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Security and Data Protection for Payroll Software

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Processing payroll requires processing large amounts of your employees' personal data, including names, addresses, bank account information, social security numbers, and salary information. All of this is sensitive information that the law requires you to protect from accidents, misuse, loss and prying eyes.

Does data protection law impact payroll?

Because payroll processes personal data, it is one of the key HR areas affected by data protection laws. The UK General Data Protection Regulation (GDPR) requires you to:

  1. Document what personal data you have, where it comes from and with whom you share it
  2. To keep the amount of data you store as low as possible - only keeping what is necessary and not for longer than necessary
  3. Review and, if necessary, amend the data protection notice to ensure that it complies with the new rules
  4. Control access to payroll data through appropriate security measures
  5. Safeguarding and compliance with the specific rights of those affected, e.g. the right to information, the right of access to personal data, etc.
  6. In some cases the appointment of a data protection officer

The UK General Data Protection Regulation also requires you to take technical and organizational measures to protect the personal data you hold. These measures may include, for example:

1.Secure workstations, servers and storage space
2.Encryption protocols
3.Specific security guidelines
4.Confidentiality clauses establishing best practices for data protection

If you use payroll software, some of its features (such as password protection, access control, secure storage, etc.) can help you meet some aspects of GDPR security requirements.

Protecting your payroll data

A risk assessment can help you determine whether your users, processes, and systems pose a risk to your payroll data. Once you have identified the potential risks, you can implement internal controls and policies to address them. For example, you could:

Manage and limit access to the payroll system to only necessary employees. Use timeout functions to log employees out of the system after a period of inactivity.
Separate duties within the payroll team - if possible, at least two people should manage the payroll process. This way you can avoid conflicts of interest and minimize the risk of fraud.
Conduct a peer review and/or approval process - this helps validate data entries and changes. Only make actual payments with appropriate authorization.
Carry out control reports on payroll, e.g. about system access, new hires, departures, new bank accounts, etc. This can help identify potential problems and uncover discrepancies early, e.g. Errors in entering hours, pay rates and other data or fraud.
Implement a data retention policy and ensure payroll professionals adhere to it.
Classification of data according to their sensitivity and agreement on procedures for encryption, transmission, etc.
Use and regularly update security measures such as firewalls, antivirus programs and patches.

If your company's payroll is handled by a single person, you should have a plan in place in the event that person is unavailable. For example, your company's accountants could step in in case of an emergency.

Keep backup copies of payroll data, ideally in a safe location, such as a computer. in a fireproof safe. For security and continuity reasons, it may make sense to run the payroll software on a separate computer to avoid interruptions due to the failure of other software.

If you keep information in paper form, such as: For example, payroll, you need to consider their physical security. Destroy all trial runs and tests, such as: Payroll reports to prevent accidental access to sensitive data.

In light of the UK General Data Protection Regulation (GDPR), you should consider switching from printed pay slips to a digital alternative. This could help you consolidate your employee data in one secure location where you can control access to sensitive documents.

Payroll is a business-critical process for every company. You need to pay your employees correctly and on time to avoid poor morale, poor performance, and possibly even reputational and legal issues. A good computerized payroll system like Icehrm can help you run payroll faster, more efficiently and more securely.

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