What a payroll variance review should catch before you approve a run

Most payroll errors are not calculation errors. The software adds up correctly; what goes wrong is an input. An overtime approval keyed twice, a leaver still on the run, a salary change effective from the wrong month. A variance review is the check that catches these, by asking one question about every employee: why is their pay different from last time?

Start from what changed, not from the whole register

Reviewing every line of a large register is slow, and slow reviews get skimmed. A variance review narrows the work to the people whose net pay moved against the previous period. For everyone else, the pay run is the same as one you already approved.

For each person on the list, the review should show the previous net, the new net, the difference, and the input that caused it. A variance with no named cause is the one to stop and look at.

The checks worth making

• Large movements: anyone whose net pay changed by more than a set percentage. Pick a threshold and apply it consistently.
• Joiners and leavers: new starters prorated from the right date, and leavers removed or paid a final settlement rather than a full month.
• Negative net pay: deductions or recoveries larger than earnings. These need a decision before approval, not after.
• Missing bank details: people who would be excluded from the payment file unless the details are added.
• Effective-dated changes: salary increases and promotions applied from the month they were approved for, including any arrears.
• Reimbursements: approved expense claims included once, as non-taxable lines, and not duplicated.

Make acknowledgement part of approval

A variance report that can be ignored will eventually be ignored. The stronger control is to make each variance something the approver has to acknowledge, so a run cannot be approved while any change is unexplained. That turns the review from a report someone may read into a step the run cannot skip.

Order the warnings by how they block approval: changes that need review first, then people who will be excluded, then arithmetic that cannot stand, such as negative net pay.

Show the arithmetic

The one calculation every approver checks by hand is gross minus deductions equals net. State it at the top of the run, with the totals, so nobody has to reconstruct it from separate figures. Employer cost belongs alongside it, not inside it, because it is a cost on top of gross rather than a deduction from anyone.

How PayLoom does it

In PayLoom, inputs reach the run already approved in Attendance, TimeSheet, Leave and Expenses, so the variance list shows where each change came from. The run states its totals as an equation, flags large changes against the previous cycle, and cannot close until every variance has been acknowledged by a named approver.