Employees don’t like to be left out of the loop, particularly when it comes to pay cycles. An employer that plans on making a switch should communicate early and frequently, so that employees are aware of what is happening. Most businesses will switch their pay cycles for greater efficiency.
How Employers Should Communicate With Employees
When preparing to change pay cycles, employers should utilize the 5 Ws, which are why, where, what, who and when. Employees should know who is affected by the change, why the change is being implemented, when it will go into effect, and where. People are naturally wary and resistant to change, so it is critical for employers to alleviate anxieties and demonstrate that the switch is important for everyone.
Proposed changes should also be posted to bulletin boards, websites, brochures and other places where employees are likely to read them. Announcements could also be made at company meetings. Changes regarding the delivery dates of paychecks and the days within a pay period will usually result once the new pay cycle is initiated. Employers should understand the calculations that can occur whenever a pay cycle is switched.
How The Pay Cycle Should Be Implemented
A team will need to be formed which will be responsible for planning and executing the next pay cycle. This team will typically consist of members from departments such as finance, information technology and human resources. It is also helpful to include an ombudsman in the group who will not be affected by the change and can therefore make suggestions which are unbiased.
The team will next need to assemble a calendar which demonstrates dates for payment, as well as cutoff times for processing and direct deposit. Everyone on the team should unanimously agree on milestone as well as checkpoint dates. Details are important for this process, as the group will need to assess the effects of moving pay dates backwards or forwards, and should review the deductions and earning codes so that communication can be facilitated regularly and early.
Other Things To Consider
Many states have laws on the books regarding the switching of pay periods, so it is important for employers to be aware of this. It is one of the reasons why many businesses switch to bi-weekly payments from semi-monthly payments, due to requirements from FLSA and other state laws. Some states only allow bi-weekly payments at the maximum, so employers should find out what rules apply to their area of operations.
Another factor to consider is benefits deductions, and the way in which they should be managed. Employees will have concerns regarding deductions from dental or health insurance benefits, so employers must decide how they will approach these. Some choose to switch to twenty six periods, while others choose to skip the deductions for the first payroll or remain at twenty four periods and skip the third payroll two times a year.