PAYROLL MANAGEMENT SYSTEM

Payroll management is an important part of any business because it helps improve employee engagement and regulatory compliance. Without an efficient, accurate means of paying employees, depositing and filing taxes, and maintaining records, employers could face wage claims and expensive penalties.

Reference: https://factohr.com/complete-payroll-guide/

 

PRE - PAYROLL PROCESS

Formulation Payroll Policy: The first and foremost thing in any payroll process is to define various policies for attendance, leave, benefits, and payroll policy. These include all the elements and factors that monitor to decide an employee’s salary. To standardize the payroll process, the policies should be pre-approved by the management. Moreover, as policy changes are less frequent, the step is not required to perform repeatedly in every cycle. To begin with, these policies need to be properly defined and approved by the management to ensure standard payroll processing and administration. The primary company policies that are considered while processing payroll include:

•  Attendance Policy
• Duty Shift 
• Late Fine
• Out Pass
• Overtime                                 
• Attendance Tracking System
•  Leave and Holiday Policy
• Leave Types & Financial Benefits
• Holidays
• Rest Day
• Leave Requisition Process
• Employee Pay Policy
• Pick Pay During
• Pay Method
• Active Staff Pay Day
• Termination Staff Pay Day
• Salary Shortage Pay Day          
•  Allowance Policy
• Incentive
• Commission
• Performance Allowance
• Project Allowance
• Station Allowance
• Petrol/ Fuel Allowance
• Attendance Allowance
• Overtime Allowance
• Phone Bill Allowance
• Meal Allowance
• Hostel Allowance
• Transportation Allowance
• Increment or Servant Allowance
• Bonus
• Education Allowance
• Labor Welfare Allowance
• Deduction & Withholding Policy
• Salary Advance
• Staff Loan
• Staff Uniform
• Saving
• Leave Without Pay & Absent
• Late Fine
• Penalty & Fine
• Labor Welfare Fund
• SSB (Social Security Board)    
• Personal Income Tax               
•  Separation Policy
• Resignation Staff
• Termination Staff
• Dismissal Staff
• Handover
• Payroll System
• Manual Payroll
• Payroll Software System
• Outsourced Payroll

• Pay Structure Policy
• Job Grading
• Ranging Pay Scale
• Job Enlargement Pay Scale
• New Joiner Staff Pay Scale
• Payroll Budgeting Policy
• Manpower Planning
• Public Holiday
• Absent Rate
• Overtime

 

Collecting Data Input: The next step in the payroll process is to collect all the data required to calculate employee salary from different departments and managers, which includes information about attendance, leave, performance, salary revision, loan recovery, transportation costs, income tax details, etc. If the organization is large, the volume of this data will be huge, and collecting and processing it manually can be quite an overwhelming task. 

• Employee Master Data
• Employee ID, Name, Date of Birth, NRC No., Father Name
• Education, Other Qualification
• Date of Join, Career Experience
• Contact Phone No. & Address
• SSB Number
• Bank Information (if banking pay method)
• Position, Probation Salary, Permanent Salary, Allowance
• Document Control System (cloud system for soft copy)
• New Joiner Data
• Refer back to Employee Master Data
• Attendance Record Data
• Working Day Data (Manual Sign Paper, Finger Print, Viber Location & ect.,)
• Overtime Requisition Form
• Leave Requisition Form
• Late Minutes Penalty Form
• Allowance Data
• Refer back to Allowance Policy
•  Deduction & Withholding Data
• Refer back to Deduction & Withholding Policy 

 

Verifying Data Input: Once all the data is collected, need to double check them for accuracy and if it complies with regulatory laws or not. If data size is large need to use various statistical methods to double check. As a part of data verification also need to check the count of active and inactive employees. This step is a crucial and proactive step to reduce errors, improve accuracy in payroll processing. If this step is done properly, it will make the payroll calculation a cinch task.

 

ACTUAL PAYROLL PROCESS

Payroll Calculations: In this step, have to feed all the data collected in previous steps into the payroll system or excel sheet. The final output of this process is addition and deduction components for each employee based on attendance, leave, statutory laws and many other factors.

Payroll Calculation Excel: http://u.pc.cd/iuS  

• Gross Pay
• Calculate regular working hours based on their hourly rate or salary.
• Compute overtime, if applicable.
• Include any bonuses or incentives.
• Deduction & Withholding
• Deduct taxes based on current regulations.
• Subtract other deductions (e.g., benefits, loan repayments)

• Net Pay
•  Calculate the final net pay for each employee.

 

Statutory Compliance: Statutory compliance in HR means adherence to the regulatory laws formed by the government. During payroll calculation itself, need to ensure that all statutory deductions are made as per the SSB & Personal Income Tax Laws and amount submitted to authorities.

• Luther Myanmar Labor Law: http://u.pc.cd/l36ctalK
• Myanmar Labor Law: https://www.mol.gov.mm/my/
• SSB (Social Security Board): https://www.ssb.gov.mm/portal/home
• Personal Income Tax Calculation Article: https://spiceworksmyanmar.com/blog/income-taxation-process/
• Personal Income Tax Calculation Excel Video: http://u.pc.cd/L3nrtalK

 

POST PAYROLL PROCESS

Payroll Reconciliation: Once the actual payroll calculation stage is completed, need to reconcile the current month payroll data with previous month payroll data to verify its accuracy. In a broader sense, payroll reconciliation is to ensure that data needs to be processed are included like new joiner, salary revision, other income and deduction amounts and data to be not considered are excluded like left employees, suspended employees etc. at the time of input. Most commonly, the following details should be checked during reconciliation.

• Past employee count vs Current employee count
• Past Salary Amount vs Current Salary Amount
• Past working hours vs Current working hours
• Past Over time hours vs Current Over time hours
• Past Employee leaves vs Current Employee Leaves
• Past vs current statutory & non-statutory deductions

 

Payout: This step is also known as releasing payroll. Once the salary is calculated and reconciliation is done, you have to make payment to the employees. Organizations typically adopt various methods including cash, cheque, or bank transfer to make payment. Usually, organizations deposit salary into an employee’s bank account through a bank transfer. For this you need to prepare a bank funding file and give it to your bank to carry out transactions. This funding file generally requires a bank ID, account number, salary total, etc., based on the type of bank. Manage envelope & money, paper sign & steam, pay slip based on the type of cash down payment.

 

Payroll Accounting: Keeping a record of all the financial transactions is an indispensable part of the payroll process. Employee salary is one of the most integral operating costs which has to be recorded in the books of accounts.

 

Payroll Reporting: Reporting is to track and analyze underlying trends in any HR process in order to identify business risks and improve decision-making. Similarly, departments like HR and finance may require reports like department-wise employee cost, salary reconciliation reports, etc., after you have completed the monthly payroll.

 

Document Control: Maintain thorough records of payroll transactions, including pay slips, payroll registers, and any communication related to payroll.

• Input Data Documents
• Attendance Manual Paper
• Overtime Form
• Leave Requisition Form
• Warning Form
• Late Minutes Penalty Form
• (Salary) Promotion Form
• Salary Distribution Documents
• Salary Pay Slip
• Salary Sign Paper
• Bank Transactions
• Payroll Reporting Documents
• Payroll Budgeting
• Department-wise employee cost
• Payroll Reconciliation
• Document Control
• Salary Complain Record
• Error Step Record
• Feedback Record