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Controls on human resources costs

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It is always difficult to distinguish precisely which aspects of staff costs HR and finance should be responsible for because they fall into both areas, and in a small organisation, it becomes even more intertwined because it is unlikely that you will have separate teams for each.

These policies focus as far as possible on the financial impact of employing or contracting with people.

Remuneration or pay policy could potentially sit in this manual as it is tied so closely to finance considerations, but as it should not be driven by them, it is usually found alongside other employment policies.  It is good practice to have a pay policy - download a sample policy for small organisations.

Read our advice on how to go about starting from scratch  (pdf, 64KB)

Staff recruitment

Recruitment is largely an operational issue, so this section is mainly to establish that there has to be financial approval of any new or replacement post.

You need to decide the level at which the operational approval of new posts can be made.

Staff salaries

This is a very procedural section about how people get paid.  You may reduce the detail for the trustees.

You need to think through whether you would be prepared to make payments outside the normal pay run, because payroll staff are occasionally faced with requests for advances when staff are short of money and it is useful for them to have a policy to refer to.

You may also be interested in FMO – NCVO’s Trusted Supplier in payroll services. We have a range of suppliers in on other areas of finance and HR support.

Salary reviews

It is important to manage the timing of the salary scale review so that it can be incorporated into the budget, with assumptions about any incremental increases staff may receive. 

The template suggests that you would pay increases from the beginning of the financial year, which is administratively tidy. 

You should be pragmatic about this.  You may need time to manage the individual salary review process if it relates to appraisals, and you may not get your plan and budget approved far enough in advance of the start of the year to allow for this.  

Casual staff and consultancy

Casual staff and consultants can provide a very useful complement to your staff team, either to accommodate times of peak need, or to bring particular skills, but temporary staff are expensive. 

You need to define when you would make use of them, and be clear about the need for prior approval.

Your organisation might want to create a standard agreement if you make regular use of contract staff so that you can be sure that you are not inadvertently creating an employment situation. 

Starters and leavers

It is easy to assume that someone else has told the finance team about staff changes, and at the end of the month, you either find that someone new has been missed off the payroll run, or that you have overpaid someone who left mid-month.  It is worth identifying:

  • precisely who in finance needs to know in order that people are paid properly
  • who should be responsible for telling them
  • what authorisation needs to be attached (for example a copy of the offer letter).

This is a detailed procedural section, and you may want to collate these financial details with the other bits of administration and issue a single starters and leavers document rather than facing staff with paperwork from a range of teams.

Starters

The new member of staff has a vested interest in getting their details to the payroll person, but you might want to think about what you would do in the circumstances where they missed the normal payroll run.  Some organisations are very hard-line, and others are more accommodating of mistakes.

Leavers

You need to decide whether you will require staff to take all their accrued holiday prior to leaving, or whether you will pay for any not taken.  In a small organisation you might find it hard to insist on people taking the time off.

Reimbursement of expenses

Although this section too is detailed, the trustees do need to approve it, as they will be bound by it if they wish to claim expenses.

Different organisations have very different approaches to this and here is some advice on the range of questions you need to consider before you adapt the template for your organisation.

Template expenses forms:

You also need to ensure that you are familiar with the HMRC guidance on what is allowable. They also have a specific page on the rules around Expenses and benefits: business travel mileage for employees' own vehicles.

Templates

As an NCVO member you can download our financial procedures manual templates.

Page last edited Jan 03, 2018

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