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Set up payroll

Follow these steps in order before your first payroll run. All payroll settings are in Payroll configuration. Its Overview tab shows your setup progress, the next step and a checklist, and the side navigation marks tabs with missing setup with a dot.

Before you start​

  • Employees are created with their official details, as described in Set up HCM Cafe.
  • You have payroll administrator access.

1. Foundation​

  1. Payroll policy – create a policy with its currency, pay frequency, how paid days are counted and the attendance cut-off.
  2. Payroll calendar – generate the pay periods for the payroll year. A run can't be created for a period that doesn't exist.
  3. Salary components – create the earnings, deductions and employer contributions you pay.
  4. Pay groups – only if you process groups of employees in separate runs.

2. Statutory and tax​

  1. Statutory identifiers – your organization's registration numbers.
  2. Configure the statutory schemes that apply in your country. In India these are PF configuration, ESI configuration, PT configuration and Labour welfare fund. Other countries use Contributions & levies.
  3. Component mapping – tell HCM Cafe which components count towards each statutory wage base.
  4. Income tax – tax slabs and settings. Tax Declarations opens the windows in which employees declare investments.

3. Pay structures​

  1. Pay structure – build one or more structures from your components. For statutory components such as PF or ESI, use the statutory value type so the amount comes from the statutory setup and isn't counted twice.
  2. Optional: Structure rules suggest a structure by grade, location or designation, and Salary bands warn when a salary falls outside the grade's range.

4. Processing and payments​

  1. Processing rules – where attendance comes from, what happens to days with no attendance record, the recovery component for negative net pay and the minimum net pay.
  2. Optional: Overtime Pay, Leave Encashment, Gratuity Master, Loan and Loan perqusite mapping.
  3. Payslips and Payslip templates – what payslips show and how they look.
  4. Bank master and Bank Files – the bank file format for salary payments.
  5. Accounting – how the payroll journal is split for your accounts team.
  6. Full and Final – the components used in leaver settlements.

5. Employees​

For each employee:

  1. Fill in their payroll settings, statutory identifiers and bank details.
  2. Create and approve their salary. See Set an employee's salary.

The Employee salaries check on the Overview tab shows how many active employees still have no approved salary.

Next steps​