New to HR? Understanding Provident Fund and Payroll Basics

What are Provident Fund (PF) and Payroll? I am new to the field of HR and would appreciate information in this regard.

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Provident Fund (PF) is a retirement savings scheme mandatory in India for salaried employees. It is a fund to which both the employee and employer contribute a certain percentage of the employee's salary each month. The accumulated amount, along with interest, is paid out to the employee upon retirement.

On the other hand, Payroll refers to the list of employees who receive compensation from a company. Payroll also refers to the total amount of money a company pays to its employees. Payroll management involves tasks such as calculating wages, withholding taxes, and ensuring timely payment to employees.

I hope this clarifies the concepts of Provident Fund and Payroll for you. If you have any further questions, feel free to ask!

Prakash,

Provident Fund (PF) is a kind of benefit for the employees. An employee will contribute 12% of his monthly basic salary to the PF account, and the employer will also contribute 12% to the same account. It is a form of saving for you. You can avail a loan from the PF account as well. In the end, you can close the account and receive the amount with interest.

Payroll involves calculating salaries/wages for the employees. As an HR professional, you will calculate the leave taken and notify the concerned person of Loss of Pay (LOP).

Regards,
Madhu

Understanding PF and Gratuity

PF and Gratuity are two schemes designed to benefit the employees of the private sector.

In PF, a small portion of the employee's salary is deducted and deposited with the government PF office. At the time of retirement, it is paid as a lump sum to help the employee lead their life peacefully despite retirement and loss of monthly income.

Gratuity is a scheme to motivate people to serve for longer durations with the same employer. Anyone who has served an organization for more than 5 years is eligible for Gratuity. A portion of your last drawn salary would be multiplied by the number of years of service and paid out to you when you leave an organization after years of service.

Regards,
A. Vishnukumar