Ad Hoc – Importance and meaning

Ad Hoc Meaning

Ad Hoc is a Latin term and it’s literal meaning is “for this.”

For Human Resources, it means a temporary and improved solution that you’d create for a certain specific situation.

You use these solutions as quick fixes instead of a long-term strategy or a pre-established plan.

In this article, we’ll discuss

• Ad Hoc Meaning
• What is Ad-Hoc Payments
• Why Do Ad Hoc Payments Matter in HR?
• Common Types of Ad Hoc Payments
• Managing Ad Hoc Payments
• Ad Hoc Payments in Practice

What is Ad-Hoc Payments

As we described, ad-hoc are the solutions you offer to employees to address a quick need.

Similarly, Ad Hoc payments are the extra or one-time payments you make to employees in addition to their regular payroll cycle.

This compensation doesn’t follow the usual process of issuing paychecks or invoices you clear on a regular basis. Instead, you make these payments for special reasons or unique situations like some special remuneration or festive bonus.

Why Do Ad Hoc Payments Matter in HR?

You require Ad Hoc payments for various reasons. Let’s go over them one by one.

1. The first and the most important reason is to address certain unique situations. When the standard payroll process can’t cover all employee compensation, you need to make Ad Hoc payments.
2. The next important reason can be employee satisfaction. Your employees definitely need to receive timely and accurate compensation for their jobs. When they receive it, their morale is boosted, which leads to employee satisfaction. The Ad Hoc payments ensure the employees are compensated fairly.
3. It can also help you handle errors and make adjustments to the mistakes that might happen during the payroll. You can use Ad Hoc payments to ensure that employees are always paid what the company owes them.
4. Companies can also use Ad Hoc payments to give incentives and rewards to employees such as Diwali bonus, high performance reward, or any other special incentive.

Common Types of Ad Hoc Payments

 Now that we have established what Ad Hoc payments are and why they’re important. Let’s discuss what are the common types of Ad Hoc payments that you can use when the situation demands it.

1. The number one situation where you can use Ad Hoc payments is to fix the errors and adjust your timesheet when you’re late on the payments. It can help you compensate your employees accurately and promptly.
2. There can be times when you happen to miss certain payments from an employee’s regular paycheck. So, you can use Ad Hoc payments to make up for these accidentally missed payments.
3. You can also use Ad Hoc payments to cover tax payments of employees to ensure they can meet their tax obligations.
4. If your company is a costlier city and your employees have incurred expenses, you can use Ad Hoc payments to cover them.
5. You can give Ad Hoc payments to reward employees for their exceptional performance.

Managing Ad Hoc Payments

Here are some simple tips for effectively managing Ad Hoc Payments in your HR department:

1. Have clear policies and procedures for Ad Hoc payments at the company to ensure employees know when and how to request these payments.
2. Make sure you have detailed record of Ad Hoc payments documented. It should include the reasons for the payment, how much amount has been given, who has received it, and any other supporting document if required. It can eventually help in future auditing.
3. Establish and implement an approval process for these payments. It can involve HR, finance, and management and will ensure that all the payments made are authentic and as per the guidelines of the company.
4. Make sure any communication related to Ad Hoc payments are clear to everyone. It can help your employees understand the process easily and should be comfortable in reporting any issues or requesting it.
5. Your Ad Hoc payments should also comply with tax regulations and labor laws. It means that you make sure the legal requirements are followed and the required taxes are deducted from this payment.
6. You’ll need data to make the right decisions and analyze the total cost at the end. HR software or a payroll software system can help you do that the right way in minimum time.

Ad Hoc Payments in Practice

Let’s explore some examples to understand how exactly you can use Ad Hoc payments in real life situations to make it easier for you. So, here are some of the best use cases.

1. Use it to make overtime payments to employees working beyond their regular working hours.
2. If your company provide incentive or performance bonuses, you can use Ad Hoc payments to motivate your employees for it.
3. You can also provide your employees with a petrol allowance.
4. You leverage Ad Hoc payments during the festive seasons like for providing Diwali bonuses.
5. You can also offer Ad Hoc payments for service industry employees who are earning tips or other service charges.