Handling payroll customization in ERPNext

ERPNext
1

I’m exploring ERPNext for HR and payroll, and I noticed there are many ways to customize salary structures.
Some companies prefer fixed rules, while others calculate benefits differently based on years of service. I’m curious, for those already using ERPNext, how flexible do you find the payroll module when adapting it to local labour laws?

2

I’m exploring ERPNext for HR and payroll, and I noticed there are many ways to customize salary structures.
Some companies prefer fixed rules, while others calculate benefits differently based on years of service. I’m curious, for those already using ERPNext, how flexible do you find the payroll module when adapting it to local labour laws?

3

Been using ERPNext for Salary. There are two scenarios you need to consider:

Fixed Pay Employees

This is for employees that have Biweekly/Monthly payment frequency. Here are few things that you need to do:

  1. Define Holiday List: For all your salaried employees you need to define Weekly offs (E.g. In Middle east its Friday & Saturdays, for US its Saturday & Sundays). You also need to add all Public Holidays. Lets say you want to give your Senior staff more holidays that can be controlled using Leave Allocation
  2. Define Salary Components: These go on your Salary slips. You need to figure out if its Deductible and Taxable. If there is an amortisation over “Base” this is where you define all your formulas
  3. Create Salary Structure: This is where things get interesting. I’ve seen companies use just single Salary Structure for all Employee. I personally have define for one per “Role”. This helps you deal with real world conditions of not levying a Tax component either by Gender or Pay Scale.
  4. Associate Salary Structure Assignment: This is where you define “base” for each of the Employees along with Effective From date. This is important from perspective of giving Promotions an Pay raise. ERPNext will use the field in here to figure out which Salary Structure Assignment to honour.

Hourly Employees

  1. The process is similar to Fixed Pay Employees with the provision that their Pay for a given period is calculated based on Submitted Timesheets

Now that you’ve defined all necessary dependencies, the process for generating payroll is as follows:

  1. You create a Payroll Entry defining period and frequency
  2. You “fetch” all Employees relevant to that time period
  3. Next you create Salary Slips for each Employee. Salary slips will compute Working days/hours depending on Attendance/Timesheets
  4. Now would be a good time to make any necessary adjustments. E.g. Paying extra incentives for Employee of the Month. (Bear in mind you will have to create these incentives in Salary Components preferably ahead of time)
  5. Once done you “Submit” the Salary Slip

If you’re required to make changes to format of Salary slips for compliance you can do so using Print Formats

Having said this, what is the customisation you’re seeking? I believe ERPNext already has a lot of stuff available out of the box

FYI: There is already a Attendance Module that you can hookup to ERPNext via a Biometric Device