The payroll process ensures that employees are paid correctly and on time while taking into account the hours worked, paid leave, and any holidays or main calendar events. The UAE Labor Law implies that it’s the companies responsibility to ensure that the payroll is carried out accurately…..no pressure!
Payroll processing can be one of the more stressful tasks in an HR department’s role. The process needs to be accurate and completed on time and unfortunately, there are just no shortcuts! However, with the right structure in place, you can succeed in having an organized and efficient payroll system.
Here are 10 key steps to help your HR department nail your companies payroll system and make your life a little bit easier:
1. Payment Cycles
The first step in any payroll processing timeline is to decide on when or how often you are going to pay your employees. Will this be weekly, bi-weekly, monthly? Many companies decide to go with a monthly schedule however you can choose whichever suits your business structure more.
2. Separate Types of Employees
Ensuring you spend some time separating your part-time hires or contractors from your full-time employees within the payroll system will help when calculating factors such as hours worked or extra allowances. Be sure to classify which employees are part-time/full-time in your payroll system, or else this could get confusing later on.
3. Check Your Budgets
Make sure that your payroll costs are in line with your company operating budgets, otherwise, you run the risk of overspending on salaries and having to have an awkward conversation with your CEO….nobody wants that!
4. Keep Records Up To Date
Without maintaining employees’ records with correct up-to-date information such as their basic salary, allowance amount, and employee contact number, the payroll process can fall down at the first hurdle. Ensure these records are continuously updated and include any changes in salary, allowances, or time off. It might be tedious but it’s extremely important.
5. Calculate The Gross Wage
This is the first step in calculating the overall payment that will need to be made to every single one of your employees this month, so it’s important to make sure your calculations are correct at this time. To determine your employees’ gross wage, take the employees’ basic salary and then add any allowance that they are allocated. Then simply add this number to your payroll records.
6. Calculate Overtime Pay
Following on from assessing the gross wage, now you must calculate the overtime pay of each employee. This can be an extremely long and monotonous job as these figures will need to be checked several times if you are doing this process manually, as it’s easy to make mistakes at this stage.
Overtime hours can be divided into several different categories such as working on holidays or over the weekend or simply just working over the normal allotted working hours of the week.
A common calculation for costing overtime pay is 8 hours x 1.25 for ‘normal’ overtime hours, or 8 hours x 1.5 for the hours worked over a weekend or holiday period.
7. Calculate Allowances
With many job roles, there are additional allowances due on certain months, these could include commissions, car expenses or quarterly bonuses. Make sure these additional incomes are noted and added on to the wage slip. You don’t want an angry employee knocking on your door because you haven’t paid them their bonus!
8. Calculate Deductions
While it’s important to add on any additional allowances the employee might be owed, it’s also vital not to forget the salary deductions as well. Such as any un-paid absences or technology deductions.
9. Create a Pay Slip
Once you have all of this information and you’ve followed all of these steps, you then need to summarise this into one salary statement, including the employee’s basic salary, overtime, allowances and deductions. This then needs to be kept on record for both the company and given to the employee.
10. Create a WPS SIF file
This is one of the most important steps of the payroll process, creating a SIF (salary information file) or salary transfer file. This is required by the Ministry of Labor in order to distribute salaries.
So, there we go, 10 key things HR Managers need to do within the payroll process. We know this sounds like a lot on top of an already busy role. With the use of technology and our managed payroll service, you can pass on this pain of a payroll task onto people you can trust! We even have three different payroll services to suit different business needs. Check out our services page for more information when you decide to do the payroll yourself manually just isn’t cutting it anymore! No one needs an extra headache in their life, so let us take on the pain for you.
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