Is ‘admin error’ the new black?
24 June 2019
Tesco has recently faced public scrutiny over an ‘administrative error’ that resulted in incorrect redundancy payments, again showcasing how ‘high-risk’ pay and reward has become as a headline subject.
According to one retail media report between 200 and 300 former workers were affected with some overpaid by as much as £2,000. What has also been reported is that anyone who was overpaid by more than £500 will be able to keep £100, but anyone overpaid by less than £500 will be allowed to keep the full amount.
Reportedly a Tesco representative said:
“Colleagues who were underpaid were paid the correct amount within one to two working days and this issue is now resolved.”
“We have been in touch with colleagues who were overpaid to apologise, and we will be fair to colleagues affected, taking account of individual circumstances.”
Mixed messages if the reported process for dealing with overpayments is indeed correct.
Tesco confirmed changes earlier this year which included the closure of fresh food counters in about 90 of its stores and cuts being made at its head office to create a simpler and leaner structure, putting up to 9,000 staff jobs at risk. Around half were said to be being redeployed, however redundancies were going to be inevitable.
Business Matters reported that a number of redundancy payments were made at the end of May, but an administrative error meant that hundreds received the wrong amount.
Tesco do not appear to have issued its own press release on the matter, so we are left to speculate as to exactly what the ‘admin error’ was and where the responsibility for it lies. There is no mention of whether Tesco’s payroll function is handled in-house or is outsourced to an external payroll provider. In principal redundancy calculations should be straight forward, especially when using the online calculator on gov.uk, however this relies on all the relevant information being present and correct, which in turn relies on good communication between HR and payroll and between client and payroll supplier – depending on the arrangement in place.
Many media reports will strive to apportion blame, however this ‘admin error’ and many others reported in the press, serve to highlight the increasing complexity of 21st Century payroll and just how vital strong communication between all parties is. As we see time and time again with minimum wage ‘errors’, if a detail is wrong, or something has not been communicated accurately or on time, then the risk to the employer or client can be extensive when media coverage comes into play and the headlines are splashed. Not to mention the threat of an employment tribunal, although in the Tesco case it does appear that the company have acted quickly to correct any errors and minimise the associated risk.
It becomes more and more apparent that payroll is no longer an administrative function; its impact on the strategic function of a company continues to grow and that importance should be recognised across all business functions.