Challenges in Handling Payroll Management Process

The payroll process becomes challenging due to two main reasons.

The Requirement to stay Statutory Compliant

As mentioned before, non-adherence to statutory laws can lead to levy of fines and penalties and in the worst case may even threaten the existence of the business. Today there are some advanced payroll management software that automatically processes payroll in compliance with statutory laws.

Dependence on Multiple Payroll Inputs Sources

Before payroll can be processed, you need to get all the data together from sources such as attendance register, conveyance facility availed record, data from HR team like salary revision information, etc., making it a complicated process. For many years HR and payroll officers were managing payroll on excel sheets, but excel sheets have problems like dependency on excel formulas for salary calculation, complexity in adding and removing employees and other limitations like manual data entry, difficulty in extracting information, etc.

Integration with Time, Attendance and Leave Management System

Time Management

Typically this module is used to track time spent on projects or specific activities. Consulting firms such as audit firms, specialist doctors, etc., who manage critical projects require a robust time management module for tracking time and at times this data may also be used for billing clients.

Attendance

While most small organization go for manual attendance system, medium and large organizations have started using smart automated tools such as biometric method, auto-tracking via system log-in, access cards, iris capture, etc. The data is stored in a system and linked to the payroll software that uses this data to calculate attendance days, overtime, etc. For seamless payroll processing, check that software supports attendance management and is configurable with access control machines.

Leave Management

In every organization, employees are entitled to take a certain number of leaves such as privilege or annual leave, casual leave, sick leave, holiday, etc.

If the software has leave management ?feature, HR can directly credit these leaves to the account of every eligible employee. As and when required, the employee can apply for leave through the system. A good system should also be able to define a workflow to notify the employee’s manager for either approval or rejection. A robust payroll leave software with built-in leave management feature can help attain accurate payroll.

Integration with the Accounting System

Your accounting/ERP system needs to record every financial transaction including payroll information like department wise employee cost, individual payroll components like reimbursements, tax due and paid, etc. Some payroll solution have integration with accounting software via API( a way to push data directly from one software to another).

In the absence of such integration, the payroll officer needs to provide all transaction details to accounts department. The accountant then manually posts it in the form of journal entries in accounting/ERP software like Tally ERP, SAP, Quick books, etc. These integrations can help finance and payroll team work together and avoid any manual entry of data.

Statutory Compliance in Indian Payroll

When you run payroll, being statutory compliance ?means that you are paying as per the applicable employment norms set by the central and state legislation. The common statutory requirements that apply to Indian businesses include the provision for minimum wages, payment of overtime wages to workers, TDS deduction, contribution to social security schemes such as PF, ESI, etc.

While computing salary you need to consider all these deductions and contributions. Income tax is one such deduction. At the beginning of the year, the employee is asked to make a declaration about his additional incomes, tax saving investments, etc. called as ‘income tax declaration.’ Accordingly, employee’s tax liability is calculated, and TDS is deducted.

Non-adherence with the statutory law can lead to hefty fines and penalties. That is why you need to be up to date on all tax and payroll statutory changes.

Further timely payments of salaries are essential for the smooth functioning of any organization. Paying employees on time is not only a legal requirement but also crucial for maintaining a healthy work environment. Delayed payments can lead to low employee morale, decreased productivity, and even legal issues. Therefore, it is crucial for employers to ensure that salaries are paid on time.

To ensure timely payments of salaries, employers should adopt best practices that help streamline the payroll process. These practices include:

1. Automating Payroll:?Automating payroll can help reduce errors and ensure that payments are made on time.
2. Setting up a Schedule:?Employers should establish a clear schedule for payroll processing and communicate it to their employees. This will help employees plan their finances and avoid any surprises.
3. Using Direct Deposit:?Direct deposit is a secure and efficient way to pay employees. It eliminates the need for paper checks and ensures that payments are made on time.
4. Hiring a Professional Payroll Service: Outsourcing payroll to a professional service provider can help ensure timely payments of salaries.
5. Communicating with Employees:?Employers should communicate with their employees regularly to keep them informed about any changes to their payroll. They should also be available to answer any questions or concerns that employees may have.

Delay in Salary Payment or Wages

When there is delay in payment of wages or any deduction has been made from the wages, in such case, application can be made to the authority. Following is the list of person, who can make application to the authority:

• The person himself; or
• Any legal practitioner; or counselor
• Any official of a registered trade union, duly authorized in writing;
• Any inspector; or Enforcement Officer
• Any other person acting with the permission of the authority.

To make sure that your employees are happy and you are law compliant, you need to have a proper understanding of what payroll is and how to run payroll effectively.

Thanks.