Define Salary Structures

Define Salary Structures

The Define Salary structure functionality allows you to create salary structures and assign them to employees with variation, if required. The use of variation in the salary structure assignment allows you to assign a unique salary breakup to a group of employees that belong to the same salary structure.

To define a salary structure, you need to:

1. Log into the system as Administrator.

The My HR tab displaying  your home page appears, as shown in Figure 2-4-1.


Figure 2-4-1

2. Rollover mouse on the Settings tab and then select Payroll option from the menu that appears, as shown in Figure 2-4-2.


Figure 2-4-2

Alternatively, click on the Settings tab and then click on Payroll section heading, as shown in Figure 2-4-3.


Figure 2-4-3

The Payroll Setting page appears, as shown in Figure 2-4-4.

The page displays all the functionalities that you can perform to customize the payroll module according to your requirements.
Help on each functionality can be seen by just clicking on the help icon ( ) next to it. The left navigation bar opens up the Payroll node and displays all the subnodes under it.

3.  Click Define Salary Structures link on the page or click the same node in the left navigation bar.


Figure 2-4-4

The Setup Salary Structures page appears, as shown in Figure 2-4-5.

The page displays the already existing salary structures (if any) that are used by the system for the payroll generation. It also allows you to create new salary structures.

4.  Click Add Structure.


Figure 2-4-5

The Setup Salary Structures > Add Structure page appears, as shown in Figure 2-4-6.

The page allows you to define a salary structure.

5.  Provide the name of the salary structure in the Structure Name field and then select the pay period type from the Pay Period Type dropdown.
6.  Select the mode using which the salary would be paid to employee from Employee Salary Mode dropdown.

Two Employee Salary Modes are available. These modes are:

  • Yearly: This salary mode is used for the permanent employees of the company, who get annual benefits besides getting monthly salary. If you choose this mode then you will have to define the CTC and the other salary heads.
  • Hourly: This salary mode is typically used for the temporary/contractual employees of the company, who get hourly remuneration for a limited period. These types of employees typically do not get any benefits except the hourly remuneration. If you choose this mode then you will have to define the CTC and remove all the other salary heads that are not in use.

7.  Provide the total annual salary or CTC that you want to pay to the employees of this salary structure in CTC Amount field.

8.  Select AddBalancing Head check box if you want to view the remaining amount after the automatic calculation of various salary heads on the basis of CTC.

The Balancing Head amount can be used to set the amount of remaining salary heads that you want to give to your employees after calculating the formula based salary heads. For example, consider the CTC is Rs 12,80,000 out of which Rs 9,92,000 has become a part of fixed salary and Rs 2,88,000 is remaining.

Now Balancing Head field would contain Rs 2,88,000. You can now distribute this amount to various other benefits that you want to give to your employees such as Medical Reimbursement – 88,000,  Conveyance allowance – 50,000 and Bonus 1,50,000. In short Balancing Head field allows you to manage your CTC after formula based calculations of various salary heads.

9.  Provide the description of the salary structure in the Description field.
10. Keep Is Active field selected if you want to use this salary structure.
11. Click Save or click Save And Close if you want to go back to the previous screen.

Figure 2-4-6

Add Salary Heads

Once the salary structure is created and saved successfully, you need to include the salary heads to the salary structure that do not appear in the list of salary heads on the page. The salary heads that you add from the salary structure would only apply to the current salary structure.

To add salary heads, you need to:

1.  Click Add Head to add a salary head in the salary structure, as shown in Figure 2-4-7.

Posted in Configure Payroll, Payroll