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September 10th, 2015

Why Rule Groups are the Easiest Way to Maintain Compliance in Payroll

One of the most fundamental requirements of payroll is compliance. Of course, you need to ensure you pay your people correctly but the other big piece of compliance is ensuring that your organization is conforming to policies and laws defined by your tax authorities and union associations. The stakes are high because non-compliance can result in fines, litigation or even prosecution. However, it can be an exhausting task to ensure you remain compliant, especially when you have hundreds or thousands of employees and almost as many business rules.

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Maintaining compliance can become particularly challenging when:

  • You must add or update a rule for multiple employees
  • You have different groups of employees that have the same deductions, but they are calculated differently depending on employee attributes
  • Your tax authority introduces new changes to regulations that affect only some of your employees

In payroll solutions like Advanced Payroll AX from LOKI Systems, the concept of rule groups is applied to simplify rule assignment and maintenance and, ultimately, to help ensure compliance. In this post, we’ll go over the concept of a rule group and how they can be used to streamline your payroll processes.

What is a Rule Group?

A rule group is a set of business rules that are grouped together and given an identifier. Employees are then assigned a group and they receive all the rules configured for that group. Rule groups simplify the assignment and maintenance of a standard set of rules by allowing you to associate a group of rules to an employee instead of individually. Rules in a rule group may also have different periodicity. For example, in a rule group for Drivers, there could be both a weekly meal allowance and a monthly gas allowance given to employees.

The real strength of rule groups comes from the ability to create different rule groups that reference the same earning or deduction codes, but are calculated differently depending on the rule for the employee. For example, you may have a rule for overtime where overtime for senior staff is twice their regular rate while overtime for regular staff is 1.5 times their regular rate. This can be accomplished with two rule groups—one for senior staff and one for regular staff—and a single overtime earning code.

How Can I Use Rule Groups?

Rule groups are great for when you need to assign rules in bulk to different groups of employees for items such as:

  • Time premiums
  • Earnings
  • Benefits and deductions
  • Entitlement banks, such as vacation time and sick leave

After assigning a rule group to an employee, you can still easily add, remove or modify rules for individual employees to accommodate specific requirements and preferences.

Rule groups also reduce the effort needed to enroll a new employee in payroll. Rule groups ensure that all employees, or a group of employees, have the same standard set of rules applied automatically. Once an employee is assigned a rule group, all their standard deductions come into effect in the next pay period. This means that you no longer have to worry about your employees missing the right tax deductions from pay period to pay period.

With rule groups, business rules are also simpler to maintain and manage. Any changes to a rule in a rule group will automatically apply to all the employees with that group. This means that if you add or remove a rule to the rule group, the rule group updates automatically for all the employees who have that group.

Employee benefits, payroll, insurance file folder cropped

How Can Rule Groups Make My Life Easier?

Here are two examples of how rule groups can make payroll easier:

  • Joanna has 20 new employees that she needs to enroll into payroll. By using rule groups, Joanna simply assigns an employee to a position, inputs their salary or hourly rate, and selects which rule groups the employee belongs to. Since all statutory deductions are in the designated rule group, all of those deductions will start in next pay period for the new employees. Joanna doesn’t need to assign each individual employee numerous deductions to ensure that they all receive the correct statutory deductions and are all enrolled in the company health and life insurance policy.
  • In Company ABC, they decided to end the parking space benefit and replace it with a Health Club benefit. Instead of replacing the old benefit for each employee, the payroll administrator simply makes the change in the rule group and it will apply to all of the enrolled employees.

 

Rule groups help reduce errors from manual entry by automating the process and decrease the number of steps needed to enroll employees in payroll or make changes to existing business rules. This helps your company stay compliant with jurisdictional laws and minimizes the pressure on your payroll administrators to maintain employee information and process payroll every pay period.

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