Construction payroll software: what construction payroll and payroll for construction have to prove

What to require of a construction payroll product

1. Require multiple rates on one timesheet. A single employee working two classifications in a week needs both rates on one record, not two employee records or a manual adjustment. Ask to see it entered and then see it on the payslip and the job cost report, because the three do not always agree.
2. Ask to see a certified payroll report produced. On US federally funded work, weekly certified payroll on the standard form is the deliverable, and producing it by hand is how firms fall behind. Have the vendor generate one from test data in front of you rather than describe the feature.
3. Follow the hours to job costing. Labour cost by cost code is the number the estimator needs and the number that is wrong most often. Establish whether hours reach job costing as approved, at what level of detail, and what happens when an allocation is corrected after the pay run.
4. Check the UK scheme rules if you are subcontracting. Where subcontractors are paid under the Construction Industry Scheme, deductions, verification and monthly returns sit next to payroll and have their own deadlines. A product that runs payroll but leaves the scheme returns to a spreadsheet has solved the smaller half.

Why general payroll products struggle here

They assume one person has one rate and one place of work. Construction breaks both assumptions on an ordinary week, so the features that look like edge cases elsewhere, split allocations, per-diem and travel, prevailing-wage classifications, are the daily case on a site. A general product handles them with adjustments, and adjustments are where errors and audit findings come from.

The second problem is timing. Site hours arrive late, get corrected, and then have to be reflected in both pay and job cost. Products designed for office payroll treat a correction as an exception; products designed for construction treat it as normal and keep an audit trail of it.

Public work changes the test

On publicly funded jobs the obligation is not only to pay correctly but to file a weekly statement that says you did, in a prescribed form, with classifications that match the wage determination for the work. The practical question for a buyer is whether the product produces that statement from the same data it paid from, or whether somebody retypes it.

Fringe benefits are the other trap: whether they are paid in cash or into a plan changes the report, and a product that cannot represent both will force a workaround on exactly the jobs where accuracy is being checked.

What to ask a vendor for in writing

The list of report formats it produces for public work and how they are kept current; whether the scheme or prevailing-wage rules are maintained by the vendor; how many rates per employee per period it supports; and one reference from a contractor of your size doing the kind of work you do. The last is worth more than the first three together.

Common questions

What makes construction payroll different?

Several rates, several cost codes and several sites for one employee in one week, plus a reporting obligation on public work that has to be produced from the same data you paid from. The pay calculation is ordinary; the allocation and the evidence are not.

Is certified payroll only a US requirement?

The weekly certified statement on public work is a US requirement. The UK equivalent concern is the Construction Industry Scheme for subcontractor payments, with its own deductions and monthly returns. Both mean the same thing for a buyer: reporting sits beside payroll and cannot be an afterthought.

Can an HR suite handle construction payroll?

Some can, with a construction module or a partner product. Judge it on the two tests above rather than the brand: multiple rates on one timesheet, and the public-work report generated from live data.

Do we need job costing in the same product?

Not necessarily, but you do need the hours to arrive in job costing without being retyped. If the integration is a nightly file, ask who checks it and what happens when a correction crosses a pay run.

Coverage by country

• Employer of record vendors covering Singapore
• Employer of record vendors covering Mexico
• Employer of record vendors covering Spain
• Employer of record vendors covering Colombia
• Employer of record vendors covering United Kingdom
• Employer of record vendors covering France
• Employer of record vendors covering Hungary
• Employer of record vendors covering New Zealand