Payroll Management

OpenERP Payroll
Generic Payroll System

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Introduction
OpenERP supports various costing methods for the employee, and invoicing from the direct
employee working time and tasks using the various techniques like Time sheet, Time Sheet
from Project Task but it is not providing the management for the payment of Employees
and structured management of the same. Now a new module available in OpenERP called
hr_payroll that will provide featured to allow user to do same. It provides the features like
all other basic Payroll Management system, employee management, payslip, payroll
register, leave management, over time, managing various allowance and deductions, bank
advice, and many more features. This module will automatically fits in to the existing hr
system easily with few configurations.
Installation
hr_payroll module available on the trunk-extra-addons branch.
lp:~openerp-commiter/openobject-addons/trunk-extra-addons/
Take a module from the branch and install it as like the other modules, also please take all
the dependencies from the same branch, it may also required the module like hr_contract,
hr_holidays, and hr_expanse, as these module are integrated with the hr_payroll module to
manage the everything to gather in payroll.
Configuration
Configuration process is very easy and need to configuration according to requirements.
There are lots of things need to configure we will see hare one by one.

Holiday Status

Allowance/Deduction Heads

Employee Functions

Employees

Accounting

Employee Contract

Holidays Per Employee

Above are the few master configuration that we need to do before we start the Payroll
Procedures every month, we will get the reports every month and every year are as follows
Payslip, Pay register, Bank advice, Yearly Salary Report, Yearly Employee Payroll Report.

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Allowance/Deduction Heads
This is the most important features of the Payroll to provide generic configuration for any
State or Country according to the rules and company policy. There are pre-install heads are
given you can change the or add/remove according to the requirements basically it deals
with the employee salary to classify for the allowance, deduction and others.

Here is a configuration for the House Rant Allowance, it coded as HRA, and type is
allowance. Basically all allowance deduction are based on the basic salary but some time
special allowance can be based on the other amount rather then the basis in that case Based
on field are use to compute the base amount for further calculation. Some times it also
important to check some condition before applying the allowance or deduction.

Contribution configuration is mainly used when the depending on the employee deduction
company have to contribute the same, like Provident Fund. If contribue by company is true
then company will overhead by the contribution expanse, and if Included in salary is true
then company contribution part is also deduct from the employee salary itself. It is possible
if company defines the package including all or CTC (Cost to company).

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Holiday Status
This configuration is again depending on the company policy. Like most of companies are
giving CL Paid Leaves, ML Half Paid Leaves, and UPL Un-Paid Leaves. So in company,
yes some time companies also give the Basic Pay leaves too, but mainly 3 type if Leaves are
there. Paid, Half Paid and Un-Paid.

Important things for payroll configuration is Payroll Configuration Section. There we need
to define Payment Conditions. There can be Paid, Half Paid and Un-Paid. Then important
fields is account in which cost for the paid leaves are calculated. Also we can track the
analytic accounting for the holidays by defining the analytic account, and need to define
this under which Allowance/Deduction head.
You can configure the holidays status as like follows.

Where Paid Leaves are Full Paid, Medical Leaves are Half Paid and Unpaid are Unpaid
Leaves. If we implement Basic pay leaves then it is also possible to configure the Basic Pay
leaves in OpenERP.
Employee Functions
Employee function are mainly related to Employee Designations, or role of the employee in
company, and it is very much important to define all employees role in company. Like any
Service based company following are the main designations.
Application Engineer, Service Engineer, Junior Engineer, Sr Application Engineer, Team
Leader, Marketing Executives, Marketing Managers, Account Officer, HR Manager, HR

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Executives. Team Leaders, Project Managers, Department Heads, Managing Directors, CEO's
etc. so according to the job profiles we need to configure the salary for all employees so its
good to once define job profile and also configure the profile allowance and deductions.
Here is an example for the software service based company, look at the list of designations.

Now look at the Salary structure for the an Application Engineer Profile.

There are list of allowance and deduction lines, important configuration are Analytic
account on Employee Function it will allow to do analysis for Application Engineer Salary
expanse. But it will not allow to do analysis for every type of allowance and deductions
heads. For that we need to configure Analytic account for every line, if any of the line not
define then it will follow the root analytic account. Name and code are use to define the
name and code for the allowance and deductions. Then important are Amount type and
amount and type. Amount type can be Fixed Amount or Percent (%), according this amount
is defined, like for house rent we have to define 30% of basic so we have to select Amount
Type = Percentage %, and amount = 0.30. then type is define for the type of line, it can be
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Allowance, Deduction, Loan, Leaves, Advance and for any other type of Payment or
Deduction Other is used. And next 2 fields Category where we need to select the allowance /
Deduction heads and in General Account we need to select the Account for expanse and
Payable entry encoding, like All allowance are expanse for the company so its better to
encode all in separate account to track easily. For all deduction is not an income for the
company but its actually payable amount to government or some other company. Like
Provident Fund its deduction from the Employee but it should be payable to some bank
account so when we pay its again encoded as an expanse for the company. So General
accounting configuration is important to manage the automatically all payroll entries to
Account management.
So we need to configure all Employee functions for the basic salary structure carefully
depending on the govt rules and also company policy. Also its configurable to it can be
changed at any time depending on the requirements. In OpenERP salary structure can be
defined in 2 ways, one which we have seen just now based on Employee Functions and 2nd
we can configure salary structure separately for all employees which is not functionally
correct but its possible. Also we can configure like common structure + special
allowance/deduction for employees, we will see this feature in detail when we see
employee configuration.
Employee
Employee is most important configuration, for payroll system there are lots of changes in
the employee normal form, please have a look at the configuration billow. For
understanding better we divide the employee configuration in 3 parts.

Informations

Payroll

Accounting

Informations fields are mainly used to store the informational data's like Employee name,
Bank Account no, PAN Card, etc..
Payroll configuration data are used to payroll calculation, and Accounting Configuration
are used to configure the accounting information to link between the Payroll and Accounts.
Billow views there are almost all fields are self explanatory, like name, company, user,
Bank Account No, Home Address, Phone, Email, etc.
For Payroll module important field is Home Address, as employee directly related to the
Partner through Address so address must also related to the Partner in order to relate
Employee with Partner. So all accounting reports is working for the partner so same report
will work for the employee too.
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Now look at the screen billow, its important configuration for informational fields and
payroll configurations fields. Like PAN card Provident fund Account No, ESI Account No,
etc.

Important is Special Allowance Deduction lines, like here employee suggest to deduct the
Tax from his salary every month. So that at the end of year no more tax payment will be
remains, as like the same we can add allowance line for the marketing people for
Incentives. Here need to add functionalities like start date and end date to restrict
calculation for certain period of time. Now lets see next screen for most important
configuration that will define basic / net salary for employee for specific period of time, so
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that we can track all increment and changes in to the contract depending on the work and
designation changes.

Employee Jems Scots, appoint from the first 1st of July 2008 and he was get reviewed on the
30th June for according to his performance he get appraiser and get promoted to the
Application Engineer with increment of 6000. here configuration are something like all
salary which is given to employee that is 18,000 and all allowance and deduction are
applicable in that so in all case payable salary will not be increased more then 18,000 which
is already defined. In most of other payroll we need to first define basic salary then based
on that system will apply the allowance an deductions which is also supported in hr_payroll
module but as a special feature it also computer basic salary based on the net salary and
salary structure, so this will be a good features to configure contract easily. Have a look at
the contract detailed configuration.

So Depending on the Wage Type salary will be applicable including all or basic Salary.
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Now look at important feature of employee that provide accounting configurations.

Bank Account is provide information that from which bank account of company, employee
will get paid. Salary account is used to encode the expanse for basic salary of employee, and
Employee Account is used to encode payable salary for employee. Its better to select the
same account here partner Payable account, or else if you want to keep the separate
account for employee salary then we can create a new account for employee.
After configuration all above payroll system we will be able to print Employee Salary
structure will be necessary details which can be used to provide with the increment letter
for further use, have a look next page for full detailed report.

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Payroll Register Monthly Process
Payroll register is mainly group all employee payslip for the specific month, so that all
employees payslip can be track easily in pay register, and also company records can
become systematic.

Look at the above screen, important fields are date it will computer all employees salary
according to the selected date in register, it will take care for Holidays, Contracts based on
the dates, so we can prepare a slip for old dates also once we configure all old contract and
holidays for all employee.
Register displays the total of Allowance, Deduction, and based on that Grows and Net Salary
respectively.

Payslip is fully integrated with the workflow and same flow is called from the Payment
Register for all Salary slips. Once register is confirmed it will automatically create a bank
payment advice and we can also take the print of Register and bank advice as follows have
a look at reports.
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Payslip
every month we can take a print of the salary slip from the system for all employees as
shown billow.

Note : Need to change few things in report.

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