Payroll Processing

Payroll processing handles salary calculations, deductions, and payment generation. This guide covers complete payroll management from setup to disbursement.

Overview

The payroll system enables you to:

• Define salary structures and components
• Process monthly/weekly payroll
• Calculate taxes and deductions
• Generate payslips
• Create bank payment files
• Maintain statutory compliance

Accessing Payroll

Navigate to HRM → Payroll to access payroll features.

Understanding Payroll

Salary Components

Earnings

Component	Type	Description
Basic Salary	Fixed	Base pay amount
House Rent Allowance	Fixed	Housing allowance
Transport Allowance	Fixed	Travel allowance
Special Allowance	Fixed	Additional pay
Overtime	Variable	Extra hours pay
Bonus	Variable	Performance/festival
Commission	Variable	Sales incentive

Deductions

Component	Type	Description
Income Tax	Statutory	Tax withholding
Superannuation	Statutory	Retirement fund
Health Insurance	Statutory/Vol	Medical coverage
Loan Recovery	Fixed	EMI deduction
Advance Recovery	Variable	Salary advance
Leave Without Pay	Variable	LOP deduction

Payroll Periods

Type	Frequency	Use Case
Monthly	Once/month	Most common
Bi-weekly	Every 2 weeks	Some industries
Weekly	Every week	Hourly workers
Semi-monthly	2x/month	Regional preference

Payroll Statuses

Status	Description
Draft	Period created, not processed
Processing	Calculation in progress
Processed	Calculation complete
Approved	Ready for payment
Paid	Payments disbursed
Closed	Period finalized

Setting Up Payroll

Creating Salary Structures

1. Go to Settings → HRM → Payroll → Salary Structures
2. Click New Structure
3. Define structure:

Structure Details

• Name - Structure identifier
• Base - Reference amount type
• Currency - Payment currency
• Payment Mode - Bank/Cash/Cheque

Components

Add earnings and deductions:

Basic Salary      = Base × 40%
HRA               = Basic × 50%
Transport         = Fixed $200
Special Allowance = Base - (Basic + HRA + Transport)
─────────────────────────────
Gross Salary      = Sum of Earnings

Tax               = Calculated per tax rules
Superannuation    = Basic × 9.5%
─────────────────────────────
Total Deductions  = Sum of Deductions

Net Salary        = Gross - Deductions

4. Set effective date
5. Save structure

Assigning Salary Structures

Individual Assignment

1. Open employee profile
2. Go to Compensation tab
3. Click Assign Salary
4. Select structure
5. Enter base amount
6. Review calculated components
7. Set effective date
8. Save

Bulk Assignment

1. Go to HRM → Payroll → Salary Assignment
2. Filter employees
3. Select structure
4. Enter amounts or use template
5. Apply to selected employees

How-To Guides

How to Set Up Salary Structures

Component Configuration

1. Go to Settings → HRM → Payroll → Components
2. Create components:

For Each Component:

• Name - Component name
• Type - Earning/Deduction
• Calculation - Fixed/Percentage/Formula
• Taxable - Yes/No
• Show on Payslip - Yes/No

Formula Examples

// Percentage of Basic
HRA = basic * 0.50

// Conditional
Overtime = IF(ot_hours > 0, ot_hours * hourly_rate * 1.5, 0)

// Tax Bracket
Tax = IF(annual_income > 180000,
         (annual_income - 180000) * 0.19,
         0)

How to Process Payroll

Monthly Processing Steps

1. Create Payroll Period

   • Go to HRM → Payroll → Periods
   • Click New Period
   • Select month and year
   • Set payment date
   • Save

2. Lock Attendance

   • Ensure all attendance finalized
   • Process regularizations
   • Calculate overtime

3. Process Leave

   • Finalize leave records
   • Calculate LOP days
   • Verify comp-off usage

4. Run Payroll Calculation

   • Go to HRM → Payroll → Process
   • Select period
   • Click Calculate
   • System processes all employees

5. Review Results

   • Check calculation summary
   • Review exceptions
   • Verify totals
   • Fix any errors

6. Approve Payroll

   • Submit for approval
   • Manager/Finance review
   • Final approval

7. Generate Payslips

   • Click Generate Payslips
   • System creates PDF payslips
   • Available for employee download

8. Process Payments

   • Generate bank file
   • Submit to bank
   • Mark as paid

How to Generate Payslips

Payslip Generation

1. Go to HRM → Payroll → Payslips
2. Select processed period
3. Choose employees (all or specific)
4. Click Generate
5. System creates payslips

Payslip Contents

Standard payslip includes:

• Employee details
• Period information
• Earnings breakdown
• Deductions breakdown
• Net pay
• YTD totals
• Leave balance

Distribution Options

• Email - Send to employee email
• Portal - Available in self-service
• Download - Bulk PDF download
• Print - Physical copies

How to Handle Tax Deductions

Tax Configuration

1. Go to Settings → HRM → Payroll → Tax
2. Configure tax rules:
   • Tax year
   • Tax brackets
   • Deduction limits
   • Exemptions

Tax Brackets Example

Income Range	Tax Rate
$0 - $18,200	0%
$18,201 - $45,000	19%
$45,001 - $120,000	32.5%
$120,001 - $180,000	37%
$180,001+	45%

Tax Calculation

System automatically:

1. Calculates annual projected income
2. Determines tax bracket
3. Applies monthly withholding
4. Considers declarations
5. Adjusts throughout year

How to Process Salary Revisions

Creating Revision

1. Go to HRM → Payroll → Revisions
2. Click New Revision
3. Select employee
4. Enter new salary details:
   • New base amount
   • Component changes
   • Effective date
5. Calculate arrears (if backdated)
6. Submit for approval
7. Apply revision

Revision Types

Type	Description
Annual Increment	Yearly raise
Promotion	Role change
Market Adjustment	Competitive pay
Performance	Merit increase
Correction	Error fix

How to Handle Advances and Loans

Salary Advances

1. Employee requests advance
2. Manager approves
3. Finance processes
4. System records advance
5. Recovery scheduled
6. Deducted from payroll

Loan Management

1. Go to HRM → Payroll → Loans
2. Create loan:
   • Loan amount
   • Interest rate
   • Tenure
   • EMI amount
3. Approve loan
4. Disburse amount
5. Auto-deduct EMIs

How to Generate Bank Files

Bank File Setup

1. Go to Settings → HRM → Payroll → Bank
2. Configure bank:
   • Bank name
   • Account number
   • File format
   • Field mappings
3. Save configuration

Generating Payment File

1. Process and approve payroll
2. Go to HRM → Payroll → Bank Files
3. Select period
4. Choose bank format
5. Generate file
6. Download for upload to bank

Supported Formats

• ABA (Australia)
• NACHA (USA)
• BACS (UK)
• Custom CSV/XML

Advanced Features

Multiple Pay Groups

Manage different pay cycles:

• Weekly workers
• Monthly salaried
• Contractors
• Different currencies

Payroll Adjustments

Handle corrections:

• Arrears payment
• Recovery adjustments
• One-time payments
• Reimbursements

Statutory Compliance

Built-in compliance for:

• Tax withholding
• Superannuation
• Leave loading
• Termination pay
• Tax reporting (PAYG, W-2, etc.)

Payroll Reports

Report	Description
Payroll Summary	Period totals
Department Wise	Cost by department
Bank Advice	Payment details
Tax Report	Tax deductions
Variance Report	Period comparison
Cost Analysis	Labor cost breakdown

Best Practices

📋 Process Management

• Fixed payroll calendar
• Clear cutoff dates
• Checklist for each cycle
• Approval workflows

📊 Accuracy

• Double-check calculations
• Review exceptions
• Verify bank details
• Audit trail maintenance

🔒 Security

• Role-based access
• Data encryption
• Secure file transfer
• Confidentiality

📁 Documentation

• Keep calculation records
• Store payslips
• Maintain tax documents
• Audit compliance

Configuration

Payroll Settings

Navigate to Settings → HRM → Payroll:

• Pay Cycle - Monthly/Weekly
• Pay Day - Day of month
• Cutoff Date - Attendance cutoff
• Currency - Default currency
• Decimal Precision - Rounding rules

Tax Settings

• Tax Year - Start month
• Tax Tables - Rate brackets
• Deductions - Allowed deductions
• Exemptions - Tax-free limits

Approval Settings

• Approval Levels - Who approves
• Thresholds - Amount-based routing
• Notifications - Alert configuration

Troubleshooting

Common Issues

Salary not calculating

• Check structure assignment
• Verify component formulas
• Review employee status
• Check effective dates

Tax incorrect

• Verify declarations
• Check tax table
• Review YTD totals
• Audit calculations

Bank file rejected

• Verify account numbers
• Check file format
• Validate amounts
• Review field mappings

Payslip not generated

• Ensure payroll processed
• Check employee selection
• Verify template setup
• Review generation logs

Next Steps

Learn about Performance Management to link performance ratings with salary decisions.