Payroll

Payroll.It is a list made up of all the workers who will be remunerated for the services they provide to the employer.

Rules

The payroll is based on parts of the content of the employment contract, in relation to the service to be provided and the remuneration, which will be governed by the following rules:

  • The worker will be obliged to perform the services that are compatible with his strengths, aptitudes, state or condition, and that are of the same gender as those that form the object of the activity to which the employer is dedicated.
  • The remuneration must be appropriate to the nature and magnitude of the services and may not be less than the minimum wage or that paid for work of the same nature in the region and in the company itself. These details help to easily determine the provision of the service and remuneration in those employment contracts where there was no express stipulation, a situation that frequently occurs.
  • Payroll Design, according to the size of the company, the appropriate payroll model must be designed, which will change substantially from one company to another, subject to variations in allocations, deductions, cumulative, determined by the need for business.

Payroll Types

Manual Payroll

It is made by entirely manual calculations, used in small or medium capacity companies. There are on the market, designed forms, for example: LEC and the Mc-Be system.

Computerized Payroll

It is made through a computer, which allows, generally by means of coding, to automatically calculate both the contributions and the discounts made in the period to be paid. To operate this type of payroll, the following type of information must be created:

  • Entry and coding forms.
  • System reports.
  • System operation.
  • System files.
  • System programs.
  • Drill or tab designs.

According to the payment method

  • Weekly: For daily workers or staff, whose payment period is established at that time.
  • Biweekly: For employees whose payment period is established at that time.

According to the type of personnel

  • Executive or Senior Payroll: For executives and senior management. Confidential payroll.
  • Employee Payroll: For the rest of the staff employed.
  • Workers Payroll: For operating personnel; in turn it can be divided, for cost purposes, into production and maintenance personnel.

Parts of Payroll

Allocations

  • Salary or wages.
  • Attendance bonus.
  • Extraordinary hours.
  • Day of rest.
  • Night bonus.
  • Overtime on holidays.
  • Paid leave.
  • Marriage premium
  • Children premium.

Deductions

  • Social Security.
  • Forced unemployment insurance.
  • Income tax.
  • Labor union.
  • Savings bank.
  • Hospitalization insurance.
  • Housing policy.
  • Dinning room.
  • Company loan.
  • Commercial credit.

Preparation of the Payroll

The payroll process begins each time a pay period begins. These periods are clearly defined by the Organic Labor Law in Article 150 where it is stated:

The worker and the employer shall set the period for the payment of wages, which may not be more than a fortnight, but may be up to a month when the worker receives food and housing from the employer.

The workers are paid weekly, while in the case of employees, the payment is made biweekly. The design of the format in which the payroll is prepared varies according to the magnitude and other characteristics of the company, as if its preparation is carried out manually or computerized. As for the substance, there is no difference between one technique and another.

Internal Control Standards

The internal control standards that will be mentioned below represent the guarantee for the company that the monetary resources allocated to personnel administration are being properly distributed.

  • They must be approved by authorized persons.
  1. The hiring of staff.
  2. The salary to pay.
  3. Deductions to be made on payroll.
  • The record of each worker must remain inaccessible to people who:
  1. Overtime and other special payments.
    • Prepare the payroll.
    • They approve payroll.
    • They pay the payroll.
  • Marking clocks or other means to control working time must be used.
  • In the case of piecework, controls must be established so that the worker’s production can be determined.
  • There must be separation of functions:
    • Among the personnel who control the time worked, prepare the payroll and pay the payroll.
    • Between the personnel who hire or fire and the one who prepares the payroll.
  • Hiring or firing must be immediately notified to the payroll department.
  • The time to pay each worker must be approved by the head of the respective department.
  • Payroll calculations must be reviewed before paying workers.
  • Payroll payment must be approved by a responsible official.
  • When the payroll is paid by check:
    • There must be a bank account that is used only for that purpose.
    • The payroll bank account must be reconciled monthly by a different person than the one who prepares the payroll and the one who pays.
    • The person who performs the reconciliation must receive the bank statement directly.
  • When payroll is paid in cash:
    • A withdrawal must be made from the bank exactly for the net amount to be paid.
    • The necessary measures must be taken to prevent theft by employees or strangers.
  • Each worker, upon receiving their remuneration, must sign a receipt that details the different concepts that have intervened in the calculation.
  • Payroll payment must be periodically supervised by an independent payroll department official.
  • Unclaimed wages must be guarded by a different person than the one who prepares the payroll or made the payments, and must send a report of the same to the accounting department.
  • Unclaimed wages must be deposited in the bank after a reasonable time, registering the corresponding liability for this concept.
  • Subsequent payment of unclaimed wages must be approved by a different official than the one preparing the payroll.
  • The officials who pay the payroll must be rotated periodically.
  • The accounting distribution of the payroll must be reviewed by a person who does not belong to the payroll department.

When payroll is paid in cash

  • A withdrawal must be made from the bank exactly for the net amount to be paid.
  • The necessary measures must be taken to prevent theft by employees or strangers.
  • Each worker, upon receiving their remuneration, must sign a receipt that details the different concepts that have intervened in the calculation.
  • Payroll payment must be periodically supervised by an independent payroll department official.
  • Unclaimed wages must be guarded by a different person than the one who prepares the payroll or made the payments, and must send a report of the same to the accounting department .
  • Unclaimed wages must be deposited in the bank after a reasonable time, registering the corresponding liability for this concept.
  • Subsequent payment of unclaimed wages must be approved by a different official than the one preparing the payroll.
  • The officials who pay the payroll must be rotated periodically.
  • The accounting distribution of the payroll must be reviewed by a person who does not belong to the payroll department.

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