Best Practices For Your Employee Salary Management

1. Best Practices For Your Employee Salary Management For the larger organization, the payroll and employee salary management hold different significance. The number of employees is there, the chances of mistakes happening in payroll are higher. Though the HR team of every company strives hard to leave no error, it is a rare possibility of having no mistake unless the use of the software is there. For the employees, the salary is the only source of their livelihood, and if they are not paid on time, there can be chances of high resentment among employees. Hence every company needs to have specialists in payroll processing in HR which can help it to have accurate movement of salary and that too on time. Some of the companies also go for providers who offer salary outsourcing services, but the probabilities of mistakes are with them too. A little error in employee salary management can prove troublesome not only financially to the company, but it also tarnishes the image and lower downs the morale of the employees. Such a mistake is serious as it can lead to the low productivity of employees in the long run. Here one needs to note that the employee salary management system is not important from the viewpoint of salary making only. As per different laws and regulations, also it needs to be taken care of as there are many other computations that are affected by the salary management.

2. The tax amount, ESI, PF, and Professional tax are some of the important aspects which are directly associated with the salary of the employees. In the case of salary management mistakes, the employer may also have to face legal issues if they are not addressed rightly and timely. Hence looking from various aspects, the employee salary management needs to be perfect by any organization. Therefore, HR is advised to follow different steps in the payroll process, which can help the company refrain from such issues of payroll management. Those who offer salary outsourcing services also use payroll management services in India, which can help them offer effective and accurate services to the clients. One can find software for the same, which can prove as a handy tool in carrying out the salary process in a short period also. What is employee salary management? Though the term salary management or employee salary management seems a small thing, it has an enormous impact on not only the financial conditions of the employees and credit of the company but also on its compliance. As per the law, there are certain aspects of statutory compliance that the company must follow. In case of non-compliance, it can lead to legal issues which can result in fine, punishment or even both to the relevant authorities. Payroll has multiple aspects, which include the pay policy, components, inputs, calculations, and distribution of salary as well as salary slips. It also has other processes such as deposition of ESI, PF, and TDS as well as professional tax. All these steps and processes together make a payroll system that is a part of the salary management. Though for the majority of the companies, the components remain safe, a few things such as calculation and TDS as well as PT and PF amount change, which need to be taken care of by the HR. Those who offer salary outsourcing services to different organizations in the field have to be more careful with all these aspects. As they provide payroll services in multiple organizations, they need to have various experts who can see the computation for different companies else there are high chances of mistakes in calculations, which can prove fatal for the concerned organization. Payroll is considered as the amount the employer salary management or pay to the employees for different types of jobs they have performed as per the instructions of the employer. Hence from the viewpoint of the employer, it has various segments such as pay policy development and flexible benefits as well as the policy for leave encashment. It also needs to have complete information about basic pay to the employee, other allowances such as LTA and HRA, as well as overtime and variable pays. There also needs collation of data from different departments such as food given at discounted rates and other facilities from other departments. One must have an idea about gross as well as net salary and other deductions from the salary slip. It is also the responsibility of the employer and, in particular, the HR department to deduct TDS, PF, ESI, and PT from the salary and deposit the same to the

3. respective department. Hence, in a nutshell, we can describe it as a complete solution with the help of which the employee can have an idea about his net earnings, and other deductions. As a part of the employee salary management system, one can follow the simple calculation or formula as gross salary-various deductions= Net salary. What is employee management? Employee management is a broad term where the salary to all the necessary facilities is covered. One can say that or believe that the majority of people need to have better pay to be happy with the work. Still, after certain years of experience, this idea changes, and one believes to have promotion and say in management also to be satisfied. However, if we talk about the employee salary management system, it needs to be smooth as it has a direct impact on one's work and quality as well as morale. However, being a wide term in Employee management, there can be many more things included, such as the development of skills, training sessions, motivational activities, and group activities, which are also doubtlessly a part of HR functions only. What is payroll processing in HR? From the viewpoint of salary management, payroll processing in HR can be termed as the core activity. It needs not only an expert who can handle various data and process the payment to the employees but also need to be able to have complete command on a system where he can link the data to payroll and find out the errors immediately. Even if the organization goes for salary outsourcing services, it needs to check that the concerned service provider has such an expert who can carry out the activities without any error, as in the case of large organizations, no one can find an error if it has happened. In many cases, the service provider for such payroll offers his payroll services in multiple organizations. Hence, the chances of errors may increase if the concerned service provider does not have enough staff to handle the work with due diligence. At this stage of salary outsourcing services, one needs to be more careful. Though every organization has its own process to keep a check on the funds and data movement and hence if there is an error, it can be tracked rightly and immediately, but one needs to make special efforts for the same. Payroll processing in HR involves various steps that need to be discussed in depth. What are the steps involved in the payroll process? In India, one can find several service providers who offer payroll management services in India with various staff and in different cities. They provide payroll services in multiple organizations, but the steps, whether it is a payroll service provider or the team of HR in the company, remain the same. Though the steps in the payroll process vary as per the requirement of the organization, the basis

4. for each of them stays the same. However, those who are keen to know about this process or want to develop a business for the same must know these steps. The steps in the payroll process are divided into three stages. First stage: Here, one needs to have a precise definition of the payroll policy. From the viewpoint of a payroll officer, this is the primary thing he needs to know. In this stage, the second step is he needs to collect and collate various inputs that can contribute to the payroll. This includes attendance and leaves, as well as other data. Once the data is collated, he needs to validate the same to offer the concerned benefits or deduct the necessary amounts. With the inputs, the first stage of activity gets over. In defining the payroll, one needs to remember that the net pay can be provided after several deductions only. Still, these deductions need to be taken into account before going for the second stage. At the time of collecting various data also one needs to focus on variables such as revision of salary, any additional amount committed to be paid, etc. The data that one needs to take into account at this stage can be collected from respective department heads, attendance systems, and HR teams as well as an employee directly. One also needs to be sure that all required compliances are followed and data is as per the company policy only. The second stage: In the second stage, he actually needs to run the payroll process with the help of which the required amount of salary gets credited to the accounts of the concerned employees in their respective accounts only. However, while paying, one needs to check that there is no change in the account number of any of the employees as he or she may not get the salary credited. Here one needs to have a practice of reconciliation of the net pay and deductions with the payroll and accounts. It can help to avoid errors and track them if there is any. The third stage: In this stage, he has to act on generating the salary slips, deposit the required amount to the concerned departments such as ESI and PF. He also has to report any variation to the relevant department heads. At this stage, one needs to remember that the respective deposition with the concerned department is done timely. In many cases, one has to submit the data monthly, while in some cases, it can be quarterly, half-yearly, or even yearly. This compliance needs to be followed accurately, which is a process after the completion of the payroll process. Such data may be in the form of challan, return, or direct deposit. It is required for every organization to have proper accounting and track of each transaction. In large organizations, the software takes care of many things, but

5. yet there must be an officer who can check and validate the data. Such a check is not only to save money but also to know what happens in the company. The reporting of the transaction can prove much useful to the management, where it can know the cost of each department as well as the employees. Many more decisions can be taken by the top management on the basis of such data provided by HR.