What is Payroll

Human Resources is a very vast division that includes many sub-domains such as Recruitment, Training and Development, Compensation and Benefits, HR Audit, Compliance, HR Operations, Payroll, etc.

Payroll is an important domain with good scope and a promising future.

How to define Payroll

Payroll is a process in which employees are paid for the work they perform. This payment is made according to a defined process and set of rules. Some rules are prescribed by the government, while others are defined by the organization. Although this process may seem simple, it is not easy. It requires a lot of experience and a strong analytical mindset.

What is Payroll

As mentioned earlier, payroll is a process. Therefore, it is very important to understand payroll from start to end.

Payroll is a process in which the salary payable to employees for their work is calculated by considering government compliance requirements and the company’s policies.

Let us divide Payroll into four parts:

1. Payroll Input Collection
2. Payroll Input Validation
3. Payroll Output
4. Payroll Input Collection

1. Payroll Input Collection

We already know what is included in Payroll Input Collection. When there is a vacancy in a company, the company posts a job to fill that position. Candidates then apply for the job. Recruiters screen the resumes, conduct interviews, and if a candidate is finally selected, an offer is made.

During this process, all employee documents are collected, such as master details, PAN, Aadhaar, bank details, academic details, family details, and other relevant information. After collecting all documents, an appointment letter is issued to the employee when they join duty.

From a payroll perspective, all these details are required for processing the employee’s salary, such as:

• Employee Name
• Date of Joining
• Date of Birth
• Gender
• Position / Designation
• Department
• Location
• Bank Details
• PAN Number
• Aadhaar Number
• UAN Number
• Salary / CTC Details

Each of these master details has its own specific role. I will briefly describe the role of each one below:

1. Employee Name
   This ensures the correct identification of the new joiner, i.e., the employee’s name.
2. Employee Code
   The company generates a unique code for each employee to maintain records accurately, as employee identification based only on name can be critical and confusing.
3. Date of Joining
   This is required to calculate the employee’s salary. For a new joiner, the Date of Joining is essential for pro-rata salary calculation.
4. Date of Birth
   Certain statutory compliances require the employee’s age, and employment tenure considerations are also based on Date of Birth.
5. Gender
   Some statutory compliances and benefits are gender-specific; therefore, gender details are required.
6. Position / Designation
   This ensures the employee’s role and level within the organization.
7. Department
   Departments are categorized based on the nature of work performed by employees.
8. Location
   Many payroll compliances vary from state to state; hence, location details are important.
9. Bank Details
   These are required to transfer the salary directly into the concerned employee’s bank account.
10. PAN Number
    PAN is used for depositing Tax Deducted at Source (TDS) against the employee as per the applicable income tax slab.
11. Aadhaar Number
    Aadhaar is used for PF/UAN registration and related statutory purposes.
12. UAN Number
    UAN is a unique number linked with the employee’s Provident Fund (PF) account.
13. Salary / CTC Details
    This refers to the remuneration agreed upon between the employee and the organization for the services described in the job profile.