Open ERP

Payroll Configuration

Set up the reusable calculation and accounting rules that turn attendance and employee salary agreements into monthly payroll.

Two levels of configuration

A Salary Component defines what an amount means: Basic, DA, HRA, PF, reimbursement or another earning/deduction. A Payroll Scheme decides how a selected group of those components behaves for a class of employees. The scheme contains ordered component rules.

DefinitionSalary Component

Meaning, stage, default method, wage flags, tax flags and default posting ledger.

Reusable rule setPayroll Scheme

Attendance basis, rounding, payable ledger and ordered component calculation rules.

Employee agreementSalary Structure

Effective-dated employee amounts and permitted overrides of scheme rules.

Recommended first payroll

For a simple monthly payroll, define components in this order: Basic, DA, HRA, variable additions, employee deductions, employer contributions and reimbursements. Codes referenced by another component must be calculated first.

Example calculation chain

01 BASIC = ₹20,000 fixed, attendance affected

02 DA = 10% of BASIC, attendance affected

03 HRA = 20% of BASIC+DA, attendance affected

04 MILK = ₹1,000 fixed addition

05 PF_EMPLOYEE = 12% of BASIC+DA, employee deduction

06 ADVANCE_RECOVERY = eligible outstanding instalments

Net pay = adjusted gross + additions + reimbursements − employee deductions

Configuration guides

Next guideSalary Component Master