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Prohibit Deductions for Employee Purchases


Prohibit Deductions for Employee Purchases

Many companies allow their employees to use corporate discounts to buy products through them. For example, a company may have obtained a large discount on furniture from a supplier, then allows its employees to buy at the discounted rate and have the deductions subtracted from their pay-checks in convenient installments. Some employees will make excessive use of this benefit, purchasing all kinds of supplies through the company; accordingly, it is common to see a small minority of employees making the bulk of these purchases. The problem for the payroll staff is that they must keep track of the total amount that each employee owes the organization and gradually deduct the amount owed from successive paychecks. If an employee makes multiple purchases, the payroll staff must constantly recalculate the amount to be deducted. Depending on the number of employees taking advantage of discount shopping through the company, this can have a measurable impact on the efficiency of the payroll department.

The solution to this problem is to prohibit employee purchases through the organization. By doing so, all the extra paperwork associated with employee purchases is immediately swept away. That said, though this is a good best practice for most companies to implement, it should first be cleared with senior management. The reason is that some employees may be so accustomed to purchasing through the company that they will be upset, even angry, by the change, which may be a condition that management wants to avoid (especially if valuable employees will be among those upset). Also, some companies have valid reasons for allowing employee purchases, such as when, for example, steel-toed boots or safety clothing are necessary for performing their jobs.

As just noted, this best practice should be reviewed with all key department managers and senior management before being made public. Also, any employees who are currently having deductions taken from their paychecks for past purchases should be "grandfathered" into the new rule, so that they are not forced to suddenly pay off the remaining amounts due.


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