The Steps in Payroll Processing

As explored in our previous blog, Reasons to Consider Payrolling, Payroll is a process for the calculation of the salaries of your employees. The process of payrolling is an important business function where organisations tally their employees’ net pay after adjusting the necessary taxes and deductions.

Depending on the sector and the level of employees, different companies use different payroll processes in India, with respect to local laws, contract type or duration, and even employment type. Payroll processing also involves payslip generation, calculation of taxes, disbursals, and more.

There are three phases that an organisation providing payroll processing services follow:

Pre-payroll Process

Before service providers can begin their work, they need to align the organisation’s policies with labour laws, rules and regulations of the land, if there are any discrepancies. They also need to understand the company policy related to time and attendance, shift management, roster management, holiday list, types of leaves, and more.

Calculating Payroll

Service providers then need to gather employee data from HR/different departments to compute actual salaries for the month. Service providers calculate the taxes and deductions for each employee in the workforce. This is the most crucial and complicated step as this defines how much an employee receives as their take-homes. Any discrepancy in the salaries disbursed could later lead to litigations, employee complaints, brand malignment, and lack of trust.

Post-payroll Process

Once the deductions of ESI, PF, and TDS are confirmed, the final payment amount is tallied. The statutory deductions and the final payment are notified to the company for a final sign-off. When processing the final payout, payroll service providers transfer the money into the bank accounts of the employees. In most cases, organisations don’t have a single fixed bank so they need to ensure accuracy while transferring in several accounts within several banks.

The service providers are also obligated to communicate with their employees on how much is being deducted from their total salary, either in advance or in the payslips being sent in the future.

While it is only a three-step process, a meticulous calculation key to ensuring accurate month-on-month payouts. It is also important to know taxation, labour laws and labour policies for each industry, hence organisations need service providers such as ManpowerGroup to outsource their payroll processes.

Service providers like ManpowerGroup India specializing in workforce management help with recruitments, market insights, training and development programs, insurance support and end to end life cycle management for employees. ManpowerGroup India has over two decades of experience in India, catering to over 600 clients for their payrolling needs.

Communications Team
The communications team at ManpowerGroup publishes incisive blogs, articles, and white papers that are deeply rooted in the developments of the world of work. If there is a topic you would want us to address, please contact us at [email protected].
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