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What is payroll processing?

The payroll process is the glorious glamorous beauty who steps out onto the red carpet, effortlessly breathtaking when all the cameras start flashing.

What? Never thought of payroll that way? Being glamorous and gorgeous does not happen all by itself. It takes hours of relentless work to obtain perfection.

Many employees may not even stop to think about what lies behind the money magically appearing in their bank accounts. But payroll processing takes careful step-by-step planning to efficiently work through this elaborate process and crucial business function.

Strict diet and exercise

The payroll process is the undertaking of arriving at employees’ net pay – the gross income, including salary, allowances and other payments to the employee, minus all gross deductions for the employee. The deductions include regular, statutory and one-time deductions.

The payroll administrator must carefully plan and polish the payroll process. The perfect figure requires a strict diet and hardcore exercise regime that includes the following steps:

  1. Collect and maintain accurate employee information.

Ensure all employee paperwork is current and on file. Contracts must be in place, bank details for each employee up to date, medical insurance documents and employee handbook and policies signed.

  1. Record employee time and attendance

The better your company’s time and attendance tracking, the closer to perfection you come. But beware, the quality difference between a manual timekeeping system and a digital one is the canyon that divides your Jimmy Choos, and the stilettos bought from Dragon Mart. HR software, or even better, the Cloud, offers the best time and attendance solutions the industry has to offer. Ask us for more information.

  1. Calculate the gross pay for every employee

As the end of the pay period approaches, the payroll administrator must calculate each employee’s gross wages, which include the basic salary and any allowances due, and update the payroll records in preparation of payment.

  1. Calculate overtime

Overtime needs to be calculated at every pay period for every employee. This is where the behind-the-scenes sweat and suffering is and where the goddess is created. Overtime hours in the UAE are divided between normal overtime and Friday overtime.  Triple ensure that the overtime calculations for each employee is 100% accurate, every time. As the saying goes, no guts without glory.

  1. Calculate deductions

Consider the categories of deductions. Absences, medical insurance, taxes (if applicable), pension, and more. Then deduct the total deductions for each employee’s gross pay at every payment period.

  1. Print and distribute salary statements and pay slips

Prepare summary reports that contain all the salary components of employees to maintain the records of salaries paid for every payment period. The salary statements must contain base salaries, deductions, allowances, absences and overtime.

At the same time, every employee must receive a payslip for the payment period informing them of the net pay and how it had been calculated.

Many companies still issue manual pay slips, but this is time-consuming. Here again a good payroll software program, the Cloud or an outsourced payroll service would do this automatically and accurately.

  1. Create a salary transfer file and pay via the Wages Protection System

Your payroll is almost red-carpet ready. At this stage, the payroll admin must create a salary transfer or sif file for the Ministry of Labor. The government in the UAE (like most GCC Countries) mandates the payment of salaries through the Wages Protection System whereby employees receive salaries transferred to their bank accounts that are authorized by the Central Bank of the UAE.

Voila!

Your employees are paid on time and accurately and in accordance with the government’s labor laws. Roll out the red carpet and let the Paparazzi eat their hearts out. Payroll administrators everywhere have achieved (not) effortless perfection once again.

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