Basic Concepts: Payroll Overview

Classification: Internal
Basic Concepts
Payroll Overview
Payroll is a list of employees who get paid by the company. Payroll also refers to the total
amount of money employer pays to the employees. As a business function, it involves:
1. Developing organization pay policy including flexible benefits, leave encashment

policy, etc.
2. Defining payslip components like basic, variable pay, HRA, and LTA
3. Gathering other payroll inputs (e.g., organization’s food vendor may supply
information about the amount to be recovered from the employees for meals
consumed)
4. The actual calculation of gross salary, statutory as well as non-statutory deductions,
and arriving at the net pay
5. Releasing employee salary
6. Depositing dues like TDS, PF, etc. with appropriate authorities and filing returns.
Gross income or salary = All types of regular income + allowances + any one-time payment or
benefit
Gross deduction = All types of regular deductions + statutory deductions + any one-time
deductions
Configuration Setting Payroll
Payroll Organization:
Some basic settings must be made in Customizing to be able to run payroll in the SAP HR
HCM System.
1. A period parameter and a date modifier are assigned to each payroll area. The
period parameter determines whether payroll is run monthly, quarterly, weekly or
for several weeks.
2. Payroll periods must be generated for each combination of period parameters and
date modifiers assigned to a payroll area.
3. Date modifier links the additional date types with a payroll calendar.
4. Control record must be created for every payroll area. This control record controls
the individual stages of payroll.
Control record:
A control record must be created in Customizing for each payroll area before it can be
used.To Maintain Personnel Control Record use transaction PA03.
The payroll control record has the following functions:
1. It locks the personnel numbers, for which payroll should be run, so that master data
cannot be changed which might affect payroll data when payroll is being run.
2. If the master data for the personnel number is being changed for which payroll is
run, it locks the payroll for that time, so that nobody can run the payroll during this
time
3. You can also get information on what is the next payroll period for which regular
payroll should be run, up to what date is retroactive accounting carried out and
what status does the payroll currently have.
Payroll Process:
When payroll is run master data and time data changes are not permitted.Also payroll
must not be run during master data maintenance. This can be controlled by payroll
control record.
Phases available during payroll run:

If the function Release Payroll is selected from the menu, it locks the personnel number
attached to payroll area under consideration. Thus, it will not allow any changes to
infotypes for this personnel number. Though changes that affect future are still
permitted. This function must be executed before starting payroll.
If Check Result is selected, it doesn’t allow you to start payroll for the payroll area
concerned. This way, you can check the payroll result, as nobody can change the payroll
result.
If Corrections is selected, lock on master data and time data records for the selected
payroll area are released. You can make changes in infotypes for personnel numbers
having selected payroll area.
Sometimes personnel numbers are rejected during payroll run because of incorrect data.
This data can be corrected by selecting Corrections. After this select release the
payroll and this locks the personnel records again. Then, Start payroll again to run
payroll for these corrected personnel numbers. You can get the list of personnel
numbers whose payroll have been rejected due to incorrect data and their personal data
is changes in correction phase in a Match code W.
If Exit Payroll is selected, it releases infotypes and locks payroll area for payroll run.
Payroll can be exited only if all personnel numbers have been processed successfully.
Payroll Basic settings
Define Period parameter
period parameters. . (V_T549R)
Define Date Modifier
Define Default payroll Areas (ABKRS)
Check Payroll Accounting Area
Generate Payroll Periods.
Generate Calendar for Cumulations

Personnel Management Personnel AdministrationOrganizational Data Organizational

Assignment Create payroll area
Transaction Code:-OH00

Assignment Create payroll area
Transaction Code:-PE03

Assignment Check Default Payroll Area
Transaction Code:-PA03

Assignment Create control record
Transaction Code:-PA03

Assignment Create control record
Personnel Management Personnel AdministrationPayroll DataBasic PayDefine EE Sub Group

Grourping for PCR and Collective Agreement Provision
Personnel Management Personnel AdministrationPayroll DataBasic PayDefine Reason for

Change
Personnel Management Personnel AdministrationPayroll DataBasic PayCheck PayScale Type
Personnel Management Personnel AdministrationPayroll DataBasic PayCheck PayScale Area
Personnel Management Personnel AdministrationPayroll DataBasic PayCheck Assignment of

PayScale Structure to Enterprise Structure
Personnel Management Personnel AdministrationPayroll DataBasic PayDetermine Default for

PayScale Data
Personnel Management Personnel AdministrationPayroll DataBasic PaySetup Payroll Period for

Collective Agreement Provision
Personnel Management Personnel AdministrationPayroll DataBasic PayDefine PayScale Salary

ranges
Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types Create

Wage Type
Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types Create

Wage Type
Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types Check

Wage Type Group u201CBasic Payu201D

Wage Type CatalogCheck Wage Type Text

Wage Type CatalogCheck Entry Permissibility Per Infotype

Wage Type CatalogCheck Wage Type Characteristics

Wage Type CatalogCheck Wage Type Characteristics
Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types

Employee Sub Group Grouping for Primary Wage
Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types

Personnel Sub Area Grouping for Primary Wage Type
Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types Define

Wage Type Permissibility for each PS and ESG
Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types Define

Wage Type Permissibility for each PS and ESG

Basic Concepts: Payroll Overview

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Classification: Internal

1. Developing organization pay policy including flexible benefits, leave encashment

Configuration Setting Payroll

The payroll control record has the following functions:

Phases available during payroll run:

Payroll Basic settings

Define Period parameter

period parameters. . (V_T549R)

Define Date Modifier

Define Default payroll Areas (ABKRS)

Check Payroll Accounting Area

Generate Payroll Periods.

Generate Calendar for Cumulations

Personnel Management Personnel AdministrationOrganizational Data Organizational

Personnel Management Personnel AdministrationOrganizational Data Organizational

Personnel Management Personnel AdministrationOrganizational Data Organizational

Personnel Management Personnel AdministrationOrganizational Data Organizational

Personnel Management Personnel AdministrationOrganizational Data Organizational

Personnel Management Personnel AdministrationPayroll DataBasic PayDefine EE Sub Group

Personnel Management Personnel AdministrationPayroll DataBasic PayDefine Reason for

Personnel Management Personnel AdministrationPayroll DataBasic PayCheck PayScale Type

Personnel Management Personnel AdministrationPayroll DataBasic PayCheck PayScale Area

Personnel Management Personnel AdministrationPayroll DataBasic PayCheck Assignment of

Personnel Management Personnel AdministrationPayroll DataBasic PayDetermine Default for

Personnel Management Personnel AdministrationPayroll DataBasic PaySetup Payroll Period for

Personnel Management Personnel AdministrationPayroll DataBasic PayDefine PayScale Salary

Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types Create

Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types Create

Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types Check

Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types Check

Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types Check

Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types Check

Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types Check

Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types

Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types

Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types Define

Personnel Management Personnel AdministrationPayroll DataBasic PayWage Types Define

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