Monthly Payroll Processing

This section covers the complete monthly payroll processing workflow from pre-payroll checks to final payment.

Payroll Processing Workflow

1 Pre-Payroll Checklist → 2 Generate Payroll → 3 Review & Approve → 4 Process

1. Pre-Payroll Checklist

Before generating payroll, verify that all prerequisite data is complete and accurate.

Checklist Items:

Important

Missing or incorrect data in any of these areas will result in payroll calculation errors. Always complete this checklist before generating payroll.

2. Generate Payroll

   Once all prerequisite data is verified, you can generate the monthly payroll.

   How to Generate Payroll:

   1. Go to Payroll Dashboard

   2. Click "Generate Payroll" button

   3. Select the month and year

   4. Choose employees (All or Selected)

   5. Click "Preview Calculation" to see results before saving

   6. Review the preview for any errors or anomalies

   7. Click "Generate & Save" to create payroll records

   What Happens During Generation:

   • System fetches employee salary structures

   • Calculates earnings based on attendance and leaves

   • Applies LOP (Loss of Pay) for absent days

   • Adds approved reimbursements

   • Deducts loan EMIs

   • Calculates statutory deductions (PF, ESI, PT, TDS)

   • Computes gross salary, total deductions, and net salary

   • Creates payroll records with status "Draft"

   Calculation Logic

   Net Salary = Gross Salary + Reimbursements - Total Deductions - Loan EMI
   
   Gross Salary = Sum of all earnings (Basic + HRA + Allowances)
   Total Deductions = PF + ESI + PT + TDS + Other Deductions
   LOP Deduction = (Monthly Salary / Total Days) × Absent Days

3. Review & Approve Payroll

   After generation, carefully review all payroll calculations before approval.

   How to Review Payroll:

   1. Go to Payroll → Monthly Payroll

   2. Select the month you just generated

   3. Review the payroll summary:

      • Total employees processed

      • Total gross salary

      • Total deductions

      • Total net salary

   4. Click on individual employees to view detailed breakup

   5. Check for anomalies:

      • Unusually high or low salaries

      • Missing components

      • Incorrect deductions

      • LOP calculations

   Making Adjustments:

   If you find errors, you can:

   • Edit Individual Records: Click "Edit" on any employee's payroll to make manual adjustments

   • Add One-Time Components: Add bonus, arrears, or special deductions

   • Regenerate Payroll: If major errors, delete and regenerate the entire payroll

   Caution

   Manual adjustments override system calculations. Document the reason for any manual changes in the "Remarks" field for audit purposes.

   Approving Payroll:

   1. After thorough review, click "Approve Payroll"

   2. Confirm the approval action

   3. Payroll status changes from "Draft" to "Approved"

   4. Approved payroll cannot be edited (only Admin can revert)

4. Process Payment

   After approval, generate payment files and process salary transfers.

   Generating Bank Payment File:

   1. Go to Payroll → Monthly Payroll

   2. Select the approved payroll month

   3. Click "Generate Bank File"

   4. Select bank format (NEFT, RTGS, or bank-specific format)

   5. Download the generated file

   6. Upload to your bank's portal for processing

   Payment Confirmation:

   1. After bank processes the payment, return to the payroll

   2. Click "Mark as Paid"

   3. Enter payment date and reference number

   4. Upload payment confirmation (optional)

   5. Click "Confirm Payment"

   6. Payroll status changes to "Paid"

   7. Payslips are automatically generated and can be emailed to employees

   Bulk Actions

   You can mark multiple employees as paid in one go using the bulk action feature. Select employees using checkboxes and click "Bulk Mark as Paid".

   Distributing Payslips:

   1. Go to Payroll → Payslips

   2. Select the month

   3. Options:

      • Email All: Send payslips to all employees via email

      • Download All: Download all payslips as a single PDF

      • Individual Download: Download specific employee payslips

   Handling Special Cases

   New Joiners (Mid-Month)

   For employees who join mid-month:

   • System automatically calculates pro-rata salary based on joining date

   • Formula: (Monthly Salary / Total Days) × Days Worked

   • Ensure joining date is correctly set in employee master

   Resignations (Mid-Month)

   For employees who resign mid-month:

   • Mark employee as "Inactive" with last working date

   • System calculates salary till last working date

   • Process final settlement separately (if applicable)

   Salary Arrears

   To pay arrears from previous months:

   • Add a one-time earning component "Arrears"

   • Enter the arrear amount in the current month's payroll

   • Add remarks mentioning the period for which arrears are paid

   Bonus & Incentives

   To pay bonus or incentives:

   • Add one-time earning components in the payroll

   • Or create a separate bonus payroll for the month

   • Ensure proper TDS calculation on bonus amounts

   Monthly Timeline

   Recommended Payroll Processing Schedule:
   
   Day 1-3: Complete attendance, leave approvals
   Day 4-5: Process loans, reimbursements
   Day 6: Generate payroll
   Day 7-8: Review and approve
   Day 9: Generate bank file and process payment
   Day 10: Distribute payslips