Navigating shared compliance: Key regulatory overlaps between payroll, HR, and finance

Lyndee Patterson, senior compliance counsel at Dayforce, said those regulatory overlaps can be more complex than they initially appear, which makes the co-operation between those professions critical — because a single missed update or misunderstanding can trigger employee complaints or regulatory headaches.

“I think there's a real team effort, getting everyone pointed in that same direction,” said Patterson.

There are lots of examples where responsibilities flow across department lines, she said. For example, the HR team handles hiring, onboarding, and managing employee leaves; payroll ensures accurate and timely compensation, along with statutory withholdings and tax remittances; and finance oversees the budget and justifies headcount.

When regulatory changes or new legislation comes into play — think holiday entitlements, paid leaves, or Canada Pension Plan (CPP) requirements — everyone must be ready to play their part.

“There's always one group that's hardest hit by a particular change,” she said. “That's typically the group that's the driver. Then you've got all of those stakeholders that you bring in.”

Co-ordinating regulatory changes

So how do these three groups align on overlapping issues? The first step often starts with identifying which department has the most immediate stake in a compliance shift. For example, when new legislative requirements change the way benefits must be taxed, payroll might initiate the process.

From there, HR fields questions from employees who notice a difference in their paycheques, while finance adjusts projections to account for any new costs, she said.

Yet communication sometimes fails or sputters. That can lead to a scenario where a dormant problem surfaces, leaving the organization scrambling to fix issues that went unnoticed. This can lead to backtracking, employee confusion, and potential penalties, she said.

Clear communication crucial

Elvira Ciambella, vice-president, business innovation, transformation and shared services at ADP Canada, said clear communication protocols are crucial to avoid these scenarios.

“Implementing clear communication protocols and designating compliance champions within each department can help with collaboration,” she said. “This approach ensures every department fully understands its role and responsibilities in meeting regulatory requirements.”

Tools and technology bridging the gap

Technology also has a big role to play — especially in organizations that are spread across multiple locations, time zones, and jurisdictions. Patterson said centralized Human Capital Management (HCM) tools “absolutely help give a common platform for some of the stakeholders to have access to the information.”

Automated reminders, shared dashboards, and secure communication channels can keep everyone in the loop, she said.

Ciambella echoed this point, explaining that “technology is critical in streamlining tax tasks by integrating payroll and HR systems, ensuring smooth data flow.”

Automated tracking, instant messaging tools like Slack, and project management software can ensure no department is blindsided by changes and kept in the loop about the progress of other teams.

Avoiding siloed thinking

One of the biggest obstacles to shared compliance is the silo effect: the tendency for departments to focus narrowly on their immediate tasks and the fires in their own walls. Yet “you don’t know what you don’t know,” said Patterson. A seemingly isolated compliance policy change — for example, a new garnishment rule — can have major consequences for payroll processing, the HR function that fields employee questions, and the finance department’s bottom line.

“There's constantly, ‘Oh, but have you guys thought about this?’” Patterson said. “There are times when a question is asked, and until it gets picked apart… that's when you really surface risk.”

In that sense, regular face-to-face (or virtual) meetings among department leaders become a key part of any strategy. Whether the trigger is a legislative change or an internal organizational shift, ensuring that each department’s viewpoint is heard can prevent compliance lapses.

Staying on top of ever-changing rules

Death and taxes are the only certain things in life. But we can also add another — Canadian tax rules evolve. Between federal, provincial, and territorial legislation, employers face a steady stream of potential updates.

How do professionals stay on top of the changing rules? Patterson’s approach involves relying on trusted sources, including an online subscription service and alerts from the National Payroll Institute (NPI). She described NPI’s “late breaking payroll news” resource as an important early warning system for significant legislative changes.

But technology alone won’t solve every challenge. Someone still needs to evaluate the relevance of each new rule and share that information with everyone who might be affected. Ciambella suggests “designating compliance champions within each department,” a strategy that prompts every team to stay alert and fosters accountability.

Getting buy-in from the top

While it’s cliché, executive support is often the final — and perhaps most critical — piece of the puzzle. Without buy-in from senior leaders, cross-departmental efforts to address compliance can lag behind other priorities. When compliance champions in HR, payroll, or finance have the ear of the C-suite, they can secure both resources and attention for any emerging issues.

The good news is that the benefits of collaboration extend beyond mere compliance. When finance and HR align on hiring or compensation policies, they can reduce turnover and better plan for the future. When payroll has access to accurate data from both teams, they can remit taxes more efficiently and address employee concerns faster.

A culture of shared responsibility

In the end, compliance is everyone’s job — and that can be empowering for all three groups. Patterson said collaboration lets different subject matter experts spot potential problems before they escalate. By uniting around a shared purpose, these departments can also drive broader organizational success.

“Finance strategies need to consider the people strategy component… The cost of getting people up to speed is so great,” she said, adding that retention and proper onboarding are also big compliance considerations.

Enter some text...