Payroll errors are noticed by every employee within hours. A payroll system earns trust by getting statutory and voluntary deductions right every month, and by changing quickly when rates change.
Common deductions
- Income tax withheld at source, using the current bands and reliefs
- Social security or pension contributions, employee and employer shares
- Health insurance contributions
- Other statutory levies where they apply
- Loans, salary advances and recoveries
- Voluntary deductions such as savings schemes, insurance and union dues
What the system should handle
- Rates and bands held as settings, so a budget change is a configuration update, not a rebuild
- Effective dates, so back pay is calculated at the rate that applied at the time
- Employer contributions posted to the right expense and liability accounts
- Statutory returns and payment schedules produced from the same run
- Payslips sent to employees directly
Checks to run every month
- Compare gross pay with last month and explain every large change
- Check new joiners and leavers
- Reconcile each deduction total with its liability account
- File returns and pay before the due dates