Six Questions You Should Be Asking When Updating Your HR Tech/Payroll System(s) – Contracts

Many questions come to mind when companies start trying to solve for HR technology issues. For many who have never been through an implementation, there are so many questions, it can be hard to decide where to start. In our role of helping clients navigate the maze of HR technology solutions, we’ve heard them all (or most at least!). In this six-part blog series, we’ll share some of the highlights from the chat session as well as add our own additional insight.

In this second of six articles; companies chimed in on to a recent survey to the following question:
What should HR professionals be on the lookout for when it comes to HR tech contracts? What are some important considerations?*

The following list includes, but is not limited to areas you should consider as areas of focus:
1. Length of contract (aka “term”)
2. Support model during setup and ongoing
3. Frequency of system updates
4. Data security measures
5. Service level agreements and penalties
6. Implementation timeline overview
7. Client vs Vendor Responsibilities
8. Termination clause
9. Can I get my data out in a useful format?
10. What are hidden costs?

These are all great things to look for in formal agreement and bottom-line all agreements are unique and should be carefully reviewed. While you should always have a second set of eyes by your attorney to review the legalese, your MillsonJames team is also happy to take a look for other common things such as:

– Term of the contract. It used to be that the initial term of agreements were at least a year, up to as many as three years. Along the way, clients pushed back and vendors realized they were as only as good as their last payroll and so nowadays, you don’t find too many long term agreements. The benefit of a longer term is that you have a rate lock, but the downside is that you’re a little more tied down if something really goes south. If there is a longer term agreement, be sure to know what the “out clause” is and if any early term fees apply.
– If you were to terminate the agreement, you should also ask how long do you have access to the data after the system is shutdown? Sometimes, access to the system ends immediately and so you may want to start downloading data well in advance of your transition out. On the flip side, some vendors may let you keep the data hosted on the cloud indefinitely for a fee.
– Regarding security, always ask about their SSAE16/18 certification. This is an independent audit done to validate the measures in place to keep your data secure.
– Once you go live on the system and start receiving invoices, always be sure to compare your quote to the invoice to ensure everything matches up as expected. We’ve seen several issues pop up when the person paying the invoices isn’t the same person who negotiated the deal and realize too late that what they’re billed (modules and rates) don’t match the quote.

Stay tuned for the next article in this series which focuses on ways to source potential vendors. Or to access other articles in this series go to:

*questions pulled from SHRM #Nextchat series on Twitter, Summer 2019

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