How Can I Keep Employee Salaries Confidential from My Accounts Staff While Using Bank Transfers?

Dear Sir,

I have a firm with 11 employees. The total salary distributed for all 11 is 1.25 Lakhs. Right now, I am distributing it by cash on withdrawal by bank. I am ready to distribute by bank (NEFT or Cheque), but I don't want my accounts staff to know the salary value given to other staff. How do I maintain the secrecy?

Ajay

Hi Ajay,

Salary disbursement through the bank is the most secure method and maintains secrecy as well. On the contrary, disbursing cash salary is unsafe and has the chance to leak information. In the case of a bank transfer, you need not take acknowledgment of salary receivable from the employee because you have a bank statement as proof for official records.

Secondly, always save computer files with a password and avoid printouts of the salary sheet. It will serve your purpose.

Neelima HR, Pune

Dear Ajay Ji,

I agree and appreciate the methodology mentioned by Ms. Neelima Ji. However, why make such a fuss over the secrecy if the salaries have been fixed rationally based on the performance and competence of the employees? Even if the salaries are credited directly into the employees' bank accounts, what guarantee is there that the employees will not share the information with each other?

BS Kalsi,
Member Since August 2011

There are various ways in which this can be achieved. It depends on a number of factors that we are not aware of.

Salary Transfer Mechanism

Many banks have a salary transfer mechanism where they will show only one single entry in the ledger, but internal records of the banks have the details of whom it has gone to. You need to ask your bank whether your salary transfer will come as a single entry or as 11 separate entries with names (which is your main concern at the moment).

Alternative Bank Account

If the bank procedure is to list all payments by names, then you can open a second bank account and use that for salary processing, and do not give that statement to your accountant.

Using Payroll Processing Companies

A last option is to have one of the payroll processing companies do the payment for you. You will give them a single cheque for the entire salary amount, and the details of the payment will not appear in your statement (but they will take a service charge that you will need to negotiate and absorb as a cost).

Would someone clarify about the ordinance of December 29? Is it compulsory to pay salary by cheque or bank transfer?

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No, not yet. The ordinance only allows the government to notify certain areas and industries where it would be compulsory. Maharashtra is the only state in which it is compulsory (they passed the rule almost 5 years ago). However, it is expected that the government will soon issue notifications making it compulsory.