Kamis, 25 Oktober 2012


Payroll is one of the most crucial areas in regulating a business. It is not only about paying money but also about business ethics and responsibility of an employer. Furthermore, employer shall bear in mind that it is one of the factors contributing to employee satisfaction. A sincere employee has the moral right to expect a systematic and standard system of payment in place.

In medium and large-sized corporate groups, the "Human Resource Department" shoulders the responsibility of Payroll. They prefer to have trained and skilled resources to take care of the system. The same is not found in most of the small-sized corporates or companies that are new. Hiring and paying these personnel adds to the total cost; especially when the cost bearing capacity of an employer is weak, he himself has to run the show and solve such odds.

Outsourcing the payroll system is always an easy and open option for few business players. However, the principal employer or sometimes the key members prefer to take charge of the payroll system. Lack of subject knowledge, poor awareness about legal compliance and scarcity of first hand experience makes the task more complex. However, awareness of the basic rules and readiness to learn can help an employer to streamline the payroll process.

Here are few guidelines that can help an employer to minimize these complications.

Setting Salary Structures
Every company should have its own salary structure. Separating the gross salary into components like, basic, house rent allowance (HRA), conveyance allowance, special allowance, medical allowance, other allowances can certainly help an employer to assist the employee in managing the income tax. As each country has a different taxation system, the salary structure needs to be framed accordingly. Then as a part of ongoing process, he just has to select and allot a structure to new joiner.

Making Leave Calculation Simple
Prior decision on holidays and leave from work can help the employer to calculate the leave of the employees. When an employee takes a leave that is not applicable to him/her, the employer can directly deduct the pay for that day. Maintaining a sheet/log of attendance can help the employer to calculate the workdays and pay for the same.

Understanding Legal Obligations
Legal obligations on an employer differ as per the Nation's Labor Law framework. Employee Insurance, Provident Fund savings, Old Age Pension and Gratuity are some of the legal obligations on the employers. However, all are not applicable to an employer; it depends entirely on the legal governance mechanism.

Managing Variable and Reimbursement Components
The variable components should always be kept separate and the calculations should be based on actual expenses. The employer can set a system of issuing the reimbursement against claims raised by employees. However, he would have to set a definite range or a highest limit for the reimbursable components. Travel or telephone expenses are normally taken as reimbursement components.

Timely Tax Calculations
A very simple way of solving the Employee Taxation problem is to set the salary structures accordingly, separating the taxable salary slabs and non-taxable salary slabs and making the calculations and provisions timely. Timeliness is the key to solve the severity of the problem. Dumping the priority issues and increasing the heap of work until year endings can lead to chaos.

Easy Full and Final Settlement
Mutually agreed notice periods for resignations, payments in lieu and parameters of calculating pending leaves at the time of separation should be planned at a very initial stage. All the norms should be incorporated in the appointment letters and the employment agreement. Following it stringently, is the simplest way of simplifying the task.

Taking Online Support
There are many employer query-solving forums available on Internet. This can be one way through which an employer can not only solve the problem upfront, but also become voluntary consultant for others. He can guide others in areas which he holds expertise and can learn from others too. A good network of experts, learners and mentors can be formed. Checking the genuineness of such forums is the responsibility of the employer.

Finding and Customizing Software
Selecting the right software for Payroll System is a bit of a tedious job, but it can solve crucial problems in the long run. However, before finalizing and purchasing any such software, following factors should be taken into consideration:
  • Compatibility
  • Features
  • Reliability
  • Existing clientele of the software company
  • Cost
  • Future requirements and plans
  • Report generation facility
In short, with a readiness to learn, right consultation and punctuality, you yourself can master the payroll system.

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