Month end is usually a period of huge stress for the HR and Payroll teams. Leave has to be finalized, benefits have to be calculated, , last minute changes have to be accommodated, missed out values from previous months have to be included, projected tax has to be calculated, payslips have to be sent out, money has to be transferred to bank accounts, statutory reports have to be filed and a myriad other things have to be done, yet the payroll has to be perfect and on time. Here are some tips to handle all these complications and yet make your month end stress free
1. Record employee joining, separation and movements as and when they happen
Have an automated system to ensure that these changes are available to the payroll without manual intervention. Don’t wait for the month end or convey it manually. An integrated HRMS with an Employee Life Cycle Module to capture enables capture of new joinees, movements, promotions, transfers and separations and automatically make it available when payroll is processed.
2. Have a system of adjusting leave balances as and when they occur
Have an automated system so that leave is recorded as and when it happens. It is best done with employees requesting for leave based on eligibility rules, supervisors approving it, and the finalized values automatically being available at the end of the period so that payroll can determine if loss of pay is applicable. Most integrated HRMS system enable defining leave policies, capturing leave in self service workflow mode and hence leave balances get updated automatically.
3. Automate the calculation of all the pay elements
Store the pay element details for all employees and have predetermined calculation methods for grade specific pay, or incentives or inter-related elements. That way, apart from some one time pay values, the rest of the values are calculated automatically. Promotions and increments which occur during the period should also have these relationships maintained so that finally payroll processing is just a processing of pay elements using these calculations. Even payment or arrears or delayed payments can be automated.
4. Process income tax exemption declarations automatically
Have an automated system so that declaration of income tax can be made by employees and based on the projected pay of the employees for the financial year the tax to be deducted is calculated and processed automatically.
5. Automate the delivery of pay-slips
Automated systems generate the pay-slips dynamically and if required email it to all employees or even make it available in a self service portal for employees to access at any time.
6. Automate the actual delivery of pay
Capture bank accounts and set up automatic payment mechanisms with the bank so that pay reaches the employee directly and instantly.
7. Statutory rules for benefits and taxes
Most automated payroll systems ensure that calculation of benefits (e.g PF, ESI, gratuity, Labour Welfare Fund in India) and taxes (e.g Professional Tax, Income Tax in India) are done automatically and the outputs by which these have to be submitted to the respective agency are also automated. In case there is an inspection, accurate traceability of the calculations are also available
Surprised that almost all of the above comes through automation?. You may have to spend some focused time to ensure that your manual, spreadsheet or non integrated systems are automated in an integrated manner. The effort and cost of automating is no longer high. For example KServeHRMS charges between 30 cents to 1 USD (Rs. 25/- to Rs.45/- in India) per employee per month on the cloud to get all this done. The product comes with large number of utilities to rapidly implement the product.
The resulting benefits of accuracy, lower stress levels, lower effort and increased employee satisfaction are well worth the transition.