WO2003038693A2

WO2003038693A2 - A data processing system for managing a payroll operation across a plurality of jurisdictions

Info

Publication number: WO2003038693A2
Application number: PCT/GB2002/004913
Authority: WO
Inventors: Andrew Robert Mcerlain; Peter Dempsey
Original assignee: Multijurisdictional Payroll Limited
Priority date: 2001-10-31
Filing date: 2002-10-30
Publication date: 2003-05-08
Also published as: WO2003038693A8; GB0126160D0

Abstract

With reference to the Figure, the present invention relates to a data processing system for managing a payroll operation across a plurality of jurisdictions each having a different deductions regime. The system comprises first input means (15 to 22) which enables input of payroll data, including employee information; first storage means (14) which stores the payroll data input via the input means; second storage means (11, 23 to 30) which stores for each of the jurisdictions deductions data regarding deductions payable in all of the plurality of jurisdictions; payroll calculation means (31) which uses the payroll data stored in the first storage means (14) and the deductions data stored in the second storage means (11, 23 to 30) to calculate for each employee a periodical payment value and a deductions value associated with the periodical payment value; output means (32, 33, 34, 35) for outputting for each employee the calculated periodical payment value and the calculated associated deductions tax value; third storage means (36) for storing a record of the periodical payment values and the associated deductions values calculated by the calculation means (31); and reporting means (12) which accesses deductions data stored in the third storage, means (36), which categorises all of the calculated deductions according to a categorisation regime applicable across all of the jurisdictions and which produces reports consolidating information across all of the plurality of jurisdictions with reference to the categorised deductions data.

Description

A DATA PROCESSING SYSTEM FOR MANAGING A PAYROLL OPERATION ACROSS A PLURALITY OF JURISDICTIONS

The present invention relates to a data processing system for managing a payroll operation across a plurality of jurisdictions. The present invention also relates to a method of managing a payroll operation across a plurality of jurisdictions.

Many multinational companies outsource their payroll operations either to a full service provider or, in some cases, a part of the payroll calculation process to a more restricted bureau service. The problem for such companies is that payroll services are predominantly provided within a territorial structure. Therefore, a multinational company must deal with a number of different providers, one or more provider per territory, each of whom will approach the payroll service in its own way using a payroll processing system which is usually different to all of the other suppliers.

Even when a single supplier provides payroll preparation services across a plurality of jurisdictions, it is usual for the supplier to use different data processing systems for each jurisdiction.

In view of the above, the management of payroll operation is inefficient and time-consuming. Furthermore, a lack of consistency between the payroll processing systems and the absence of common definitional terms means it is very difficult to obtain reliable consolidated payroll information. Even when such information might be available, there is no common reporting system which enables a plurality of different reports to be generated according to the company's needs. This results in a severe restriction on the company' s ability to gain access to reliable consolidated payroll data, benchmark its workforce costs against internal or external measures or manage its payroll costs.

The present invention in a first aspect provides a data processing system for managing a payroll across a plurality of jurisdictions, each having a different deductions regime the system comprising: first input means which enables input of payroll data including employee information; first storage means which stores the payroll data input via the input means; second storage means which stores for each of the plurality of jurisdictions deductions data regarding deductions payable in all of the plurality of jurisdictions; payroll calculation means which uses the payroll data stored by the first storage means and the deductions data stored by the second storage means to calculate for each employee a periodical payment value and a deductions value associated with the periodical payment value; output means for outputting for each employee the calculated periodical payment value and the calculated associated deductions value; third storage means for storing a record of the periodical payment values and associated deductions values calculated by the calculation means; and reporting means which accesses deductions data stored in the third storage means, which categorises all of the calculated deductions according to a categorisation regime applicable across all of the jurisdictions and which produces reports consolidating payroll information across all of the plurality of jurisdictions with reference to the categorised deductions data.

In accordance with the invention a data processing system is provided which integrates payroll processing and related functions along with a reporting system which produces reports enabling the multinational company to measure, manage and enhance the cost of the organisation's human resources and the productivity of those human resources.

The data processing system of the present invention creates compatibility between cost components occurring in different jurisdictions. The system can be configured such that taxes, social security and other payments which have different names and titles in different jurisdictions can be resolved into different categories common for all jurisdictions, so that they become easily comparable. Across eight jurisdictions there may be as many as 60 different types of deduction. One jurisdiction alone can have over 15 different levels of social security deduction. The system can ensure that all cost data is manipulated according to a diction common to all jurisdictions and into a form which can be consolidated and used for automated measurement on a consistent basis across the jurisdictions or indeed across different companies, business units or employee category, in real time or on a trend basis, over time. The reporting means can perform actual, statistical, ratio and trend analysis of the data it receives. This can be reported in preprogrammed formats or in formats defined by a particular company's requirements. The latter can enable benchmarking by comparison of workforce costs, either internally by comparing business units or externally by comparison with general costs in an industry section.

Preferably, the data processing system is operated from a single service centre, from a single server (or network of servers) and is managed by a single central team that has a thorough understanding of all the multi-jurisdictional issues and processes. This would enable a multinational company to have one supplier for all relevant countries and enable economies of scale and efficiency.

A multinational company will be able to save time and expense through dealing with just one payroll provider for several jurisdictions. Economies of scale will be achieved because of the fact that the single supplier is dealing with several jurisdictions and an enhanced service can be supplied by the operator of the dataprocessing system. Most importantly, by consolidating payroll data for several jurisdictions, reports can be generated which give real insight into a company's cross-jurisdictional payroll expenditure.

In a second aspect, the present invention provides a data processing system wherein in the second storage means information regarding deductions rates is stored with reference to local jurisdiction terminology.

A preferred embodiment of a data processing system for managing a payroll operation for a plurality of jurisdictions will now be described with reference to the accompanying figure, which is a schematic representation of a data processing system according to the present invention.

In the figure there is shown schematically a data processing system according to the present invention which is implemented on servers 10, 11 and 12. Communications server 10 receives information electronically via a wide area network (WAN) , an Intranet or possibly the Internet from a physically remote server 14. On the physically remote server 14 a multinational company runs a Human Resources Information System which contains for all employees of the company information about age, salary, terms and conditions of employment etc. The information will be updated by local managers in the various parts of the company by using local terminals 15 to 22, physically remote -from server 14, to communicate new information, eg. via a wide area network or Intranet to the server 14.

Each of the terminals 15 to 22 will be located in a different jurisdiction and each will be operated by a different part of the multinational company. The central server 14 is linked to the communications server 10 of the data processing system of the present invention and sends to it payroll data.

Each of the terminals 15 to 22 will also be used to directly input local payroll data to the server 10. The additional payroll data will include, for instance, hours worked, sickness days, unpaid holidays, overtime, new starters.

The payroll data received from the terminals 15 to 22 is received by a communications server 10 providing the input means to the payroll processing system.

All of the payroll data received by the communications server is relayed to a payroll calculator server 11 and the data is stored by a first database 23 running on the server 11.

A plurality of other databases 24 to 30 are present on the server 11. Each of these databases 24 to 30 contains the information regarding deductions relevant to payroll in a particular jurisdiction including:

1. applicable income tax rates

2. applicable social security payments

3. private health cover

4. taxation of a company car 5. taxation of any interest-free or low interest loans to employees

6. taxation of stock options and stock ownership plans

7. incentive plans (and tax payable in respect of such incentive plans)

8. effect on taxes and social security of deductions such as spouse maintenance, charitable donations, pension payments and company-related voluntary deductions 9. Details of taxation of relief therefrom for pension payments The databases 24 to. 30 will contain the information applicable in the plurality of jurisdictions covered by the system. The databases 24 to 30 are all linked to a common payroll processing engine 31.

The payroll processing engine 31 draws payroll information from the database 23. For each employee identified by the payroll information the payroll processing engine calculates a gross periodical payment value (e.g. a monthly salary payment) and then selects which of the databases 24 to 30 contains the relevant jurisdictional deduction information. The information in the databases 24 to 30 when selected is used to calculate the correct deductions from the gross periodical payment. The deductions will include, inter alia , income tax and social security payable, deductions for repayment of low interest loans, deductions for charitable donations, spouse maintenance etc.

The payroll processing engine 31 has several outputs-. The engine 31 can output signals which control the production of printed payslips by a printer 32. In the figure, for reasons of simplicity, a single printer 32 is shown, but it will be appreciated that there will be many printers receiving signals output by the engine 31. The printers can be located at a central location so that the payslips when produced are then relayed by post or courier to where they are required. Alternatively, the printers 32 could be a plurality of printers in each of the jurisdictions, with a local printer in a jurisdiction printing payslips for all employees in that jurisdiction. It is envisaged that printed payslips might be replaced by electronic messages with the same information. In such a case the printer 32 would be replaced by computer terminals of employees.

The payroll processing engine 31 also outputs signals to a payment system 33 whereby payments can be made by electronic transfer into bank accounts of the employees. The payroll processing engine 31 also instructs a payment system 34 to make payments to deduction collecting authorities such as the tax - authorities and the Social Security authorities. The payroll processing system also outputs financial information known as employer returns to accounts system 35 of the multinational company.

The output of the payroll processing engine 31 is also stored electronically in a database 36 provided on the server 11.

Also in the figure there can be seen a computer 37 which is used as a data input device to input into the server 11 information required for operation of the data processing system. For instance, deductions information for each jurisdiction, (income tax rates, social security information, benefits information etc) could be input via the computer 37. The computer 37 may in reality comprise a plurality of computers operated e.g. one in each jurisdiction by professional advisers providing updated information.

The server 11 is linked to a reporting system 12 which can send reports back to the server 14 of the Human Resources department of a multinational company. This will be typically achieved over an Intranet or a WAN. It will be typical that the computer equipment 10, 11, 12 will be geographically distant from the server 14.

Since the reporting system 12 is integrated with the systems of the server 11 it can provide to a multinational company a link between human resources and finance functions in the company. This will be achieved using payroll information since a company' s payroll information can act as an accurate and live dataset reflecting the total workforce costs of the company and the deployment of the resources of the company.

Examples will now be given of the sort of reports that the reporting system 12 can generate from the information stored in the three databases on the server 13. Some of these reports will be provided as standard reports in order to provide a "basic dashboard" or "trip computer" for users of the system.

Some of the reports can be provided in response to specific requests of a user of the system. Other reports could be generated in order to meet the requirements of a particular user. The reports are designed to give indications of how a business is performing relative to set predetermined measures.

The reports generated by the reporting system 12 will have for instance the following categories: Workforce planning, Employee acquisition, Employee maintenance, Employee development, Employee retention, Severance/separation costs and Research and development costs. Whilst reports relating to the aforementioned categories are possible without using payroll information, they have been inadequate. They dealt only at a jurisdictional level. All attempts to globalise the information have failed due to lack of easily comparable data. On the other hand, the present invention realises that: (i) payroll information completes the dataset

(ii) the data which runs through the payroll system is likely to be more accurate than other data, and

(iii)the payroll information will be able to provide an analysis of tax, social security and all other relevant deduction items.

It is envisaged that the reporting system 12 could provide information: 1. per employee, 2 per category of employee; 3. per strategic business unit; 4. per jurisdiction/country. Employees can be categorised by their function: 1. sales; 2. manufacturing; 3. general and administration; 4. human resources; 5. distribution; 6. management. Employees can be categorised by their working patterns : 1. permanent, 2. temporary; 3. part-time; 4. full- time. These categorisations will be stored with the payroll data in the database 23.

It is intended that the data processing system will receive information regarding a company' s revenues and turnover, e.g. from the financial accounting system 35. Then the reporting system 12 can be used to give measurements of the type described in "The ROI of Human Capi tal , Measuring the Economic Value of Employee Performance" by Jac Fitz-Enz. These indications include: • revenue per employee (or perhaps revenue per full-time employee)

• human economic value added (being calculated as net profit after tax +cost of capital) ÷ number of full time employees

• human capital cost factor (this being calculated as (pay+benefits+contingent labour+absence) ÷ turnover)

• human capital value added (this being calculated as (revenues- [expenses- {pay+benefits} ]) ÷the number of full time employees) and

• human capital return on investment (this being calculated as (revenues- [expenses- {pay+benefits} ] ) ÷ (pay+benefits) ) . These measurements can easily provided by the reporting system from the information stored in the databases 36 on the server 13. These measurements are principal measurements which will be provided along with other measurements. The measurements can give indications of workforce costs. They can also be used in order to construct reward schemes for employees which are aligned to the measurement of business performance.

The reporting system can provide information not usually easily accessible, this being information relating to tax and social security costs of the workforce. In many countries, the tax and social •security costs are now a significant part of the gross cost of paying an employee. This is particularly so in continental Europe and there is a perceived trend that the tax and social security costs will increase as a proportion of the total cost of employing an employee. The data processing system of the present invention will be set up so that the reporting system 12 draws data from the output of the payroll processing engine 31 (e.g. as stored in the database 36) . In the payroll processing engine 31 calculations are made at a jurisdictional level using local deduction terminology stored in the databases 24 to 30. When the information is drawn into the reporting system 12 then each deduction is categorised using a categorisation system applicable across all of the jurisdictions. For instance, the categories might be such as social security, income tax, pension tax, local tax, church tax, union contributions, social levy, garnishments, etc. It should be appreciated that for each jurisdiction different terminology will be used e.g. for what are, in effect, income tax deductions or social security deductions. The data processing system of the present invention will filter the transfer of data from the payroll processing engine 31 so that each deduction is categorised using common diction. By doing this, the system allows direct comparison between different jurisdictions, where this comparison would be otherwise difficult because of the different terminologies used.

Once the deductions have been initially categorised, some can of course be aggregated to give a combined taxation and social figures. The reporting system can report per category of deduction or for aggregated categories or for total deductions per individual employee or for all employees at the same level or for a specified group of workers, or for a geographic location, or for a business unit. Analysis can also be conducted by age, or in age-range, or with other demographic criteria. Expatriates can be dealt with separately and an analysis can be conducted either on the basis of an expatriate to a particular country inbound or an expatriate from a particular country outbound. Analysis can be conducted by employees assigned to a particular task or mission. Analysis can be conducted relative to the length of service per employee and by organisational grades and by performance ratings.

The social security rates and the taxation rates can be expressed as an absolute percentage rate or as a percentage of rate to net payment to the employee. A gross to net ratio can be worked out as the factor which must be applied to an employee' s income in order that he yields e.g. $1.00 net. For instance, if it was necessary to pay $180 gross to provide $100.00 net then the gross to net ratio (GNR) would be 1.8:1.

It is envisaged that the data processing system described above will be run by payroll services and human resource consultancy company on behalf of a number of multinational clients. Thus the information regarding social security and income tax rates, etc will only have to be established once and not established per client. Each client will have access to its own information and be able to specify what reports it requires. This access is likely to be access over an Intranet or a WAN. The terminal 38 shown in the figure illustrates the client access to the information of the reporting system 12. The link back into the Human Resources information System 14 also shows how reports can be delivered. Obviously, suitable security measures will be implemented to ensure that the data is kept safe and access rights are clear. Because the database 36 keeps historical information regarding payroll figures, the reporting system can produce rate of change figures showing the rate of change of particular costs over time. This can identify trends which will help management to take action.

Any data reported can be linked back to the payroll process, because of the integrated nature of the dataprocessing system and the information available. For example, where the general trend figures and the measures reported to the client show a potential discrepancy or a particular area of high cost, the dataprocessing system will enable the client to interrogate original data in the database 36 to find where these anomalies are arising.

It is envisaged that the data processing system will also allow modelling of theoretical situations. For instance, a client might model the effective level of taxation and social security payments if a payment were to be awarded totally in cash or if the employee were to- be rewarded totally in non-cash forms (e.g. car, stock options etc) . The modelling can also demonstrate the effects of future or proposed legislative changes on payroll costs. The terminal 38 can be used to program models or the operator of the data processing system can provide bespoke models for a client.

The reported measurements can be used by a company to design a plan for the management of the payment of income tax and social security and to create performance goals with measurable targets. The performance goals can be applied at the level of an individual employee or at a team level or strategic business unit level.

The data processing system will allow clients to apply test data through the payroll calculation process in order to validate assumptions regarding areas of high cost of potential discrepancies between countries. The effects of anticipated changes in taxation regimes can be modelled effectively. Also, assumptions and planning ideas can be tested at any time by running test data through the payroll processing engine 31.

The data processing system can permit a form of feedback. Once a client has decided on changes (and has perhaps modelled these changes via the payroll processor 17) and the changes have been implemented, then the outcome of the changes can be measured to provide to the client a "dashboard" report. In this way the client can determine in a real situation whether the changes implemented have actually achieved the intended result.

Claims

1. A data processing system for managing a payroll operation across a plurality of jurisdictions each having a different deductions regime, the system comprising: first input means which enables input of payroll data, including employee information; first storage means which stores the payroll data input via the input means; second storage means which stores for each of the jurisdictions deductions data regarding deductions payable in all of the plurality of jurisdictions; payroll calculation means which uses the payroll data stored in the first storage means and the deductions data stored in the second storage means to calculate for each employee a periodical payment value and a deductions value associated with the periodical payment value; output means for outputting for each employee the calculated periodical payment value and the calculated associated deductions tax value; third storage means for storing a record of the periodical payment values and the associated deductions values calculated by the calculation means; and reporting means which accesses deductions data stored in the third storage means, which categorises ^'all. of the calculated deductions according to a categorisation regime applicable across all of the jurisdictions and which produces reports consolidating information across all of the plurality of jurisdictions with reference to the categorised deductions data.

2. A data processing system as claimed in claim 1, wherein: the output means additionally outputs instructions to a payment system which transfers payroll payments to the employees.

3. A data processing system as claimed in claim 1 or claim 2, wherein: the output means additionally outputs instructions to a payment system which transfers deductions payments to appropriate authorities.

4. A data processing system as claimed in claim 2 wherein: in the second storage means information regarding deductions rates is stored with reference to local jurisdiction terminology.

5. A data processing system as claimed in any one of the preceding claims wherein the reporting means can report payroll costs by individual employee or by jurisdiction or by specified group of employees.

6. A data processing system as claimed in any one of the preceding claims wherein the reporting means can report rate of increase over time of payroll costs.

7. A data processing system as claimed in any one of the preceding claims wherein the output means additionally outputs instructions to printing means which print payslips.

8. A data processing system as claimed in claim 7 wherein the printing means is physically remote from the data processing system.

9. A data processing system as claimed in any one of claims 1 to 6 wherein the output means additionally outputs payslip information as electronic messages sent to the employees.

10. A data processing system as claimed in any one of the preceding claims wherein the first input means receives payroll data electronically via a telecommunications network from physically remote computer means.

11. A data processing system as claimed in any one of the preceding claims wherein the reporting means produces reports comparing deductions paid in different jurisdictions.

12. A data processing system as claimed in any one of the preceding claims comprising second input means which can be used to input test payroll data into the data processing system and wherein the payroll calculation means uses the test data to produce calculated test results and the reporting means produces reports based on the calculated test results.

13. A data processing system as claimed in any one of the preceding claims comprising third input means which can be used to input test information regarding deductions into the second storage means and wherein the payroll^" calculation means uses the payroll data stored in the first storage means together with the test information regarding deductions stored in the second storage means to produce calculated test results and the reporting means produces reports based on the calculated test results.

14. A method of managing a payroll operation across a plurality of jurisdictions each having a different taxation regime, the method comprising: inputting into a computerised data processing system payroll data, including employee information, for employees in all of the plurality of jurisdictions; storing the input payroll data in first storage means of the data processing system; storing in second storage means of the data processing system deductions data regarding deductions payable in all of the plurality of jurisdictions; using both the payroll data stored in the first storage means and the deductions data stored in the second storage means to calculate for each employee a periodical payment value and deductions value associated with the periodical payment value; outputting from the data processing system for each employee the calculated periodical payment value and the calculated periodical deductions value; storing in third storage means of the data processing system a record of the calculated payment values and the calculated deductions values; and categorising all of the calculated deduction values according to a categorisation regime applicable across all of the jurisdictions; and producing reports using reporting means of the data processing system by using the categorised deduction values as data on which the reports are based and by consolidating the data across all of the plurality of jurisdictions.

15. A data processing system substantially as hereinbefore described with reference to and as shown in the accompanying drawing.