Business owners have a general sense of most HR terms, but still some questions keep coming again and again. In particular, the relationship between payroll and HR often creates confusion. We often hear questions like – What is the role of HR in payroll processing? Does HR include payroll? What is the connection between HR and payroll? What are the advantages of integrating HR software and payroll software? What exactly is the role of HR in payroll processing? The role of HR in payroll processing is crucial. HR (Human Resources) plays a significant role in ensuring accurate and timely payment to employees. Here are some specific responsibilities of HR in payroll processing: Employee Data Management: HR collects, verifies, and maintains employee data such as personal information, employment details, tax withholdings, and benefits enrolment. Time and Attendance Management: HR tracks employees’ working hours, leave records, overtime hours, and other attendance-related information. This ensures accurate calculation of wages. Payroll Calculation: HR works closely with finance departments, or outsourced payroll providers, to calculate employee wages based on the agreed-upon pay rates, deductions, bonuses, and allowances. Compliance with Employment Laws: The human resource department ensures that payroll processes comply with labour laws regarding minimum wage requirements, overtime regulations, tax withholdings, and other applicable legal obligations. Payroll Administration: HR handles administrative tasks related to payroll processing, including preparing pay cheques or electronic transfers for employees, distributing payslips or statements, and addressing any payroll-related inquiries or discrepancies. Benefits Administration: In most organizations, HR manages employee benefits programs such as health insurance, retirement plans, and other voluntary deductions that impact payroll processing. Reporting and Record-keeping: HR maintains accurate records of payroll transactions and generates reports for management’s review or external audits. These reports may include payroll expenses, tax filings, year-end reports, etc What is Payroll processing? Payroll is a list of employees that are paid by the company. Payroll is the total amount the employers pay to the employees. A payroll function involves the development of an organization pay policy that includes flexible benefits, leave encashment policy. Payroll management also includes payslip components like basic, variable pay, HRA, and LTA. and also gathering other payroll inputs like the organization’s food vendor supply, etc. Payroll and HR management also involve releasing the employees’ salary, depositing the dues like TDS, PF, etc with appropriate authorities, and filing returns. Put together Payroll processing includes the calculation of the Net Pay after the tax adjustments and other deductions. By integrating payroll within an HRMS, organizations can have several advantages: Centralized Data: The integration of payroll with other HR functions in an HRMS enables centralized employee data management. This reduces redundancy of data, improves accuracy, and also ensures consistency across different processes. Time and Cost Efficiency: Automating payroll processes through an integrated system eliminates the need for manual calculations. It also reduces paperwork. This saves time for HR professionals and minimizes errors. It also helps in faster processing of salaries and reduces administrative costs. Compliance Management: An HRMS with a payroll module ensures adherence to labour laws and regulatory requirements related to payroll processing. It assists in accurate tax calculations, generating necessary reports like tax filings or year-end documents, thus facilitating compliance with legal obligations. Employee Self-Service: Many modern HRMS systems provide self-service portals for employees. These portals allow them to access their payslips, view tax information, update personal details relevant to payroll processing (such as bank account information), and submit reimbursement claims online. Reporting and Analytics: An integrated payroll module within an HRMS provides comprehensive reporting capabilities. It generates reports on various aspects of payroll such as expense analysis, salary distributions, overtime tracking, etc. It is a great help to management in making informed decisions Payroll processing in India Pre-Payroll Activities Defining payroll policy- The first step is wherein the policies to the bank during the payroll processes need to be established. These policies need to be approved by the management to turn these policies into standards. Policies like the Pay policy, Attendance policy, leave and benefits policy, and more. Gathering inputs- At this stage, the inputs are gathered from various departments to ensure the accurate calculation of the payroll. Source of Data Data Example Employees Income tax declaration, facilities availed, and more HR team Salary structure, eligibility for benefits Finance team Deduction for recoveries Leave and attendance systems Data from attendance systems, current work shift, etc. General service providers Transport service provider, canteen vendor, etc. This data collection can seem tedious at first but registering with IndiaFilings will make it more hassle-free. Input validation- It is necessary to verify the validity of the data once it is gathered as a minute mistake can ruin the entire payroll process. It is necessary to ensure that the list contains all the active employees and no records of inactive employees. Checking the data whether it adheres to the company policy. Ensure the present in the right format. Payroll Calculation- This step is when the validated input data is fed into the payroll system for actual payroll processing. The result is the Net pay after adjusting the necessary taxes and other deductions. Once the payroll process is over it is always better to reconcile the values and verify the accuracy to avoid further errors. Post- Payroll Statutory compliance-The payroll administrator needs to religiously adhere to statutory compliance. There are various statutory deductions like EPF, TDS, ESI is deducted during the payroll processing. These deductions are then paid to the respective authorities or government bodies. Payroll accounting- Every organization is required to maintain an accurate book of accounts and the salary that is paid for one of the significant entries in the books of accounts. Payout- After complying with the steps above the salaries can be finally paid in cash or cheque or via bank transfers. For hassle-free transfers, it is better to have salary accounts of the employees. Report- Preparing a report is the last stage and it is necessary to prepare an accurate report containing information such as the department or location-wise employee cost. Various methods of payroll management Excel-based payroll management- At the
