The salary heads can be combined into a group called Salary Structure. This webpage describes how a salary structure used for multiple employees can be defined and how the same salary structure can be assigned to each employee.
With Setup Salary Structures functionality, you can setup 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:
- Log into the system as HR Admin/ HR Manager.
- Go to Manage>> Manage payroll >> Setup Salary Structures. The Setup Salary Structures page appears, as shown in Figure 1.
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 employee salary structures. A default salary structure already exists in the system. If no salary structure is defined, the default salary structure is used by the system.
- Click Add Structure.Define a salary structure on the Add Structure page, as shown in Figure 2.
- Provide the name of the salary structure in the Structure Name field.
The default pay period type and the employee salary mode appears in the Pay period type and Employee Salary Mode fields.
- Provide the description of the salary structure in the Description field.
- Keep Check to make Active field selected if you want to use this salary structure.
The page further displays the default salary heads on the page, as shown in Figure 3. You can add or remove salary heads by selecting/ deselecting the variables that you don’t require.
- Provide the total annual salary or CTC that you want to pay to the employees of this salary structure in CTC (sal_ctc) field, as shown in Figure 3. As soon as you put the CTC amount in the CTC (sal_ctc) field, the formula salary head fields are automatically calculated.
The Balancing Head (balancing_head) field displays the remaining amount after the automatic calculation of various salary heads on the basis of CTC, as shown in Figure 4.
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.5,00,000 out of which Rs.3,80,000 has become a part of fixed salary and Rs.1,20,000 is remaining.
Now Balancing Head field would contain Rs.1,20,000. You can now distribute this amount to various other benefits that you want to give to your employees such as Special allowance – 1,00,800, Conveyance allowance – 19,200. In short, Balancing Head field allows you to manage CTC after formula based calculations of various salary heads.
- Click Save And Close button, if you don’t need any change in the salary structure else click Save to save the structure details and make changes to the salary head types.
The salary structure is successfully saved and a message suggesting the same appears. If you have clicked Save, the page appears with various buttons (Update, Update And Close) for salary head fields, as shown in Figure 5.
- Click Delete icon to delete a salary head and click up and down arrows to change the order of appearance of the salary heads on the salary structure.
- Click Modify Head Type to modify the salary head.
The Setup salary structures >> Modify Head Type window appears, as shown in Figure 6.
- Select the desired Head Type. The available options are:
- Constant: If Constant Head Type is selected for a salary head variable, then that salary head variable becomes a constant component in the system. The constant components are fixed for all the employees and cannot be changed for individual employees. For example, while defining the salary structure of E4 grade, if you make Medical Reimbursement a Constant salary head variable and set its Constant Amount to Rs 12,000, then all the employees of E4 grade will get Rs 12,000. The Amount Rs 12,000 cannot be changed for E4 grade employees.
- Variable: If you select Variable Head Type for a salary head variable, then that salary head variable becomes a variable component in the system. The variable components are not fixed and can be changed for each individual employee. For example, while defining the salary structure of E4 grade, if you make Bonus a Variable salary head and set its Variable Amount to Rs 12,000, then the bonus amount for each employee of E4 grade can be changed.
- Formula: If Formula head type is selected from the Head Type dropdown then the formula for the variable can be entered/modified in the Formula field.
- Specify the value for the salary head. For example, if you have selected Variable or Constant option for Head Type then you need to provide the amount of the salary head in the Amount field else if formula is selected then specify the formula in the Formula field.
- Click Save.
The salary head is modified successfully and the amount of the head is modified / recalculated.
- Click Update to save the changes or click Update And Close to save the changes and leave the page. The salary structure is successfully defined and a message suggesting the same appears.
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