Your 5-min guide: What HR must do in case errors are detected in your HR and payroll systems

About 3,000 former and current civil servants in Singapore will be compensated by the Public Service Division (PSD) in the coming months, following recent errors that were found in the Division’s HR records. 

In a statement on 18 November (Wednesday), the PSD said it had discovered these errors while upgrading the Civil Service’s HR and payroll IT systems. “The errors arose primarily because of human errors in data entry and coding of the HR and payroll IT systems. The IT systems also had inadequate error detection capabilities,” it noted.

In light of this, in an exclusive with Human Resources Online, Aileen Ng, Regional Lead, HR & Payroll at TMF Group, shares four steps HR can take if they face a similar situation in their organisation, as well as how to avoid such issues. 

Q What steps can HR teams/employers take to rectify the issue, should they face a similar situation? 

When payroll errors are detected, HR must remain calm amidst the expected pressures that they will face with employees, governing agencies and worse if the financial impact is significant. 

1. HR should focus on an initial assessment of the extent of the errors and a best-estimate of the time frame it needs to take corrective actions. 
   
   
2. Communicate to employees and affected parties which may include CPF Board, IRAS, etc., with a plan of action. Be brave to seek support with affected parties if extensive time is required to rectify, as errors typically involve multiple elements and extensive time to back-trace the errors. 
    
   For example, if you enter the date of birth incorrectly in the payroll system when your employee joins, it will result in an impact on CPF computation and if the employee further has changes in their work pass/citizenship status, salary increments during the affected period, the rectifications required can be complex and/or time consuming. 
   
   
3. Provide a Statement of Payroll Re-computation showing what was paid, what it should be with the actions to be taken and advise how the employee will be impacted (if any), such as recovery of salary, income tax re-assessment, etc. 
    
4. Governing agencies, organisation leaders and employees would expect to hear how such errors will be prevented in future. 

Q Overall, how can HR avoid running into such issues with their payroll? 

Payroll involves many elements and issues/errors will emerge from time to time.  To minimise payroll issues, HR may consider the following:

• Review settings in the payroll application annually – this is an often-neglected area and the risks increase significantly where payroll applications have not been upgraded for prolonged periods, and with regulatory changes occurring more frequently in today’s employment landscape and (with) emerging workforce complexities. 
  
  
• Perform payroll health-checks annually as an extension to the usual audits. A different team member not involved in the usual payroll processing should be assigned this role or HR may consider working with third parties who are independent of their organisations as this often demands a ‘fresh pair of eyes’. 

Payroll health-checks are alike to going for your medical health screening and getting a ‘health report’ – it helps to detects, correct and prevent issues as far as possible. 

Background on the errors made to the PSD’s HR records 

According to the PSD, that a majority of these errors pertain to inaccuracies in the Full-Time National Service duration records of male civil servants. “Since 2002, the Civil Service has recognised the 'fitness cut' period that a full-time national serviceman was eligible for, as part of the NS period recognised for the purposes of determining starting salary and service benefits. 

“However, we discovered that the ‘fitness cut’ period was not included in the HR records of some male civil servants. This in turn affected their leave and other benefits.”

There were additional errors involving inaccuracies in the IT algorithms used to calculate the medical leave wages for civil servants on Service Injury Leave, as well as errors in the HR system programme to compute the payments that some pensioners make when they retire from the Civil Service in order to receive annual allowances.

About S$10mn in total to be paid out to individuals who had been under-compensated 

In light of the discovery, the PSD will be paying a total ofS$10mn in compensation to the individuals who had been under-compensated as a result of the errors.However, it will not be recovering the excess payments given those who had been over-compensated, given that these errors had been made “a long time ago.” 

The Division has assured it will update all records to ensure accuracy going forward.

Here’s what affected individuals can expect going forward, as the PSD will be making the compensations in phases:

• In-service civil servants will be notified by their respective HR departments between November 2020 to March 2021. The process of validating and making good the shortfalls will be carried out from now till mid-2021.

• Individuals who have left the service will receive a registered mail at their last known address, as well as phone calls and home visits, from now till March 2021.  

At the same time, the PSD has highlighted that if a civil servant has not been contacted by March 2021, it means they have not been adversely impacted by the errors.

Individuals who have queries can approach the HR departments of the government agencies they are currently working in or were employed before they left the service. They can also write in to the PSD via this email.

Photo / 123RF 

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