With attendance and employee structures now configured, Sarah moves on to setting up salary structures, tax rules, and statutory contributions so payroll calculations remain accurate and compliant.
She carefully defines payroll components and deduction policies because even small mistakes could affect employee trust, compliance reporting, taxes, employer liabilities, and monthly payroll accuracy across the organization.
Salary structures, tax policies, and contribution rules are configured successfully so payroll calculations can run accurately and consistently across the organization.
Before Sarah touches any deduction rule, she sets two numbers on the payroll policy: standard hours per day, and standard days per month. The second one is the one people misread. It is not a count of the month — it is a divisor, saying how many working days one month's salary is treated as buying. Twenty-six is the usual answer: roughly thirty days less a rest day each week.
Salary is monthly and flat, so nobody earns less in February. The divisor exists only to price a single day when something has to be deducted, and holding it steady is the whole point — if it followed the calendar, one day of absence would cost more in February than in March for exactly the same behaviour.
Sarah sets overtime up once, in the Overtime section of the payroll policy. It used to be split across this page and a separate Overtime Policy screen; that screen is gone.
Two things catch people out. There are two minimums and both apply — one gates a single day, the other gates the month's total. And with Requires Approval on, a weekly cap cannot be applied; a monthly one still is.
Moving overtime here did more than remove a screen: the old one was a single setting per company with no dates on it, so recomputing an old month used today's rates. It is effective-dated now, like everything else on a payroll policy.
Attendance records what happened; the payroll policy decides what it costs. Sarah opens the policy and finds four rules instead of a row of switches — one for each way a month can lose pay. They are grouped the way her payslips print them: Late arrivals, then Days missed, then Unpaid leave. Each rule can be turned off, given its own settings, and pointed at the whole company or at named departments. Within a group they are a list, not a sequence: each one looks at the month on its own, and the amounts are added up.
Two things are worth knowing before Sarah changes anything. A policy made before the rule list existed says its rules come from the policy's old fields — it is deducting exactly what it shows, and "Make these editable" turns that set into rules she can change one at a time without moving a single figure. And grace is not on the policy at all. It belongs to the shift, so every late rule starts from the same allowance and none of them can quietly forgive more than the shift already did. It is not subtracted from the bands either — those are counted from the shift's start time, so "2 hr" on a 9:00 shift means 11:00 and nothing else.
Beyond month-to-month pay, Sarah sets up the long-term benefits that follow an employee through their tenure. Provident Fund and Gratuity are configured once as policies, then accrued and tracked automatically by every payroll run.
These are not just line items — they carry balances over time, and the system reconciles them at withdrawal and at separation so the final number is never guesswork.
| Failure | What the user sees | What happens next |
|---|---|---|
| Salary components do not equal total salary amount | Validation rejects salary breakdown | Adjust component totals to match overall salary |
| Negative salary component amount configured | Validation rejection shown | Enter valid positive component values |
| Percentage-based salary component produces fractional values | Rounding rules automatically applied | Review generated rounded values if necessary |
| Overlapping salary structure effective dates for the same employee | Conflict validation shown | End previous structure or adjust effective dates |
| Salary structure updated after payroll already processed | Change scheduled for next payroll cycle | Review next payroll run for updated calculations |
| Overlapping tax slab thresholds configured | Validation rejects tax slab configuration | Adjust slab threshold ranges |
| Negative tax rate configured | Validation rejection shown | Enter a valid positive tax percentage |
| Contribution cap configured below minimum allowed value | System warning displayed | Review statutory minimum contribution requirements |
| Scenario | Behavior | Why |
|---|---|---|
| Employee salary changes during the middle of a month | Payroll applies prorated salary calculation automatically | Ensures accurate partial-month compensation |
| Payroll runs for February, a 28-day month | The same policy applies unchanged; a day of absence costs exactly what it costs in any other month | Standard days per month is a divisor, not the length of the month — no per-month policy is ever needed |
| Two employees join on the 11th, one in February and one in March | Their pro-rata deductions differ — ten twenty-eighths against ten thirty-firsts | Mid-month joining is the one path priced on the month's real length |
| Every deduction rule on a policy is switched off | No late, absence or unpaid-leave amount is deducted at all | An empty rule set is a decision, so the older fixed fields are not consulted as a fallback |
| A rule is scoped to a department | Only employees in that department are deducted by it | Lets one policy carry a stricter rule for a site without a second policy |
| Tax exemption threshold configured | First portion of income remains tax-free before calculations apply | Supports legal tax compliance requirements |
| Statutory contribution percentages change during the year | Remaining payroll cycles apply prorated contribution calculations | Maintains fair and compliant contribution adjustments |