Payroll processing and employee management is one of the most time-consuming, often tedious task that a business needs to manage on a day-to-day basis. Often, the introduction of a new tax law in the given country requires and upheaval of the entire system, making it both an important yet frustrating bit of work.
Payroll processing is a complex, multi-layered task that involves different steps such as paying employees during each period of the payroll, keeping a track of the hours worked by every enrolled employee, deducting money for employee benefits, remitting payroll taxes etc. Handling payroll appropriately is crucial for every business as it can streamline employee handling and other repetitive administrative task. A well-managed system is designed to not only improve productivity but also avoid any penalties that may come with breaking the Department of Labor Laws.
One can process payroll manually, but using a payroll software ensures improved accuracy in the results. Human error is negated with the help of these softwares, and it can also ave a significant amount of time and manpower.
There are three basic steps for handling payroll — calculating the total time worked, computing earnings (including CTC) and finally, paying employees. The process works by first collecting each employee’s work time during the stipulated pay period. The working hours are then verified against the time card data. This also determines the overtime put in by employees. Following that, both pay types are put together to calculate the total gross pay. Taxes, benefits and insurances are then deducted from the gross amount, and the final payroll is ready.
Leave management is a process closely related to payroll processing. It involves the use of a leave management policy that helps schedule leaves applied for by employees. An online cloud-based leave management system along with an auto-update leave balance makes this task easier.
Statutory compliance is a legal framework within which an organisation must operate to be in compliance with the labour laws in their country of operations. Effective payroll management can help maintain statutory compliances.
ESI Fund and PF
ESI fund is applicable for the employees earning INR 15000 or less per month for medical benefits.
A provident fund on the other hand is a compulsory contributory fund that works as a retirement fund, and also as a monetary cushion for the employee’s family.
Statutory Compliances also include other tools such as TDS, gratuity, professional taxes and EDLI.
The concept of employee management includes a variety of strategies and procedures that ensure that the employees are doing their work, and also help monitor, measure, as well as interact with the work force through effective and channelized communication.
Employee Management consists of some fundamental principles that include selecting the right employees during the selection process, measuring performance and goal-achievement, monitoring employee performance and communication.
Employee management and payroll processing can both be outsourced, or frameworks can be developed within the organisation to ensure smooth functioning.