Employment law
Payroll and administrative outsourcing: what the service covers
The detail of the tasks taken on, the reversibility clause, and what stays inside the company.
An outsourcing service is judged on its content, not its title. This article describes concretely what a full take-over of payroll and HR administration covers, and where its limits fall.
On choosing the scope (one-off assistance, partial or full outsourcing), see Outsourcing payroll: partly or fully?.
1. The payroll side
| Task | Content |
|---|---|
| Payroll processing and payslip production | Monthly output, with the detail of every component of gross pay and itemised deductions |
| Entering fixed and variable data | Permanent employee-file items, overtime, absences, bonuses for the period |
| Social and tax declarations | Preparation and filing within the deadlines |
| Regulatory updating | Adapting parameters at every legal or contractual change |
| End-of-career payment calculations | Seniority, applicable scales, special cases |
The fourth line produces the most value, and is the least visible. Parameters that have not followed a change in the collective agreement, an overtime premium rate, for instance, generate a gap that repeats every month, and is recovered as back pay over the whole period.
2. The administrative side
| Task | Content |
|---|---|
| Social registrations | Of the company and the employees, at hiring |
| Leave management | Annual leave, maternity leave, tracking balances and carry-overs |
| Death and widowhood procedures | Assembling the files and following up entitlements |
| Employee histories | Keeping and retaining individual files |
| Workplace accident management | Reporting within the deadlines, following up with the institution |
| Expatriate administration | Contracts, visas and permits, status-related benefits, enhanced leave |
The last line is worth noting: expatriate status concentrates several distinct deadlines, permit renewals, the ten-year cap, provisioning end-of-contract travel, sixty days of annual leave. It is a file that particularly benefits from systematic tracking.
3. The reversibility clause
This is what distinguishes a service from a lock-in. The client can take payroll back at any time, with a guarantee of full reversibility of the information.
Three practical consequences to check in the contract:
- the return is complete: employee files, histories, cumulative figures, parameters, not just the latest payslips;
- the format is usable: data returned in a proprietary format unreadable elsewhere is not real reversibility;
- the deadline is bounded: the return happens within a set period, not "as soon as possible".
Reversible outsourcing remains a choice; irreversible outsourcing becomes a dependency.
4. What stays inside the company
A service, however complete, does not transfer the status of employer. Remaining in-house are:
- decisions: hiring, sanctions, terminations, pay arbitrations;
- supplying the information: a provider calculates what it is sent, when it is sent;
- legal responsibility towards the institutions and the labour inspectorate;
- keeping the registers: payment register and employer's register, five years after the last entry;
- event-driven deadlines: reporting a workplace accident within 48 hours, filing a fixed-term contract before any commencement of performance.
See HR administration.
5. A typical monthly calendar
| Moment | Who | What |
|---|---|---|
| Start of month | Company | Sending the variable elements: overtime, absences, bonuses |
| Mid-month | Provider | Processing, calculation, consistency checks |
| Before payday | Provider | Making payslips and the payroll journal available for validation |
| Before payday | Company | Validation, or flagging of discrepancies |
| Payday | Company | Paying the salaries |
| After payday | Provider | Social and tax declarations, updating the payment register |
The usual friction point sits on the first line. A written transmission calendar, with a cut-off date, resolves almost every production delay.
6. Indicators to track
- Meeting the payslip availability date, month after month.
- The number of discrepancies flagged at validation, and their origin, data supplied or parameters.
- The correction time for an identified discrepancy.
- Meeting declaration deadlines.
- The rate of employee queries about their payslips.
These five indicators are enough to steer a service. Above all they distinguish what belongs to the provider from what belongs to internal transmission, a distinction without which no lasting improvement is possible.
Key takeaways
| The rule | What it implies |
|---|---|
| The payroll side covers the whole chain | From processing variables to filing declarations |
| The administrative side covers personnel events | Registrations, leave, accidents, expatriates |
| Regulatory monitoring is the least visible gain | Outdated parameters are recovered as back pay |
| Reversibility must be total | Complete data, usable format, bounded deadline |
| Employer status is not transferred | Decisions, legal responsibility and registers stay in-house |
| A written calendar resolves delays | The transmission cut-off is the critical point |