What is Payroll Policy?

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Any organization’s most essential component is human resources. They rise and fall with the organization’s growth. It is crucial to compensate the employees for their vital services and impenetrable loyalty towards the organization. A payroll policy explains the process of payment to the employees as it envelopes the administration of the salaries, time-sheet keeping, wage methods, and payment schedules of an organization’s employees. This policy is defined to place control and make employees conscious of what they should anticipate on pay-day. Any payroll policy should specify the responsibilities and accountabilities of staff managing the same. Since payroll covers sensitive and confidential information, the policy should also define access and safety levels. The policy should differentiate the preparation required by various employee groups. To implement and streamline payroll policy in your organization you need payroll management software that will automate your redundant tasks.

All the operations should be certificated in detail in the policy handbook, which covers everything from employee hiring to separation. These procedures cover payment processing activities required for managing new contracts, time reporting, work changes, outstanding payments, data updates, deductions, and alienation. This policy covers the payment processing services provided by the organization, the legislative requirements it must comply with, and determining the employment status of workers.

In This Policy, You Will Get:

  • Sample Payroll Policy including all the components of employee payroll.
  • The purpose defined by the payroll policy.
  • The scope of employees included receiving payroll.
  • What type of constituents to be included to complete the payroll without hurting your employees.
  • Responsibility of the Payroll Administration to look after the payroll needs of the company.
  • Responsibility of the Payroll Team to confirm the accounting reports in compliance with the legislature.

Payroll Policy Sample

‘Name of the Company’ understands the importance of payroll for employees and works the fullest to process each employee’s payment before the specified date of every month. The policy covers every component for calculations while keeping it compliant with government rules.


The purpose of the Payroll policy is to complete every employee’s payment before the (date) of every month without any irregularities.


The payroll policy applies to every employee regardless of their status in the company.

Payroll Administration

‘Name of the Company’ ensures to keep a transparent pay structure for each employee along with detailing the regular pay, overtime, time-sheet maintenance, compensations, bonuses, and reimbursements, whichever is actively existing.

The payroll administration of the company looks after every component stated above while keeping the payment of employees fully compliant.

Components of Pay

The payroll service of the company entails every small detail to support and motivate their employees. The components that are included in the salary are enlisted below:

Basic pay

It outlines the gross earnings that employees earn according to their salary structure defined.

Time-sheet keeping

The time-sheet comprises the daily details of the working hours and activities completed throughout the day.


The bonus is the amount that employees can receive for any excellent performance.


Any overtime hours worked by the employees will be counted according to the pro-rate basis and it will comply with the rules stated by the government.

Tax information

The tax such as TDS, PF, ESIC, etc. will be deducted from the salary for which will be prior informed to all employees. The company will also share form-16 with the employee, which they can use for tax return.

Investment Declarations

The employees can submit any investment declarations, and the company confirms that it will be added to their salary structure.

Travel reimbursements

Any reimbursement amounts remaining to return will be included in the salary.


The pending leaves of employees will be encashed through the salary according to the Leave policy instructions.

Loan deductions

Company can also deduct the loan amount through installments and inform the employees about the same.

Payroll Accounting

Payroll administration must confirm that every payroll reports, ledger, bank reconciliations, and salary structures remain up-to-date for any audit check.


Download Payroll Policy Template

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