The interim manager was commissioned as an expert to ensure the payroll processes at one of Europe's leading addresses for high-end fashion until a full-time employee was found. In the course of the mandate, further consulting needs arose.
The company:
The company was founded in 1987 as a fashion retailer in the luxury segment. in 2014, the founders sold the company to an American department store chain in order to continue growing, particularly online. In addition to online retail, the original retail business with 30 employees continues to exist.
The turnover of the company as a whole was around 100 million euros in 2014. It has more than 500 employees from around 50 nations. At the time of the interim mandate, around 25 new positions were being filled every month. The staff is young, dynamic, international (approx. 50 nationalities) and demanding - Generation Y in its purest form. However, for the most part - due to the age structure - they have little experience. And, as young companies love it, many interns, working students, mini-jobbers, fixed-term employment contracts and the associated employment law issues, such as minimum wage, working time documentation and special requirements from the Part-Time Employment Act.
Order planned as a pure vacancy project:
The company acquisition in 2014/2015 led to changes in management and personnel management as well as employee turnover in payroll accounting. For a long time, payroll accounting was handled by an internal full-time employee, who also left the company in 2014. Since then, the vacancy was advertised but could not be filled. An employee from a tax firm was hired to bridge the gap, with a very limited functional presence of one day per week.
At the start of the interim mandate, the plan was for the payroll expert to take over payroll on an interim basis with an average time commitment of two days per week. The aim was to ensure the monthly payroll and activities in connection with payroll, e.g. certification, correspondence with health insurance companies and tax offices for the company until a full-time permanent employee was found.
After a short training period, it quickly became clear that the time required would be higher due to complex payroll issues. Due to the large number of employees from abroad (including non-EU countries), the administrative workload in the area of HR was high. This was all the more true as there were no company-wide standardized processes and regulations, but rather decisions were often made very individually for each employee. This also consumed a very high time budget due to constant inquiries.
In addition to the commissioned operational activities, the interim manager used her expertise to put several aspects of payroll accounting on a solid legal footing:
Initial calculation of the non-cash benefit for n in accordance with Section 8 (3) EStG, taking into account the 4% valuation discount and the tax allowances. Taxation of the excess amounts in payroll accounting and technical implementation in
First-time payment of anniversary vouchers/ (clarification of the payroll tax and social security law payment options for the benefit of the employee; §37b EStG, calculation of the flat-rate wage tax, payment of social security and implementation for all employees in DATEV
Clarification of the payroll tax and social security law treatment of international purchasers who have moved their place of residence from Germany to the UK. Due to the established limited tax liability and economic employer in Germany, a monthly breakdown of wages Germany/UK/other countries had to be made. As a result, wage tax had to be paid pro rata in Germany and the UK as well as social security in the UK.
Partial outsourcing of the international payroll department - international buyers
This area of responsibility was previously handled entirely by the company itself. Due to the complex tax and social security treatment and the associated sources of error - a major liability risk.
The payroll expert advised the HR management to outsource the entire topic to a company specializing in international payroll issues, which would take over the correct calculation of the pro rata wage as well as the complete calculation and payment of wage tax and social security contributions to the German and British authorities. Following the decision in favor of the recommended partial outsourcing, the entire process was successfully handed over to the external service provider under the direction of the interim manager. This not only significantly reduced the burden on the company's HR department, but also considerably minimized the liability risk.
Consulting on payroll human resources
The payroll expert's analysis revealed that the wealth of different specialist topics in this area could not be handled by a part-time employee. The HR department had to be staffed with at least 2 employees in payroll in the long term, also to be able to cover for sickness and vacation. Partial outsourcing made it easier to find a suitable permanent employee, as the requirements profile for suitable candidates had changed. The company has also been looking for an additional part-time employee since this year (2017).
Payroll and other downstream processes as success factors
In principle, it should be noted that companies with high growth rates prioritize filling positions that are directly related to sales and order acquisition. What is forgotten here is that the need for administration increases in secondary processes such as order or personnel administration and support. However, it is often precisely these secondary positions that determine the long-term success of the company. Customers or employees who do not feel well looked after quickly change companies again. During the interim mandate, the HR department more than doubled in size - with a focus on recruiting. However, not a single additional position was created in the area of HR processing or support.
Result: error rate reduced - liability risks minimized
The client was highly satisfied with the further development of HR processes during ongoing business, the successful completion of the externalization of foreign payroll accounting project and the training of the successor and would bring the interim manager on board again for relevant issues.
