Payroll review: strategy for risk prevention and cost reduction

Every company needs to be up to date with labor and social security obligations, but given the volume of information, not making mistakes has become an arduous task. Hence, getting specialists to run payroll review can be a solution.

Although, the lawsuits filed by employees in Labor Justice have decreased 34% after the Labor Reform, the number remains expressive. In 2018, according to the Labor Court data, the courts of first instance received 1,726,009 complaints. Among them, the most common complaints are related to the non-payment of INSS, overtime and termination of employment relationship fees, as demonstrated by the Labor Court itself.

The review consists of verifying the operationalization of the payroll item by item, from the analysis of the articles of incorporation and CNAE (National Code of Economic Activity) until it meets the payroll, its specificities and the payment of INSS, FGTS and IRPF.

In the case of the payroll review, it is possible to identify errors due to the non-updating of rates to meet the current legislation. A common example is when the company knows that the CLT establishes the payment of overtime, at least, 50%, but does not pay attention to the collective bargaining and category convention or agreement. In this case, the specific norm prevails, for a collective convention or agreement that may determine a higher percentage than the CLT.

Failure to update the system with this difference leads to information mismatch on the payroll. That is, the review considers whether the funds are being paid in accordance with the CLT, other provisions established in a convention or collective bargaining agreement and according to the standards foreseen in the regulated professions.

In addition, it is important to follow the legislation on possible changes in social security tables, inclusion or exclusion of CNAE for the framework of Labor Environmental Risks (Riscos Ambientais do Trabalho - “RAT”). The adoption of incorrect rates leads to an inaccurate calculation of taxes. Therefore, the review is also indicated in these cases.

Check some of the benefits that the payroll review provides to companies in order to avoid charges and penalties not only with the Federal Revenue and Labor Superintendence, but also with Labor Court.

Requirements to provide services to the public sector

A common situation is that companies provide services to public agencies and that should submit periodically, by contract requirement, a dossier with documents related to the payroll. This measure aims to verify whether the company providing the service complies with labor and social security standards, especially in relation to eSocial. Receiving contract values may be at risk due to failure to report such information or if the public authority detects irregularities.

The review work helps to identify possible mismatches prior to the report of the dossier, enabling the company to take the necessary measures. In addition, the consultancy in the processing the dossier, according to the contracting party's needs, ensures peace of mind and confidence for the service-providing company.

Review of social security rates

One critical point when checking the payroll is the adjustment of the rates that, in case of error, may cause problems with the Tax Authorities or the courts.

An analytical review conducted by specialists on the payroll headings/events may indicate a reduction of costs for the company, since it is common to find them paying additional taxes or failing to pay, or even applying incorrect rates in the withholding of social security, FGTS and IRPF. Another more timely review that can be performed is on the calculation of termination and vacation, which raises doubts about the payment.

Payroll Review x eSocial

During the eSocial deployment, the companies dedicated a high amount of attention to the analysis of the headings, which are the maturities in the payroll, for correct setting of rates and codes in the system.

For example, when paying notice, formerly there was a tax for INSS. However, with the change in legislation, the prior notice ceased to be taxed for INSS. If the company does not change according to the law, the tax is paid improperly.

In other words, the professional responsible for the company’s payroll that operates the system must have the analytical and legal ability to understand whether the result generated is or not according to the legislation, otherwise the company can be in noncompliance.

The review of payroll and case-by-case generate analytical reports that inform the measures that the company needs to take to establish the legal set-up of the system and, in some cases, the improvement of processes.

Opportunities for refunding and offsetting federal taxes

It is common for taxpayers who have made undue or overpayments and are not aware of the legal possibilities of refunding or offsetting federal taxes (PIS and COFINS, IRPJ and CSLL, IPI and INSS).

After the proper survey, the administrative proceeding should be made using the PER/DCOMP and PER/DCOMP web systems, according to the nature of the operation or the tax and the period.

With the entry into force of DCTFweb, cross-compensation of federal taxes becomes possible, which has great advantages for the companies' cash flow. However, the offsetting or refunding process should be very well based on the obligations that the company reports, such as ECF, EFD-ICMS/IPI, EFD-Contribuições, eSocial, ECD, EFD-Reinf and DCTFWeb, evidencing the credit right.

Read more details on this issue at: PER/DCOMP Web: offsetting and refunding of federal taxes - companies see opportunities

Keeping up is also strategic!

Having the payroll in compliance with the legislation is no longer just an obligation: it is a strategic solution to avoid problems with the tax authorities or with Labor Justice and also to reduce costs. Domingues e Pinho Contadores has a team of experts with broad experience in payroll review, able to assist companies in various moments and critical situations, analyzing each case.