Effective Strategies for Payroll Processing and Salary Components Management

Hi Jayshree,

I am Jayshree. I do not have much experience in HR. I have been given an opportunity to handle the payroll department in a company, but I have not done this before. Can somebody inform me about the process right from the beginning? For example, how to process the salary, what components should be considered, and what about the deductions?

Please let me know as soon as possible.

Regards,
Jayshree

Hi,

You need to have an idea about the components of the salary. You should chalk out the salary details with the seniors or finance colleagues. Most of the taxable items like Basic, HRA, DA, etc., need to be given on a monthly basis.

Certain items mentioned below can be given on an annual/quarterly/semi-annual basis. You need to talk with Finance on these items:

- LTA (On an annual basis)
- Performance Bonus - As applicable (Yearly or semi-annually)
- Traveling expenses - with supporting vouchers
- Books and periodicals - Employees need to produce bills
- Medical Expenses - Employees need to produce bills
- Phone expenses - Monthly with bills

This list is just indicative, and details would vary. If there are any issues with the post, you can clarify.

Thanks,
Papillon

Hi,

I did not mention the process of recording attendance in the post. So, you need to have a proper system for attendance, i.e., when you are going to gather all data, how you are going to mark absences, and how you would deduct the salary.

These operational issues are very important. If you prepare a flow chart for the process, it would be helpful for you and finance. You can also prepare a note for employees regarding the salary processing. This way, they would send all supporting documents by a certain date. Being clear about these procedures can help avoid most of the hassle.

Thanks,
Papillon:blink: