Payroll is a critical periodic activity that needs to be done by all organizations. The process in and by itself is fairly straight forward and simple. However, it is the various exceptional situations that need to be handled that make the process involved. Maintaining statutory compliance with the regards to TDS, EPF, ESI, PT and LWF bring in an additional level of complexity to the process. This the main reason why a well defined, processes oriented approach is essential to ensure timely and error free payroll processing. In this section, we will cover various payroll specific concepts briefly to give you an overview and how the same can be used within hrEntries.
Before you begin using the Payroll functionality, the first step you need to do is to set up a Payroll Calendar. As the name indicates, the Payroll Calendar details the periods when payouts will be made out. In India, this is typically done on a monthly basis. However, if you have a need to have Payroll executed on a different frequency, such as either Four Weekly, Half Monthly, Monthly, Two Weekly, or Weekly, for whatever reasons, you can define such calendars. You can also specify the types of employees that the calendar is applicable for. Again, in the Indian context, largely we follow a single Monthly cadence calendar and the same is applicable for all employees, irrespective of their employment type.
Salary -> Payroll Calendars -> List Calendars -> View
Creating a new Payroll Calendar requires a few parameters as listed below:
Salary -> Payroll Calendars -> New Calendar
Most organizations have their overall compensation structured in various buckets, called Payheads. For example in India, you will come across Payheads like Basic, Housing Rent Allowance (HRA), Medical Allowance, Conveyance Allowance etc. Different organizations follow different approaches to structuring their compensation structures to meet their specific objectives, including ensuring greatest possible flexibility is given to employees to maximize their take home pay.
Payheads in hrEntries are of ten types:
hrEntries provides more than 140+ payheads out of the box to cater to most requirements across organizations. You can customize any of these payheads to meet your specific needs and classify them as necessary.
Salary -> Payheads -> New Payhead
Pay Structures are groupings of various payheads. Most organizations have multiple levels of employees. The compensation structure for each level is usually different in terms of the pay heads they include. For example, the Senior Leadership team might have a Performance Bonus Component mandatorily included in their compensation structure, while the other levels in the organization might not have one. So, depending on your organizational needs, you can configure multiple pay structures aggregating various pay heads as needed.
Additionally, the individual pay heads within a Pay Structure might be related to one another through formulae. For example, the HRA component of compensation is usually determined as a % of Basic (like HRA = 40% of Basic). You can specify such formulae between various pay heads within your Pay Structure. hrEntries allows you to even configure complex conditional relationships such as:
Salary -> Pay Structures -> List Pay Structures -> View Pay Structure
A Salary Structure represents the compensation for the employee at a particular time. hrEntries enables you to track the compensation history of employees across their entire tenure within the organization. Each Salary Structure as such has a defined effective period, comprising the following dates:
Salary Structures themselves exist in three states:
Salary Structures include all components of the compensation structure, including the statutory contribution and deduction components as is relevant the individual based on their regional jurisdiction. A sample Salary Structure is listed below:
Salary -> Salary Structures -> List Current Salary Structures -> View
A sample Salary Structures listing screen is listed below:
Salary -> Salary Structures -> List Current Structures
There are various operations that can be performed on Salary Structures. These are listed below:
These operations are done at various points in time based on various requirements. These scenarios and typical requirements that necessitate such operations are listed below:
A Salary Slip, as the name indicates, is the monthly Pay Slip generated for each of the active employees within the organization. A sample Salary Slip is listed below:
This is essentially a summary of the TDS workings for the particular employee. This provides a simple snapshot view of both earned as well as projected income for the entire calendar year and also lists out the details of how the TDS computations are worked out for each individual. A sample TDS working sheet (also called a Tax Working) is listed below:
Declarations are basically the details of various investments that employees intend to make to ensure they optimize on all Tax Saving options available per the Income Tax Department statutes. In India, these include things like your investments under various sections of Chapter VIA, such as 80C, 80CCC, 80DD, 80E etc. This also includes investments that employees make in House Property that needs to be declared for tax exemptions under Section 24. Each employee is required to make their own declarations on their Self Service portal. A sample declaration screen is listed below. These can be accessed from:
Salary -> Declarations -> CY Declarations -> View
As an administrator, you can do various operations on Declarations based your specific needs. All these operations are accessible under Salary -> Declarations. Some of the operations are listed below:
This section covers details of how you would process the monthly PayRun. Before we get into the PayRun processing details, it is necessary to understand the various types of PayRun processing that can be done as listed below:
You can process PayRun for all employees at once or selectively for specific employees or groups of employees, whichever is relevant to your specific needs.
PayRun -> Process PayRun -> All Employees
The section below details how various inputs for your payroll process can be readied before you commence processing your monthly payroll.
Once all the necessary inputs have been readied, you can go ahead and execute the PayRun Process for the month as listed above. It can be done for All Employees or for select Employees or Employee Groups. This gives you the flexibility to split your payroll processing across groups and types, if required, for various reasons including efficient cash flow management.
Once you have completed your PayRun, you can view your Journal entries as below:
PayRun -> List Pay Runs -> View Pay Run
Processing monthly Payroll requires that you ready various inputs as a beginning step. For a typical monthly PayRun Process, the following set of inputs might be required:
In hrEntries, all these inputs are provided as summary reports. Remember, not all these inputs are mandatory for every month’s PayRun Process. Depending on what is relevant for your specific need, you create such inputs for your PayRun Process.
Sections below describe how to prepare these inputs for processing.
There are two ways of providing these inputs:
a. In bulk through excel import (Settings -> Load Employees)
b. Individually through the UI (Employees -> New Employee)
In each case, certain fields are mandatorily required as listed below. For bulk uploads using excel, please download the latest version of the template from the application itself. The template is available for download on the same page as the upload functionality (please refer the image below).
Settings -> Load Employees
In addition to the mandatory fields listed below, additional data elements (such as bank account details, unified account number/Aadhaar/PAN etc.) can also be provided through the excel file or through the UI. In case additional fields are missing while the new employee data is being created, the employee records can be incrementally updated with various data elements as and when they become available.
You can also use the bulk upload facility, to incrementally update various attributes on the Employee Masters. For example, if you wish to update the relieving dates/last working dates for all exiting employees in bulk every month, you can do the same by providing the following fields for such employees in the template excel file:
Attendance details required for payroll processing are primarily the number of days of loss of pay for various employees during the relevant pay period. The Loss of Pay (LOP) data will be inferred based on the leave transactions recorded in the system.
For processing your monthly payroll, you need to provide an Attendance Summary Report as input (incase you have any loss of pay for any of the employees). There are two ways of preparing this input Attendance Summary Report needed for payroll processing as listed below:
In case, you have not enabled Leave management within hrEntries, there is another way to import processed leave summary data using the timesheets import template provided. You can fill in all the relevant leave summary details for all employees in the organization along with their respective time sheet specific inputs and import the same in bulk. This will automatically generate all the necessary leave transactions. Once the leave transactions are generated, you can go ahead and generate the Attendance Summary Report as specified above.
Time Sheets data using the provided template can be imported from:
SETTINGS -> LOAD TIMESHEETS
The required template file for Time Sheets is available on the same upload page as well.
Sample Generated Attendance Summary Report
This set of inputs comprise all changes that need to be considered while executing payrun outside of the pre-defined salary structures. For example, items like one off bonus, one off deductions, business expense reimbursements etc. are ideally loaded through Adhoc adjustments. There are two ways of generating Adhoc Adjustments summary report needed for payroll processing:
Any arrears to be processed from previous periods can be specified through the Arrears Summary Report. The arrears inputs are specified in terms of days of pay for a specified period. Arrears are computed on different basis as listed below. You can choose the relevant calculation basis as is applicable in your case:
The arrear inputs can be specified in two ways, either manually or via bulk import using the provided template. A new Arrears Summary Report can be created manually from:
PAYRUN -> ARREARS SUMMARY -> NEW SUMMARY REPORT.
You can import the arrears data in bulk from:
PAYRUN -> ARREARS SUMMARY -> IMPORT ARREARS
PAYRUN -> ARREARS SUMMARY -> NEW SUMMARY ARREARS
In case there are any loans or advances that have been given to employees and the same needs to be recovered from the monthly payroll, such inputs can be specified using the Loan Settlements Summary Reports.
When the loans or advances issued to employees get recorded, the system will automatically generate the listing of all monthly deductions for the entire loan tenure. The monthly recoverable amount will be computed based on the interest and tenure specified. As part of the monthly Payroll process, in case there are loan related settlements to be taken into consideration within the payroll, you can generate the Loan Settlement Reports. The system will automatically determine the deductibles for the relevant employees and include the same in the Loan Settlement Report. You can override these numbers in case required for whatever reasons as required by modifying the Loan Settlement Report. Once the Loan Settlement Report has been finalized, you can use the same as part of your Payroll process.
A new Loans Settlements Summary Report can be created from:
PAYRUN -> LOAN SETTLEMENTS -> NEW SETTLEMENT REPORT.
Incentives are applicable for employees who have part of their compensation tied to performance and target attainments. For example, sales teams usually have a part of their compensation tied to the sales revenues attained. Similarly, in case of manufacturing companies, a part of the compensation might be tied to production targets.
As part of preparing inputs for the monthly payroll process, you can create a new Incentives Summary Report from: PAYRUN -> INCENTIVES SUMMARY -> NEW SUMMARY REPORT.
Inputs needed for this report are the employee specific target and attainment numbers. These inputs can be either revenue attainments or the units produced/manufactured/sold. Based on the incentive plans defined and how the various employees have been mapped to various incentive plans, depending on the target/attainment inputs provided, the system will automatically compute the payouts that the employees are eligible for. The Incentives Summary Report will be used as part of the periodic payroll process.
PayRun -> Incentives Summary -> New Summary Report
Variable Pay is applicable for organizations that follow a practice of withholding a portion of the employee’s salary under any Payhead(s) and pay out the same on a periodic basis. The quantum of the payout may be based on multiple parameters such as overall performance of the organization, department, division and the individual concerned. Typically, in such organizations, the compensation structure agreed with the employees will have one or more payheads which are classified as Variable Pay and the corresponding payheads need to be classified as Withholding payheads in the system.
If your organization follows such a philosophy of including variable pay as part of the salary structure, you will need to use the Variable Payouts Summary Report for the months when you will make the actual payouts under Variable Pay for your employees. For other periods, i.e. pay periods when Variable Payout is not done, you need not specify any inputs under Variable Pay Section for your monthly PayRun processing.
You can generate new Variable Payout Summary Report from:
PAYRUN -> VARIABLE PAYOUTS -> GENERATE SUMMARY REPORT.
Once the Variable Payout Summary report is generated, you will be able to allocate payouts based on your specific criteria. After all the allocations are completed, the Variable Payout Summary report is now ready to be used as part of your Payroll process.
The image below, the organization had withheld earnings under the Payhead Bonus, for the period from July to Sept 2019. The same was to be paid out during the month of October 2019, with appropriate allocations (in this case 100%).
PayRun -> Variable Payouts -> Generate Summary Report
Leave encashments are done typically at the end of the financial year, in the month of March, for employees who in continued employment with the organization. On the other hand, leave encashments are also done on a periodic basis for employees who have already exited the organization as part their Full & Final Settlements. In both the cases, the essential inputs here are the number of days of leave that are encashable for each of the employees for the given Financial Year. The number of days of leave to be encashed depends on the leave policies of the organization.
Once you have the leave tracking enabled in hrEntries, it is a breeze to generate the leave encashment reports at any point in time. As all leave transactions are already recorded in the system, you can create a new Leave Encashment Report in one of two ways listed below:
PayRun -> Leave Encashments -> New Summary Report
Once you have executed your PayRun process, there are a set of operations that you can undertake. This section details such operations below.
You can view the details of the executed PayRun process from: PayRun -> List Pay Runs -> View.
Journal Entry Details View
You can also view the various Salary Slips that were generated as part of this PayRun process as below:
Salary Slip Listing
You can also download Salary Slips of selected employees in bulk. You can do this by clicking on the Export Salary Slips button within the PayRun display screen. In the subsequent screen, you can choose the employees for whom you wish to download the salary slips for.
A sample downloaded Salary Slip will look as below:
You can also mail out Salary Slips in bulk to selected employees. This provides an additional way of sharing the Salary Slips with employees apart from the Self Service portal. You can do this by clicking on the Email Salary Slips button on the PayRun details display screen.
You can customize the mail message as well as indicated below:
A sample message received appears as below:
Once the PayRun is processed, you can submit the same for approval. The designated approver will be notified on submission. Once the designated approver approves the PayRun after conducting their due diligence, the PayRun now become available for publishing. Only after the PayRun is published, will the respective Salary Slips be visible in the Self Service Portal. Also, this step is necessary to also generate the Salary Payout Statement Instructions to be generated for the Banks. This can be done from:
PayRun -> Payout Statements -> Salary Statement
You can additionally download the Salary Register from:
Reports -> Payroll Data Export -> Export PayRun
The Exported Salary Register will be as below:
In addition to this, you can export various types of Payroll Statutory Reports that are available as under:
Reports -> Payroll Statutory Reports
You can also do detailed analytics comparing PayRuns across periods, by employee etc. All these operations are available under the section titled Reports.