Payroll vs. HR: Roles, Functions, and Relationships Explored (2024)

20 February 2024 Reading Time:

As your small to medium-sized business grows, so do the roles and responsibilities of each department, including payroll and human resources. What is the difference between payroll and human resources and how do the two departments work together? In this article, we'll explore how these two separate functions are important for effective human resources management and the smooth functioning of a business.

The functions of payroll in a company

Payroll is the processing, management and administration of a company's payroll and payroll. In most companies, payroll is handled by either the finance or human resources department and/or payroll experts. Payroll features include:

• Calculating, processing and distributing wages, salaries, bonuses and commissions based on hours worked, performance or other relevant factors.
• Processing deductions such as federal and/or state taxes, Social Security contributions, and other withholdings or deductions from employees' income.
• Runs payroll tax reports.
• Ensures compliance with applicable payroll regulations and requirements.
• Maintains accurate payroll data and records and reconciles payroll data as necessary.
• Prepares payroll reports for management or government agencies.
• Handles all payroll-related inquiries or issues from employees.

Importance of professionals for payroll

Payroll professionals perform several important roles in a company. A payroll department ensures that the company pays its employees accurately, properly, and on time, which is essential for maintaining employee morale, motivation, and satisfaction. Payroll clerks also play an important role in ensuring compliance with wage and hour regulations. They provide support and expertise to ensure compliance with regulations and requirements related to payment.

Additionally, payroll data and records provide valuable insights for financial reporting, budgeting and strategic decision making, contributing to the overall financial health and stability of the company.

The functions of the human resources department in a company

The human resources department is a central part of a company because it supports and manages a company's most valuable asset: its employees. Human resources covers a wide range of tasks aimed at managing and supporting a company's workforce. These features may include:

• Recruitment and Hiring. The human resources department looks for potential applicants, helps assess them through interviews and accompanies new employees through their initial training in the company.
• She acts as an intermediary in the company and takes care of relationships with employees. If there is an internal conflict or performance issue, HR will help manage the situation and even take disciplinary action if necessary.
• Coordination of training and development programs. They are designed to help every team member do their best and constantly develop and adapt.
• Maintaining HR compliance. You must ensure that every measure complies with labor law regulations and requirements.
• Management of employee data. This includes employment-related information such as Form W-4 and Form I-9. You can also take on administrative tasks managing employee tax forms and assisting with benefits inquiries.
• Management of compensation and benefits packages for employees. The human resources department sets payroll, manages payroll and benefits, and ensures that all employees are properly paid.

The Importance of HR Professionals

Human resources professionals play a strategic role in shaping the future of the company by making the most of the workforce's potential. This includes human resources planning, organizational development and the promotion of diversity and inclusion. This is not just about managing employees, but also about promoting a harmonious, productive, committed and fulfilling employee and work culture. This contributes to the long-term success and sustainability of the company.

Payroll vs. HR: Working together

When it comes to payroll and human resources, there's really no such thing as "against each other." They are allies. Here are some ways these two departments can work together to keep your company running smoothly:

• Training of employees. While HR is responsible for hiring and onboarding new employees, payroll ensures that employees are paid properly.
• Management of employee data. The human resources department manages employee data, including personal information, employment contracts, performance reviews, job descriptions and position changes, and other confidential employee data. Payroll relies on this information to ensure accurate and up-to-date management of salaries and benefits.
• Remuneration and social benefits. Human resources helps set compensation and benefits policies, the company's payroll, salary increases, incentives, bonuses and benefits packages. Payroll uses this information to process payroll by accurately calculating paychecks, deductions, and benefits contributions.
• Time tracking and attendance. Human resources typically helps establish time off policies and practices and then tracks time off requests, employee attendance, vacations, vacations, and absences. Payroll needs this information to calculate employees' accurate time balances and compensation, Overtime payments, holiday pay, paternity or maternity pay or wage cuts.
• HR and compliance with wage and hour regulations. The human resources and payroll departments work together to ensure compliance with labor regulations and requirements. The HR department advises on changes that affect payroll, e.g. Compensation changes, exemption status, and minimum wage updates. Payroll implements these changes in payroll and reporting.
• Payroll processing. The human resources department processes payroll, including calculating employee wages, payroll taxes, deductions, and employee benefit contributions per pay period. Human Resources supports payroll by providing updated employee information, addressing payroll changes, requests, or discrepancies, and verifying the accuracy of data in the payroll system.
• Separation of employees. When an employee leaves the company, human resources handles the separation process, including exit interviews, final paychecks, and benefits administration. Payroll ensures that final paychecks and benefit payments are processed correctly and disbursed on time.
• Reports and analysis. Human resources and payroll work together to produce reports on employee-related metrics and analytics. These reports can include information about headcount, turnover rates, labor costs, benefit utilization, and other data to aid in strategic decision-making.

Find the right complete HR solution

Given the relationship between payroll and HR departments, outsourcing to a comprehensive solution to integrate both departments can be a lifesaver. This can be particularly helpful for small and medium-sized businesses that lack the time and resources to run these departments effectively.

IceHrm offers a comprehensive HR solution that helps customers streamline critical HR processes for their organizations of all sizes. Our robust platform also offers payroll, tax returns, and benefits administration, among a range of other HR services. Find out how IceHrm's payroll services and HR capabilities can help your business focus more on growth, be cost-effective and set you up for success.