Payroll

The term ‘payroll‘ encompasses every employee of a company who receives a regular wage or other compensation . Payroll can use this component to calculate the remuneration for work done for each employee.

In General Explanation-

Some employees may be paid a steady salary while others are paid for hours worked or the number of items produced. All of these different payment methods are calculated by a payroll specialist and the appropriate paychecks are issued. Companies often use objective measuring tools such as timecards or timesheets completed by supervisors to determine the total amount of payroll due each pay period.

How payroll can be implemented

• Payroll with Time management
• Payroll with out Time Management

Compensation through payroll

• Employees who falls in different compensations (salaried, hourly paid, monthly wage.. etc)
• Or having different pay days etc can be remunerated through SAP India payroll.
• Different employee sub groups can be grouped together in a payroll area if they fall in same payroll period.
• This makes payroll administration easy.

ADVANTAGES OF SAP PAYROLL

• Saving time and money, and improving information for decision-making and planning.
  
• Greater automation, ensuring greater accuracy and time savings.

SAP is built to automatically apply policies and rules to employees’ data. In HRMS, this sort of information would be entered as required, keyed in by an employee. This will invariably result in a certain amount of inaccuracy, either through interpretation or simple error. In fact, as SAP HR/Payroll was created, various instances were found of employees in HRMS who were receiving benefits they were not entitled to, or who had been eligible for shift premiums but had not received them. As well, the reduced data entry will allow time for more value-adding activities.

• Improved reporting capability – Reports are tools, managers can use to analyze their operations and find opportunities for improvement. For example, attendance reports, or workload reports.Example

• • HRMS provided a limited number of standard reports in a format which could not be manipulated for more precise analysis. Reports would be ordered, and would typically take two days to arrive.
  • SAP provides users direct access to thousands of standard reports, plus the ability to easily create custom reports. Reports can be exported into Excel for further manipulation or filtering and then uploaded back to SAP.

• Improved position control – Information related to positions includes cost centre, “report to” and classification, for instance. SAP provides more position-related information than HRMS, and the information is presented in a much more user-friendly form yourself.
• Automated compensation adjustment – Prior to the introduction of SAP, compensation adjustments were calculated manually outside HRMS and then keyed in.
• Improved employee history data – This is essential planning information for various scenarios, for instance re-organization, or succession planning. SAP presents this information in a much more organized, user-friendly way.
• Better Budgeting – budgeting will improve with exact planning information replacing estimates, as information on position requirements will be shared between HR and FI modules of SAP (more accurate FTE counts).
• Accurate retroactive payment – Today, any payment which was earned in the past can only be added to the total of the pay in which it is processed, which can sometimes result in a higher rate of deduction. In SAP, payments earned in the past show up as a separate item on the pay in which it is processed, and are linked to the period in which they were earned.
• Management of leave quotas – SAP automates the management of leave quotas.

Payroll Fuctionality

Payroll Benefits

Payroll Benefits consists of a variety of processes that are becoming increasingly important due to the employer’s increased obligation to supply benefits and medical welfare. These benefits are products of:

• Labor law
• Tax law
• Contribution law
• Benefits law
• Civil law

HR System Improvements

• Consistent and accurate real-time reporting.
• Employee data shared with other modules to eliminate redundancy and data errors.
• Improved decision tables built into the software (i.e. leave rules by bargaining units).

Work Schedules are the “Base” of Payroll.  They Drive

• Number of Hours to Pay
• Overtime Calculations
• Shift Differential Calculations
• Holiday Entitlements
• Leave Accruals
• Seniority Accruals
• Retirement Accruals

How Payroll is Useful?

Calculation of below

• Earnings of Employees
• Deductions
• Statutory & Voluntary Deductions (PF,LIC,PT..etc)
• Arrears & Recovery
• Payment of Bonus

Example –

• Suppose employee’s Basic pay is hiked from Rs 8,000 to Rs 10,000 today & it is effective from 2 months back .
• In this case the retroactive run of payroll take care of the previous 2 payroll periods & compensate the employee the hiked Basic pay difference.
• Basic pay 8000 is delimited & 10,000 is effective.

How Payroll helpful in costing

All earnings deductions,taxes,employer contributions etc are mapped to a GL account.

• Posting to accounting- Cost Distribution.
• 3 separate ways cost can be allocated
• Employee’s home cost centre
• Cost distributed in percentage between cost centers
• Override on an individual day(or even hour)