The entire payroll process is an avalanche loaded with tasks. Each step has to be accurate. HR and payroll walk together in any organization. HR, being the only centralized department connected to all other departments, payroll becomes a significant responsibility. The payroll process revolves around calculating employee compensation, but it is not easy as it looks; for a successful payroll process, gathering accurate inputs is the most important aspect.
What is Leave and Attendance Data?
Gathering leave and attendance data is fundamentally keeping track of leaves and attendance of employees. One of the significant challenges of the managers is to manage the time of employees successfully so that the resources in the organization are productive. Employee leave & attendance data gathering involves keeping records of leaves sanctioned by managers and their daily attendance which includes: number of working hours of each employee and half days.
What are the types of leaves in Indian Payroll and leave management?
Casual leave (CL)
This is the most common type of leave utilized by an employee in any unplanned situation. This leave policy is not a mandatory one in Karnataka. As per the Kerala Shops & Establishment law, 12 days of CL (casual leaves) have to be provided to an employee. Companies have their own sub-policies with respect to bifurcating these 12 casual leaves. Such as few companies do not allow an employee to take all the casual leaves in one go and few do.
Earned Leave (EL)/Privilege Leave (PL)/Paid Leave (PL)
Typically known as paid leave in common HR and Payroll language, it is the type of leave provided by all companies in India whether start-ups or SMEs. This leave can be anywhere between 20-30 per year depending on the company’s leave policy. An employee can enjoy his holiday, vacation etc without affecting the pay.
It is a type of leave provided to new mothers for a period of 12-26 weeks, again depending on the company’s policy. Many expecting mother’s avail additional maternity leaves by giving overtime to the company during the initial period as per the comfort zone. Maternity benefit Act of 1961 requires that employers have to provide 12 weeks paid leave to any woman who has worked for at least 80 days in the 12 months preceding the date of the expected delivery
It is a type of leave provided to the father-to-be. It does not come in the mandatory category of the leave policies. But companies who provide, usually offer 1-2 weeks.
Also known as medical leave, is provided when an employee feels sickness. This type of leave is mandatory in labour law.
If an employee works on non-working day, he/she is offered a comp-off leave.
Such type of leave is provided to an employee in case of any emergency or unfortunate death of a family member.
What is Loss of Pay?
When an employee is out of his leave quota and does not have sufficient leave balance and still avails leaves, such leaves are beyond his/her ‘paid leave’ entitlements and therefore he/she will not be paid salary for such excess leaves. These are termed as Loss of Pay (LOP) or Leave Without Pay (LWOP).
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The Significance of leave and Attendance data
Gathering leave and attendance data is a part of the pre payroll process. Leave and Attendance data is the key input for processing payroll as almost all the other calculations are based on it. Any errors in this step will invariably lead to wrong calculation of employees’ compensation, causing employee dissatisfaction. For the HR department too, it is a time-consuming activity.
Along with attendance, it is also important to track whether the employee is spending the stipulated amount of time at work. Given that attendance data is central to payroll processing, it must be calculated accurately. The collection of this data sounds like a simple task, right? – All that needs to be done is to find out how many employees attended office or were on leave for a given period. On the contrary, given the amount of details and variations involved, it is quite a challenging task.
Giving an example of one scenario, with the advent of technology, workspaces are no longer confined and it is quite common for employees to work remotely.
When it comes to managing Employee MIS, it’s not at all an easy task. Knowing the fact that the payroll process is a step that needs expertise. Many organizations follow the manual process of recording the time and leave details of their employees. With the manual process, the chances of human errors are very high. It is a known fact that the HR department is always loaded with work.
Let us understand the complexity of this activity. Below are the myriad variations that are regularly encountered and impact the gathering of attendance and leave data:
Maintaining Employee MIS (Management Information System)/Employee Records
Recruitments, retirements, employee resignations, retrenchments, and transfers/relocations are the constant changes in any organization. The first step of collecting attendance data is to make the necessary updates to the employee master file.
This involves adding details and recording attendance data of new recruits and making the necessary changes in case of employees who retire, resign or are retrenched. For organizations operating at multiple locations, data of employees’ who are transferred or relocated also has to be taken into account.
Roster Management/Shift Management
Remote working has now become new normal in no time. Work from home, shift differentials, Interdepartmental transfers/ project changes, overseas deployment, client location deployment, overtime etc. are only some of the work variations that are part of the modern work scenario.
With recently encountered changes across the globe due to the Covid-19 pandemic, it is no longer compulsory for the employee to be present at the office. Also, in industries like consultancy, IT, and jobs like marketing; the employees are often deployed at client locations or are constantly traveling. Similarly, employees may be transferred between projects, departments, shifts, etc.
In some cases, employees may report to or work for more than one department. To calculate the time and attendance accurately, all these changes have to be updated in the attendance data.
Leaves Data Management
There are various reasons why an employee can be absent from work. In like manner, organizations provide different classifications of leaves, which the employees can avail of. While, casual leaves, earned leaves, compensatory offs are common; in certain instances, employees likewise may go on long leaves.
The reasons could be medical, bereavement, maternity, study, sabbatical etc to give some examples. While some are paid leaves, surpassing the allotted leaves or being absent from work for long periods of time can result in loss of pay. Similarly, absconding or absenteeism without information can also lead to salary cuts. While recording and collecting leave data, care should be taken to correctly categorize the type of leave, as any error will impact payroll calculations and employee compensation.
A number of businesses choose spreadsheets to reduce the manual burden a little. But, just to be more specific about the nature of spreadsheets, they are not dynamic in nature. Though they serve the basic fundamentals of calculations, the entire agenda of managing payroll activities remains untouched.
Given the dynamic and time-bound nature of this activity, and considering that it is significant for processing payroll, streamlining the gathering and collection of employee attendance and leave data is very important. An automated time attendance system that is convenient to use for the employees will definitely reduce the difficulty of the task. Payroll accuracy can be further guaranteed by integrating attendance automation with payroll software.
Most of the companies with growth mindsets have shifted to cloud-based HR and Payroll software solutions. The year 2020 has got nothing but changes. It is the time when entrepreneurs have to see opportunity in obstacles. Professional HR and Payroll software will streamline your entire HR and payroll process.
From pre-payroll activities to managing post payroll activities, cloud-based Payroll Software will micromanage everything at core level. It is important for an organization to understand the gaps within the departments and fill those obstacles with automation. A system will make your employees not only accountable but responsible for their tasks. Your organization’s work flow will be process-oriented rather than people-oriented.