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Payroll Manager Interview Questions

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Indeed’s Employer Resource Library helps businesses grow and manage their workforce. With over 15,000 articles in 6 languages, we offer tactical advice, how-tos and best practices to help businesses hire and retain great employees.

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Whether you are preparing to interview a candidate or applying for a job, review our list of top Payroll Manager interview questions and answers.

  1. As a payroll manager, what is your management style? See answer
  2. For payroll purposes, what are the differences between a contractor and an employee? See answer
  3. Have you ever delivered bad news to an employee, and how did you handle the situation? See answer
  4. How would you handle an IT malfunction that prevents you from processing our cloud-based payroll system by the payroll processing deadline? See answer
  5. How long do we have to keep payroll records? See answer
  6. What are common managerial payroll mistakes? See answer
  7. What deductions are taken from gross wages before disbursing payroll? See answer
  8. What experience do you have with card payments? See answer
  9. How would you handle an employee who was upset because of a withholding error? See answer
  10. What do you think is the best payroll schedule for part-time employees as compared to full-time employees? See answer
  11. What payroll systems have you used in previous positions?
  12. How do you keep up with changes in the provincial tax codes and the Canadian government overall?
  13. Explain how you manage your time to guarantee you’ve completed all payroll tasks by the deadlines.
  14. What’s the best way to avoid payroll processing errors?
  15. What changes in technology will impact the future of payroll processing? 
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Our mission

Indeed’s Employer Resource Library helps businesses grow and manage their workforce. With over 15,000 articles in 6 languages, we offer tactical advice, how-tos and best practices to help businesses hire and retain great employees.

Read our editorial guidelines

15 Payroll Manager Interview Questions and Answers

As a payroll manager, what is your management style?

There are several management styles, meanings, and descriptions. The candidate should explain their management style and how it works. What to look for in an answer:

  • Leadership skills
  • Strategic management style
  • Knowledge of various management styles

Example:

"I give the team opportunities to develop and grow and set realistic expectations for everyone. Also, real-time feedback is vital so a team member can correct mistakes immediately and coaching becomes more meaningful. Overall, I use a situational management style which is a type of adaptive leadership, meaning I adapt to various situations and manage them accordingly."

What payroll systems have you used in previous positions?

This question is designed to find out if the candidate has experience with the payroll software that your company uses. The answer should give you insight into their experience level with various payroll systems, including cloud-based and on-site solutions. What to look for in an answer:

  • Years of experience
  • List of payroll systems used
  • Description of preferred features

Example:

"For five years I used ExcelPayroll on-premise payroll system. After that, I transferred my payroll skills to a company that used the cloud-based Paycom system, my preferred type of system. I'm also familiar with ADP Workforce, Paylocity, and BambooHR."

For payroll purposes, what are the differences between a contractor and an employee?

To manage a payroll department, the manager must have detailed knowledge of employee classifications. This question gives you insight into the candidate's knowledge of handling taxes and other payroll requirements. What to look for in an answer:

  • Knowledge of payroll taxes for contractors
  • Knowledge of payroll taxes for company employees 
  • A clear understanding of contractor versus employee classification

Example:

"Contractors aren't employees of the company, and their pay doesn't have taxes, EI, or CPP contributions deducted. It's up to the contractor to keep track of the taxes they owe to the Canada Revenue Agency. We send them a Form Canadian T4A, documenting how much our company paid them. A regular employee's income has taxes and other appropriate deductions, the company sends taxes to the revenue agency and other pension organisations. Employees receive a T4 showing taxes paid and for use when filing an annual return."

Have you ever delivered bad news to an employee, and how did you handle the situation?

This question shows the candidate's ability to remain level-headed and calm in stressful situations. They should describe a situation and tell how they dealt with it. What to look for in an answer:

  • Avoid escalation of bad situations
  • Ability to remain calm and level headed
  • Accept the challenge of delivering bad news

Example:

"When given the task to tell my staff that there was a freeze on raises for the next 12 months, I delivered the message in a forthright manner, gave the company's apologies, and explained how a decline in business had caused the situation. I gave them as much information as I could and made an open-door policy for asking questions."

How do you keep up with changes in the provincial tax codes and the Canadian governement overall?

It's vital that a payroll manager stays current with the tax codes and is aware of upcoming changes. This question indicates the candidate's knowledge of resources and dedication to the job. What to look for in an answer:

  • Aware of tax change resources
  • Dedication to details and accuracy
  • Keeping the company in compliance

Example:

"Payroll deduction tables are available online at Canada Payroll and I have electronic alerts sent to my computer to advise me of changes. I collabourate with our software provider, HR, and our finance department for any alerts they receive. I follow Revenue Quebec, the Canadian HR Newswire, and the CPA organisation of Canada." 

Explain how you manage your time to guarantee you've completed all payroll tasks by the deadlines.

This question indicates how organised the candidate is. They should have a schedule of payroll tasks and explain their strategy for processing work and verifying activities are complete. What to look for in an answer:

  • Outline of an organisational system
  • Examples of tools used to stay organised
  • Understanding processes for verifying work is completed

Example:

"I use automated reminder systems to validate each completed payroll activity and process the payroll nine hours early."

How would you handle an IT malfunction that prevents you from processing our cloud-based payroll system by the payroll processing deadline?

Payroll managers must be able to meet challenges and deadlines. This question examines the candidate's management style and problem-solving skills. They should demonstrate a proactive work style to manage technology malfunctions. What to look for in an answer:

  • Preventative strategies to deal with IT issues
  • Ability to meet payroll deadlines in adverse situations
  • Adaptability, problem-solving, and management skills

Example:

"As a preventative measure, payroll cloud-based systems require a digital backup of employee lists and due amounts. I regularly update the backup system with updated information two days before the processing date. If a glitch happened, I would use the backup to process the payroll the day before the deadline."

How long do we have to keep payroll records?

This question tests the candidate's knowledge of compliance for documentation, such as payroll records, invoices, or payment receipts. The candidate should outline the required schedules for maintaining various documents. What to look for in an answer:

  • Up to date on government requirements
  • Awareness of what records have to be kept
  • Length of time for each category of documents

Example:

"The Canada Revenue Agency requires us to maintain payroll records, e-commerce records, and sales and purchase invoices for six years. This includes banking information, general ledger, receipts, agreements, and vouchers. The Ministry of Finance requires seven to 10 years of retention for tax records. The Ministry of Labour has a three-year requirement for retaining employee contact information, hours worked, wage statements, and employee leave information." 

What are common managerial payroll mistakes?

Mistakes can happen, but the last place you want to see them is in payroll. Managers must be detail-oriented and conscientious of the issues surrounding payroll mistakes. The candidate should outline the most common mistakes with an awareness of potential problems. What to look for in an answer:

  • Critical and analytical thinking
  • Attention to detail, meeting deadlines
  • Experience with the accurate running of payroll processes

Example:

"Common mistakes typically revolve around incorrect information, for instance, the misclassification of employees and miscalculating pay and overtime. However, managerial mistakes include setting up payroll incorrectly, incorrect tax information, and falling behind on tax payments and filings. Mistakes can happen when you run payroll late and rush the process, resulting in under or overpaid employees. Not keeping meticulous records leads to failing audits, and bad bookkeeping makes problems worse."

What's the best way to avoid payroll processing errors?

You want a payroll department that doesn't make mistakes. But if they do, you need a candidate that has a strategy to avoid payroll processing errors. What to look for in an answer:

  • Detail-oriented
  • Strategy to avoid mistakes
  • Understanding of accuracy and deadlines

Example:

"Payroll mistakes have the potential to become disastrous and costly to fix but can be avoided with a step-by-step process. I give my department the right payroll software tools, train them, and ensure they have all the information they need. This includes laws, policies, and regulations. I have staff do basic research to validate information, such as double-checking employee classifications. I run a few key reports before processing payroll to catch mistakes and use a checklist to validate every step of the process each pay period."

What deductions are taken from gross wages before disbursing payroll?

Taxes and deductions are a broad topic and technical because of the different structures in different provinces. The candidate should know about deductions and how the system works. What to look for in an answer:

  • Knowledge of provincial taxes
  • Knowledge of various deductions taken from employees' wages
  • Knowledge of Canada Revenue Agency income taxes and deductions

Example:

"Deductions include federal and provincial income taxes, Canada Pension Plan contributions, employment insurance premiums, garnishments, and sales taxes."

What changes in technology will impact the future of payroll processing?

Rapid advances in payroll technology are opportunities to reduce cost, improve efficiency, and use data held in payroll systems. The candidate should display their technical and research abilities to stay current on changes and judge their impact on your company. What to look for in an answer:

  • Ability to adapt to change
  • Knowledge of new technology
  • Experience with new software and technology

Example:

"New uses of technology include infrastructure-free cloud-based ERP, making it easier to share data, work remotely, and stay current on tax codes. While the cloud is the most significant, mobile payroll technology is becoming more essential for freelancers and telecommuting employees. Payroll technology simplifies compliance, allows us to generate a lot of data, and lets us implement data-driven strategies. Other helpful tech changes are self-service benefit portals and AI, which excel at analyzing variables."

What experience do you have with card payments?

Card payments are a simple method where an employee's wages are loaded onto a debit card. The candidate must be aware of this form of payment since it's growing in popularity. What to look for in an answer:

  • Uses of pay cards
  • Knowledge of card payments
  • Experience with card payments

Example:

"Card payments are popular in many countries but aren't yet widespread in Canada for salary distribution. Typical use is for an unbanked employee, but benefits are reduction of fraud, time savings, and cost benefits to employers. Pay cards cannot be mandated, and when used, the employer still issues a pay stub and the employee may incur charges from merchants. I like the use of pay cards for issuing to new employees between pay cycles and to pay seasonal and overseas workers. I think the best use of pay cards is for rewards, bonuses, and travel expenses."

How would you handle an employee who was upset because of a withholding error?

Most payroll processes are computerised, however, clerks must be detail-oriented and accurate in inputting data. The candidate will handle situations concerning errors so should have problem-solving capabilities, a commitment to accuracy, and a strategy to correct mistakes. What to look for in an answer:

  • Problem-solving skills
  • Taking responsibility for errors made
  • Ability to work with other employees, interpersonal skills

Example:

"I would first actively listen to the employee's complaint, apologise, and calm the employee down by telling them I will resolve the issue as soon as possible. I would then review our documents to verify the mistake. If a mistake was made, I would immediately fix it, submit back payment for the extra withholding amount, and communicate the information to the employee."

What do you think is the best payroll schedule for part-time employees as compared to full-time employees?

Payroll managers are part of payroll policy development. They must be knowledgeable of the difference between salaried and by-the-hour pay structures. This question should help you learn more about the candidate's management experience in payroll calculations and schedules. What to look for in an answer:

  • Knowledge of payroll scheduling
  • Opinion of pay schedules for part-time employees
  • Previous experience with various payroll schedules

Example:

"In my current position, we have both full-time and part-time employees. Full-time employees are paid on a bi-monthly basis, dividing their earnings into two separate payments. This gives payroll the opportunity to check for accurate calculations and the operations time to implement the process. Part-time employees are paid weekly, which I believe is the best since they often only work weekends or a few days a week."

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