Page 117 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
because the payroll staff does not possess enough knowledge to link the
payroll changes to the employee events. For example, when an employee
is married,this should trigger a change in that person’s W-4 form,so that
the amount of taxes withheld will reflect those for a married person.

Automation can create many of these linkages. Here are some
examples:
• As soon as an employee reaches the age of 55, the system

issues a notification to the pension manager to calculate the
person’s potential pension, while also notifying the employee
of his or her pension eligibility. These notifications can be
by letter, but a linkage between the payroll system and the
e-mail system could result in more immediate notification.
• As soon as an employee has been with a company for 90
days, his or her period of probation has been completed. The
system should then automatically include the employee in
the company’s dental, medical, and disability plans, and start
deductions for these amounts from the person’s paycheck.
Similarly, the system can automatically enroll the employee in
the company’s 401(k) plan and enter that deduction in the
payroll system. Since these pay changes should not come as a
surprise to the employee, the system should also generate a
message to the employee, detailing the changes made and the
net payroll impact.
• When a company is informed of an employee’s marriage, the

computer system generates a notice to the employee that a
new W-4 form should be filled out, as well as a new benefit
enrollment form, in case the employee wishes to add benefits
for the spouse or any children. Finally, a notification message
can ask the employee if he or she wants to change the benefi-
ciary’s name on the pension plan to that of the spouse.
• When an employee notifies the company of an address change,
the system automatically notifies all related payroll and benefit

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