Payroll Management

Payroll Module Usage #

You may use IceHrm to achieve the following tasks:

  • Store employee salary details with and group into salary components
  • Calculate various deductions
  • Include overtime payments into employee salary slips depending on number of hours
  • Add salary components based on attendance sheets
  • Allow employees to download payslips in PDF format

Understanding Employee Salary and Salary Components #

When paying salary to your employees you can have it divided into several components. When you create a new installation of IceHrm we pre-define some Salary components and group these salary components accordingly for your convenience. If required you can add more. (You may view/edit Salary Components under menu Payroll -> Salary)

Salary Component Types

Also in order to make it easier to define taxes and other deductions on salary components, we group these into Salary Component Types

Defining Salary for Your Employees #

You can add salary information for your employees under the Payroll > Salary -> Employee Salary Components tab.

This way you can define other salary components like allowances and hourly pay details.

Creating Company Payroll #

Company payroll is available under the Payroll -> Payroll menu. We have already added information for calculating payroll for Sri Lanka and Ghana. You can delete all these before starting to work on your payroll. But sometimes these data can come in handy as an example for building your payroll.

Adding a Calculation Group For Germany #

First, we should start with adding a Payroll Group. Go to Payroll -> Payroll reports -> payroll groups tab and add a new payroll group. As an example, we will be using Germany.

Adding Payroll Columns #

One of the best ways to decide which columns you need to have in your payroll report is to think of rows in your employee’s payslip. Payroll report as a table that holds all your individual employee payslips in each row.

Since you have three salary components Basic, Car Allowance, and Hourly pay we can define the following payroll columns. (For now, let’s assume tax is 19% on total salary). Now here is the list of columns to show on payroll:

  1. Basic Salary
  2. Car Allowance
  3. Hours Worked During Month
  4. Hourly Pay
  5. Payment For Hours Worked
  6. Gross monthly salary
  7. Deduction for Tax
  8. Net Salary

So now we can start adding payroll columns. It’s a good idea to prefix your payroll columns with their respective country code to make them easier to find.

Adding Payroll Column for Basic Salary #

Now you can go to the tab “Payroll Columns” and click on “Add”.

As this column only depends on the Basic Salary component you can just select that salary component from the list. (Note that in some cases you can add multiple salary components to the same column). Also, make sure you set the enable to Yes and default value to 0.00. The column order should be 1 because it should be the first column in your payroll report for Germany.

Adding Payroll Column for Car Allowance #

Adding: Hours Worked During Month Column #

There are employees who do not have a fixed salary but are paid on an hourly basis. The easiest way to handle these employees is to first create a column to get the number of hours worked for the month using attendance. In order to do that you can use pre-defined calculations.

Adding: Hourly Pay Column #

We can take hourly pay from the salary component and create this column as below:

Adding: Payment For Hours Worked Column #

Based on the previous column you have added, now you can create the hourly pay based column as shown below:

First create a new payroll column:

Then, Click on the “Add” button next to Calculation Columns.

Here you are adding the previously defined hours per month column as a parameter named X and the hourly pay column as parameter Y, so you can use it to do various calculations using these columns

Then under the Function field, you can multiply these columns (all other basic math expressions will work here)

Adding Gross Monthly Salary Column #

Total monthly gross salary should be the sum of basic salary, car allowance, and payment for total hours worked. This column can be created as shown below:

Adding payroll Columns for Employee Details #

When you need to indicate your employees’ details such as Employee Name, Employee ID, Bank Account Number, or Job Title, follow up the below steps: This will be the same as you added the payroll columns before.

  • First click on the Add New option under the Payroll Column Tab.
  • Add a name to the payroll column. Example: Employee First Name
  • Then select the Get Employee Data option for the Predefined Calculations field.
  • Select the Payroll Group (You can keep this as Common because these details can be common for all of your payroll groups )
  • Give the Column Order.
  • Set the Default Value to 0
  • Then change the Function Type to Simple (always select simple for these type of columns)
  • Under the Function field, you need to add the field name (If you don’t know how to add the field name, go to the Employee Fields tab under the Admin module. There, you can find the relevant field name)

Creating Calculation Method to Calculate 19% Tax #

As you have seen you can do some calculations at the column level. But things such as tax which are having different percentages and multiple slabs it’s better to use saved calculations. Now you should go to the Saved Calculations tab and add a new calculation method.

You can create a calculation method based on a Salary component group (type), a Salary component, or an Existing payroll column. In this case, we use an existing payroll column. Now click on the add button on the Calculation Process field to define the actual calculation. According to our example, the full range of gross salary tax is 19%. So we don’t need to define any ranges and can calculate the tax as follows.

Now we need to create a payroll column and add this calculation method to that column.

Please also pay attention to how we are assigning column order to each column.

Add “Net Salary” column #

Net Salary is Gross salary minus tax. So we create a Net Salary column as shown below:

Now we have finished defining payroll columns. When you go to Payroll columns and search “DE – ” you can see all the fields in German payroll.

Create Payslip Template #

As you have all the required payroll columns you can use these to create a payslip template. So we are going to create a new payslip template named German Payslip Template and add all the columns defined above. Goto Payslip Templates tab and create a new payslip. A payslip template has can be created by adding the following items:

  1. Company Logo
  2. Company Name
  3. Text (For adding special messages to notifications to employees)
  4. Separators (For separating sections on payslip)
  5. Payroll columns

Create Payroll Report #

Payroll Report is the unit used to combine all the payroll columns and calculate monthly payments for all the selected employees. Go to the Payroll Reports tab and create a new Payroll Report.

When you create the payroll report it should be in a Draft state. Only when it is processing completed it should go to Completed state.Also, you need to select all the payroll columns you defined earlier for german payroll here as shown above.

Selecting Employees For Your Payroll Report #

The above payroll is for monthly paid employees who are in the German Payroll Calculation group. So you need to add some employees satisfying the above requirements under the “Company Payroll” tab.

As shown below we have added two employees to the German payroll

Configure Employee Salary Components #

Since the payroll depends on employee salary components you should make sure all employee salary components are defined properly. You can do this by going to the Payroll -> Salary module and selecting the Employee Salary tab.

As you can see here IceHrm Employee is getting a Basic Allowance while Melba Dowling getting paid per hour. As we have configured our payroll report application, now we are able to calculate the tax and other payroll columns properly. To process the Payroll Report click on the blue color “Process” button on your payroll report under the Payroll Report tab. This will change the status from Draft to Processing.

Once the status changes to Processed, click on the view button to view the payroll report.

As you can see here IceHrm can now calculate your payroll. After checking figures manually you can click on generate payslips button which will change the payroll report status to Completed.

Downloading Payslips #

Employee payslip in Documents #

As an admin, you can go to Manage -> Documents -> Employee payslip to view and download employee payslips.

Your employees can log in to their accounts and go to Documents -> My documents -> Payslips to download their payslips.

Payslip in User Reports #

Go to the User Reports -> Reports module.

And then download the Payslip from any completed payroll report

Payslip for IceHrm Employee will look like this:

Generating Payroll for Next Month #

Once you configure your payroll initially, generating it for the second month can be done in a few minutes.

Clone a previous Payroll Report using Copy button #

Change Dates #

Then save the new Payroll Report and process and finalize it.

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