For an employee who depends upon his payroll check to pay his monthly bills, payroll frequency is a topic of great importance. Because this issue is potentially sensitive, you must exercise great care when working to change your payroll frequency schedule. By engaging in careful planning and moving systematically through the process of changing payroll periods, you can reduce the likelihood that your change leads to employee hardship and likely improve the degree to which your employees willingly accept the compensation schedule modification.
Create a project team to guide the implementation. As the Bureau of National Affairs states, dedicating a team to this delicate task can increase the ease of the implementation and decrease the likelihood that you make mistakes in your planning process.
Charge an individual with investigating the legal ramifications of your planned change. Ask this individual to look into state and local laws regarding payroll frequency as well as to confer with the company's lawyer and discuss any contractual issues with making this change.
Set a date for the frequency change. If possible, make this date at the end of a fiscal year or quarter to decrease the potential record-keeping problems that your change creates.
Inform employees of the planned change as soon as possible. The sooner you inform them of the fact that you plan to change the payroll frequency, the more effectively they can plan for this change. This is most important if you plan to decrease the frequency of pay, as doing this can have an impact on individual monthly budgeting.
Hold a question and answer session regarding the planned change. Offering an information session of this type ensures that your employees feel like they are informed and that their voices are being heard. This also prevents the development of rumors as any word-of-mouth confusions can be cleared up easily at a gathering of this type.
Gradually make contract modifications if contract stipulations prevent the change. For example, if your current contract says that employees will be paid every two weeks, instead of modifying these existing contracts, gradually phase this stipulation out, changing the wording on contracts that you offer to new hires as well as those signed as a part of annual contract renewal with existing employees. Continue with these changes until no contracts with the old verbiage exist and you can make your change without worry.
Check your math carefully before moving through with your payroll frequency change to ensure that you haven't miscalculated the newly divided pay rate. It is best to ensure that you have your calculations in order prior to implementing the change as employees will likely become very upset if they discover that you have miscalculated their rates.