pay roll

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PAY ROLLPAY ROLLAN IMPORTANT HR ACTIVITYAN IMPORTANT HR ACTIVITYA LEGAL REQUIREMENTA LEGAL REQUIREMENTA RECORD OF DETAILS OF PAYMENT A RECORD OF DETAILS OF PAYMENT MADE TO EMPLOYEESMADE TO EMPLOYEESFACILITATES SMOOTH DISBURSEMENT FACILITATES SMOOTH DISBURSEMENT OF PAYMENTOF PAYMENTSYSTEM DEPENDS ON CO.POLICYSYSTEM DEPENDS ON CO.POLICYDIFFERS FROM INDUSTRY TO INDUSTRYDIFFERS FROM INDUSTRY TO INDUSTRYLAWS GOVRNING IT IS CHANGINGLAWS GOVRNING IT IS CHANGING

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PAY ROLLPAY ROLL Payroll is defined as a method of administrating Payroll is defined as a method of administrating

employees’ salaries in the organizations. The employees’ salaries in the organizations. The process consists of calculation of salaries and tax process consists of calculation of salaries and tax deductions of the employees, administrating the deductions of the employees, administrating the retirement benefits and disbursements of salaries retirement benefits and disbursements of salaries to employees. It can also be called as an accounts to employees. It can also be called as an accounts activity which undertakes the salary activity which undertakes the salary administration of employees in the organization. administration of employees in the organization.

Administrating the employees’ salaries is not an Administrating the employees’ salaries is not an easy task, the HR and accounts department work easy task, the HR and accounts department work together to calculate and disburse the salary to together to calculate and disburse the salary to the employees. Thus, payroll management can be the employees. Thus, payroll management can be further subdivided into two sub processes, i.e. further subdivided into two sub processes, i.e. Payroll accounting and payroll administrationPayroll accounting and payroll administration. .

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PAY ROLLPAY ROLL

HAS ADMINISTRATIVE HAS ADMINISTRATIVE DIMENSIONDIMENSION

HAS LEGAL DIMENSIONHAS LEGAL DIMENSION HAS HR DIMENSIONHAS HR DIMENSION HAS MANAGERIAL DIMENSIONHAS MANAGERIAL DIMENSION HAS MACRO/NATIONAL HAS MACRO/NATIONAL

DIMENSIONDIMENSION HAS FINANCIAL DIMENSIONHAS FINANCIAL DIMENSION

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Payroll Management termsPayroll Management termsWhat is Payroll and how it has been processedWhat is Payroll and how it has been processed??

Payroll is the salary processing system. Payroll is the salary processing system. Payroll is divided into two parts-Monthly and AnnualPayroll is divided into two parts-Monthly and Annual

Monthly payroll includes the followingMonthly payroll includes the following : :

Basic salary Basic salary Dearness AllowanceDearness Allowance HRAHRA Conveyance/PetrolConveyance/Petrol Medical Medical EducationEducation TelephoneTelephone Special allowanceSpecial allowance Other PerksOther Perks DeductionsDeductions

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Payroll AccountingPayroll Accounting & & Payroll Payroll AdministrationAdministration

Payroll AccountingPayroll Accounting Payroll accounting involves calculations of Payroll accounting involves calculations of employees’ salaries and tax deductions. It employees’ salaries and tax deductions. It also undertakes the activities such as also undertakes the activities such as preparation of tax returns, maintaining the preparation of tax returns, maintaining the payroll records, etc.payroll records, etc.

Payroll AdministrationPayroll AdministrationPayroll Administration involves managerial Payroll Administration involves managerial activities such as maintaining employees’ activities such as maintaining employees’ records, referring employment laws. Here, records, referring employment laws. Here, the HR comes into picture which maintains the HR comes into picture which maintains the daily record of employees attendance. the daily record of employees attendance.

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Payroll ManagementPayroll ManagementAnnual payroll Annual payroll

* Medical Reimbursement - Rs 15,000/- max p.a. * Medical Reimbursement - Rs 15,000/- max p.a. * LTA * LTA * Meal Vouchers - Rs 50 per working day ( Sodexho * Meal Vouchers - Rs 50 per working day ( Sodexho /Accor )/Accor )

Payroll can be seen from two aspects. One is from Payroll can be seen from two aspects. One is from

HR side and other from Finance/Accounts HR side and other from Finance/Accounts sideside..

The HR persons process the payroll by means of The HR persons process the payroll by means of sending attendance details or better say LWP sending attendance details or better say LWP details and other complete details that an details and other complete details that an employee is going to get in a particular month.employee is going to get in a particular month.

And after receiving those details the FiananceDept. And after receiving those details the FiananceDept. start making entry into payroll softwarestart making entry into payroll software

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Statutes Governing PAY Statutes Governing PAY ROLL ROLL

Indian Factories Act 1948Indian Factories Act 1948 Shops and Commercial Establishments Act 1961Shops and Commercial Establishments Act 1961 Beedi and Cigar Workers (Condition of Beedi and Cigar Workers (Condition of

Employment) Act 1966.Employment) Act 1966. Plantation Labour Act 1951Plantation Labour Act 1951 Motar Transport Workers Act 1961Motar Transport Workers Act 1961 Building & Other Construction Building & Other Construction

Workers ( Regulation of Employment and Conditions of Workers ( Regulation of Employment and Conditions of Service) Act 1996Service) Act 1996

Inter-State-Migrant Workers (Regulation of Inter-State-Migrant Workers (Regulation of Employment & Conditions of Service) Act 1979Employment & Conditions of Service) Act 1979

Mines Act Mines Act Contract Labour (A & R) ActContract Labour (A & R) Act EPF & MP ActEPF & MP Act ESI ActESI Act

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INITIAL/BASIC STEPS TO INITIAL/BASIC STEPS TO CREATE PAYROLLCREATE PAYROLL

An employee data base (i.e.) a An employee data base (i.e.) a Master List to created which Master List to created which contains all the details of the contains all the details of the employees like, Date of Joining, employees like, Date of Joining, Education, Work Experience, Education, Work Experience, Personal details (DOB, Contact info), Personal details (DOB, Contact info), Salary break up detailsSalary break up details

Attendance/ Leave record details Attendance/ Leave record details

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OTHER RELATED INPUTS OTHER RELATED INPUTS FOR PAYROLLFOR PAYROLL

The salary break up details of all the existing employees The salary break up details of all the existing employees

Employee Bank account No./PAN No.if any Employee Bank account No./PAN No.if any

Attendance of all employees:: LOP detailsAttendance of all employees:: LOP details

Salary Revision (w.e.f that particular month)Salary Revision (w.e.f that particular month)

New Recruits (To be calculated form the date of Joining)New Recruits (To be calculated form the date of Joining)

Full and final Settlements (If any are to be calculated separately not with Full and final Settlements (If any are to be calculated separately not with payroll)payroll)

Additions-Arrears if anything to be paid, ReimbursementsAdditions-Arrears if anything to be paid, Reimbursements

Deductions-Deductions- Provident Fund, ESI, Professional Tax, Income Tax, LICProvident Fund, ESI, Professional Tax, Income Tax, LIC LOP, Loans/Advances, Other recoveries, MiscellaneousLOP, Loans/Advances, Other recoveries, Miscellaneous TDSTDS

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Payroll GenerationPayroll Generation Payroll generation depends totally on number of days in Payroll generation depends totally on number of days in

month. Say Feb (28 days). Total salary package will be paid month. Say Feb (28 days). Total salary package will be paid accordingly, but while deducting a LWP it would be accordingly, but while deducting a LWP it would be calculated on basis of 28 days. calculated on basis of 28 days. Thus it’s irrespective of any number of holidays etc.Thus it’s irrespective of any number of holidays etc.

The Industrial Employment (Standing Orders) Act, 1946 The Industrial Employment (Standing Orders) Act, 1946 (Ref. model Standing Order) the salary should be calculated (Ref. model Standing Order) the salary should be calculated on 30days for Monthly rated employee and 26days for daily on 30days for Monthly rated employee and 26days for daily rated employee, to maintain the constant PF deductions & rated employee, to maintain the constant PF deductions & LOP of an employeeLOP of an employee

As per government norms 26 days are calculated for salary As per government norms 26 days are calculated for salary in every month, there is no partiality to the workers like in every month, there is no partiality to the workers like skilled or semi skilled or clerical job the role applicable to skilled or semi skilled or clerical job the role applicable to all, but some of the private concerns follow 30 or 31 days all, but some of the private concerns follow 30 or 31 days for their own benefit. 26 days are consider salary for their own benefit. 26 days are consider salary calculation period. It is 30 days irrespective of the Sundays calculation period. It is 30 days irrespective of the Sundays and holidays for monthly wages and 26 days for daily wages.and holidays for monthly wages and 26 days for daily wages.

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MAJOR INTERFACING MAJOR INTERFACING MODULES OF PAYROLL MODULES OF PAYROLL MANAGEMENT SYSTEMMANAGEMENT SYSTEM

EMOPLOYEE PROFILEEMOPLOYEE PROFILE LEAVELEAVE TIME & ATTENDANCETIME & ATTENDANCE TDS/INCOME TAXTDS/INCOME TAX TDS, P.TAX, ESI AND PF REPORTSTDS, P.TAX, ESI AND PF REPORTS

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PAYROLL IMPLEMENATION PAYROLL IMPLEMENATION STEPSSTEPS

Step 1 :- Step 1 :- Pre-requisite before taking up Pre-requisite before taking up the payroll process work the payroll process work

-The purpose behind the re-engineering -The purpose behind the re-engineering process of the entire payroll-l process of the entire payroll-l

-To suggest bottle necks and improvements -To suggest bottle necks and improvements -To clearly UNDERSTAND the expectations -To clearly UNDERSTAND the expectations

the scope of the payroll processing the scope of the payroll processing --There will be trial run for a month to ensure There will be trial run for a month to ensure

that we are in line with the that we are in line with the -- Expectations.Expectations.

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Step 2 :-Step 2 :-Adherence to the corporate policyAdherence to the corporate policy

-- Ensure that procedures are in place to maintain the Ensure that procedures are in place to maintain the records of Corporate policies related to pay roll at records of Corporate policies related to pay roll at regular intervals.regular intervals.

-- Ensure that proper effect to the pay roll is given in Ensure that proper effect to the pay roll is given in accordance with the Policy guidelines defined by the accordance with the Policy guidelines defined by the CompanyCompany

- - Understand the salary components in terms of fixed Understand the salary components in terms of fixed and variable.and variable.

-- Understand the benefits available to employees on Understand the benefits available to employees on monthly and yearly basis.monthly and yearly basis.

-- Understand local laws and compliance of the same Understand local laws and compliance of the same related to payroll process.related to payroll process.

-- Receiving job details along with job code allocation. Receiving job details along with job code allocation. The job code allocation is to be given according to The job code allocation is to be given according to the type of the job description.the type of the job description.

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Step 3Step 3-- Collecting time sheets with attendance sheets Collecting time sheets with attendance sheets

If the on line system is maintained, then it will ensure If the on line system is maintained, then it will ensure automatic checking with automatic checking with

the attendance register and time sheets. Otherwise the the attendance register and time sheets. Otherwise the attendance sheets and the time sheets are to be attendance sheets and the time sheets are to be

compared manually.compared manually.

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Step 4- Step 4- Receiving detailsReceiving details-- Terms of appointment, Attendance details Receiving details of Terms of appointment, Attendance details Receiving details of

salary structure, salary structure, - Promotion-- Promotion-Changes of Grade, Salary Structure, Department Changes of Grade, Salary Structure, Department

etc. will be initiated in case of promotion on the basis of the etc. will be initiated in case of promotion on the basis of the information received from personnel department.information received from personnel department.

- Increment- - Increment- The increment letter of an employee is to be The increment letter of an employee is to be collected and necessary changes are to be incorporated in the collected and necessary changes are to be incorporated in the system.system.

- Confirmation: - Confirmation: Confirmation letters are to be collected & Confirmation letters are to be collected & necessary changes are to be incorporated in the system.necessary changes are to be incorporated in the system.

- Details of disciplinary action taken- if it has any effect on salary, - Details of disciplinary action taken- if it has any effect on salary, the same to be incorporated in the system.the same to be incorporated in the system.

- Resignation-- Resignation- The final settlement is to be disbursed, based on The final settlement is to be disbursed, based on the notice period and in consultation with the Finance the notice period and in consultation with the Finance DepartmentDepartment

- Retirement- - Retirement- can be normal or voluntary. Accordingly the final can be normal or voluntary. Accordingly the final settlement is to be made.settlement is to be made.

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Step 5 -UPDATING SALARY DETAILSStep 5 -UPDATING SALARY DETAILS- The terms of appointment- The terms of appointment- Salary Structure- Salary Structure- Annual benefits- Annual benefits- Attendance details- Attendance details- Overtime details- Overtime details- The details of reimbursement- The details of reimbursement- The promotion, increment and confirmation details- The promotion, increment and confirmation details- The details of departmental transfers- The details of departmental transfers- The details of resignation, retirement and - The details of resignation, retirement and

retrenchmentretrenchment- The employee advance position- The employee advance position

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PAYROLL IMPLEMENATION PAYROLL IMPLEMENATION STEPSSTEPS Step 6- GENERATION OF REPORTS FOR CHECKING-Step 6- GENERATION OF REPORTS FOR CHECKING-

- Salary register - Salary register - Variance Report Variance Report

Step 7 -RECTIFICATION OF Step 7 -RECTIFICATION OF MISTAKES/CORRECTIONS / MODIFICATIONMISTAKES/CORRECTIONS / MODIFICATION

Step 8 -GENERATION OF REPORTS Step 8 -GENERATION OF REPORTS - Salary register (Monthly)- Salary register (Monthly)- Pay slips- Pay slips- Advance register- Advance register- Bank Statement- Bank Statement- Other deductions and allowance statement- Other deductions and allowance statement

Step 9-MIS REPORTS-As per Management’s Step 9-MIS REPORTS-As per Management’s requirements and Reports to comply with local requirements and Reports to comply with local authorities, if any.authorities, if any.

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PAYROLL IMPLEMENATION PAYROLL IMPLEMENATION SYSTEMSYSTEM

pay roll

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