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In India, payroll is generally processed once a month (we receive salary once a month). In Western countries, payroll is processed, weekly, bi-weekly, or monthly. Coming back to India, some companies start processing around the last week of the month so that employees will be paid by end of the month. This is the norm for companies who are in services sector. Companies in the manufacturing sector start processing around 1st of the month and pay by 5th or 7th of the next month.

For example, Payroll for April 2012 is processed by 25th of April so that employees are paid by 30th of April. Some firms may process by 1st of May and pay by 5th or 7th of May. Please note that in either case this is known as April Payroll.

Steps in a typical Payroll Process

Payroll processing is the set of activities that involves computing and disbursing salaries for an employee.

To process payroll, we need to know the payroll cycle or payment period, whom to be paid, what is agreed upon as pay, current earnings and deductions, and rules and practices to be followed. Payroll is the result of a coordinated effort because inputs to arrive at compensation have to come from various stakeholders and a number of control aspects are to be taken into consideration. The basic inputs are employees joining, leaving, changes to salary, number of days worked, number of LOP days, changes to salary,OT, etc. incorporated into the payroll processing. Other inputs that need to be handled include Incentives, Bonus, one-time payouts, deductions, etc. Payroll team also needs to work on computing arrears for employees whose salaries have changed retrospectively.

The payroll process involves the following broad steps that can be done using the greytHR payroll software:

  • Update list of employees for whom compensation is to be paid.
  • Update compensation agreed upon and its structure.

  • Update changes in employee information.

  • Arrears computing and reimbursement requests
  • Loans, advances, and recoveries
  • Final Settlement
  • Arrive at Current Earnings.

  • Arrive at Current Deductions.

  • Process Payroll.

  • Arrive at Actual Compensation - Net Pay.

  • Generate Salary Register.

  • Do Payroll Reconciliation.

  • Distribute Salary to employees by way of netbanking, cash, or cheque.

  • Distribute Payslips.

  • Update Payroll data in accounting software.

  • Generate PF, PT, ESI, and IT reports.

  • Make payments to PF, PT, ESI, and IT departments.

  • Generate reports for various agencies and MIS reports.


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