Dear Colleagues,
I would like to lend my voice to the question/topic raised by Prashant.
Payroll Management can be defined as the act of updating employee payment schedules on a basis approved by management, considering all factors such as regular salary/wages, overtime spent, loan deductions, tax payable, deductions based on absenteeism, and the eventual disbursement of whatever is due to the employed populace.
Compensation Management, on the other hand, is the HR function that seeks to formulate and advise management on how to compensate employees. It carries out salary surveys, tries to benchmark using best practices in the industry/globally, and proposes 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 against Payroll Management that executes its job weekly, monthly, annually depending on the pay system put in place.
As for the taxable components, this would certainly vary from one tax regime/country to another. However, basics such as housing and transport are well-known taxable components, while most benefits/subsidies are usually tax-free, for example, medical, insurance, lunch, and 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.
Thanks.
Afolabi Ajayi