List of laundry items to check for accurate payroll processing

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Payroll process is one of the key & high rated KRA for an HR team. But payroll process is not just all about KRA. People in the organisation but all their skin for the whole month, so that they get their dues for the efforts done, that too ACCURATE and ON TIME.

Includes necessary support for meeting all statutory compliances like PF, ESI, PTAX and various other Personnel Laws.
Payroll process has evolved over the centuries, the best part of payroll process is, that is evolves every month, the dynamics & exceptions are always changing.

With the onset of Technology, payroll process has been must easier than the old days of traditional payroll.

So what are we here up for!

With the ever changing dynamics of payroll processing& automation in payroll, we have compiled a list of payroll activities as a MUST DO for an accurate payroll processing.

1. CTC structure design

For a successful payroll, a lot depends on the way compensation & benefits are design in the organisation. Consulting a subject matter expert is recommended.

  • As per STATE WISE Minimum wages
  • Good Tax Benefit / Exemptions

2. New joiner & resign employees list

The list has to be managed accurately, employee & its count in the organisation is the fundamental for any payroll to process, not having an accurate count of resign employees & new join leads to lot of chaos ranging from non-compliant to arrears calculation to employee experience for payroll.

Warnings letters to Absconding / Misconduct employees.

3. Exception management for employee payroll

We recommend standard payroll practises across organisation, but exceptions are always there, exceptions accounts for not even 1% of the organisation payroll, but it accounts for at least 10% of additional efforts, especially at Sr. level for various tax benefits. So please mark the exceptions & define separate payroll process to avoid any disturbances. Try to standardise and automate the exceptions too.

4. Time & Attendance & Leave management

Once the master data & policy are configured. The key for payroll is count of days & hours an employee has worked. Including the leave privileges as per policy. This total ups to the Paid days. We recommend

  • Automate the Attendance system using biometric device & mobile apps
  • Employee self-services solution for leave application /approval & leave ledger

5. Paid days matching

In the time of VUCA, get the paid days approved by the HOD /Manager/supervisor/employees. Any arrears adjustment needs to be considered. Paid days is an important input for payroll processing.

6. Variable pays / loans / Advances / benefits / compensation / perks / others

Apart from standard additions & deduction, kindly make a list of variable pay for smooth & error free payroll generation.

Reimbursement Voucher payment through payroll (outside payroll).

7. Investment declaration &Tax computation

With user friendly software & Government also digitalising tax processing, things have been simple for employees, but never the less, money is always a sensitive matter for employees especially the tax. All precaution needs to be adhere to compute correct taxes, to avoid any tax violation.

8. Compliance data

An employer has two obligations pay the employees & pay the government departments ranging from PF / ESIC / LWF /PT to income tax. Failing to do so calls for legal obligation

Statutory Documentation and Updating UAN / KYC PF data updating with link on Government portal which is mandatory for Government Authorities.

Statutory Reports:

  • Monthly P.F. Statement. Monthly PF online ECR file
  • Monthly ESI Statement. Monthly ESI online employee and employer Cont List
  • Profession Tax Statement
  • Labor Welfare Fund Statement

Monthly Reports:

  • Pay sheet / Stamping / Pay slips.
  • Bank transfer sheets
  • Cash Disbursement Report.

Bonus & Gratuity Processing:

  • Bonus calculation as per Payment of Bonus Act.
  • Calculation of Gratuity as required (PROVISION)

9. Full & Final with any recoveries / payments due

Exists are always hard, every organisation will have some resources who exists, it could be registration or retirement. As an HR we have to take responsibility that employees have equally good experience on exists.

Note: Taxation computation at the time of Full & Final Settlement is important.

10. Run the payroll

Post all inputs from salary structure, paid days, variables, taxation &handling of exceptional cases. Run the payroll to generate the Beta salary for checking.

11. Generate Payroll, MIS & Reports

Comparison report last month to current month salary & reasons for difference, Payregister /paysheet. Check for any deviation, do the required changes & generate the final payroll which is ready to disburse

  • Pay sheet / Stamping / Pay slips.
  • Bank transfer sheets
  • Cash Disbursement Report.

Annual Reports – mandatory

  • Income Tax For 16
  • Qtrly / Half Yearly /Annual Returns – Income Tax
  • ESI Half Yearly Return
  • Bonus Return – Form c and Form D
  • PROFESSION TAX Returns are mandatory

The above checklist is applicable for both outsource payroll services or process payroll In-House.

Finally it all depends on how well we identify &define our payroll checklist, how well we automate our payroll process to avoid manual errors. Set the maker checker process & most importantly know the payroll rules.

Feel free to share your checklist. For any discussion on payroll processing call us on 022 40365432 or dhwani@opportune.in.

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