Management Consultant
Afolabi Ajayi
Hr/mktg Consultant

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Can anyone tell me that : Is/Are there any difference/s between Payroll management & Compensation management or are they same as I have read that there are some differences between them.
2. Also what are the taxable components of salary of a white collared & blue collared employee & to what limit?

Dear Colleagues,

I would like to lend my voice to the question/topic raised by Prashant.

Payroll Management-this can be defined as the act of updating employee payment schedule on a basis approved by Management, considering all factors such as, regular salary/wages, overtime spent, loan/s deductions, tax payable, deductions based on absenteeism and the eventual disbursement of whatever is due to the employed populace.

Compensation Management-while on the other hand Compensation Management is that HR function that seeks to formulate and advice Management on how to Compensate Employees-carries out salary surveys, tries to bench mark using best prcatices in the industry/globally.

It also propose Compensation Systems that could help Retain Employees considering their Welfare, Pension, Gratuity and all other Benefits.

Hence Compensation Management is more of a long term HR unit/function as agaisnt Payroll Management that executes its job weekly, monthly, annually depending on the pay system put in place.

Then as for the Taxable Components- this would certainly vary from one tax regime/country to another, but-Basic, Housing, Transport-are well known taxable components-while on the other hand most Benefits/ Subsidies are usually tax free-eg. Medical, Insurance, Lunch,Drivers'

Above all it is a known fact that an Employer must not deduct more than 1/3 (one third) of an employee's package.


Afolabi Ajayi

-market salary survey
-fitting salary package to a position
-total salary analysis
-determining salary package
-determining the best mix within each position
like base salary, bonus, benefits, incentives etc etc
-analysing the tax impact
etc etc
-salary/ wage administration
-salary/ wage documentation
-salary/ wage recording
-salary/ wage deductions
-salary/ wage adjustments [ where applicable]
-meeting regulations compliance
etc etc

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