Payroll functions
Description / objective
The Payroll function is one of the fundamental functions of any organisation. At the basic level, it ensures that all employees receive their wages. In practice, the payroll function extends to a fairly wide range of administrative and labour issues. The Payroll Function includes the following tasks:
- Calculation of the wages due to each employee, according to their contracted payment basis
- Calculation of bonuses or deductions according to the specific work done by the employee during the period
- Calculation and deduction of taxes, social insurance and other pay-related obligations
- Deduction of pension contributions
- Deduction of voluntary amounts (e.g. union dues, saving schemes, etc.)
- Management of holiday pay and other entitlements
- Management of sick-pay and other support payments
- Maintaining records of all pay-related amounts
- Generation of payment instructions – e.g. for bank transfers or requisition of cash
- Provision of information to the accounting and audit systems
- Provision of information and reports to the MIS
The Payroll function is computerised in virtually all bus operating companies. In fact, it is often the first system of a company that is computerised, in part because of the importance of accuracy and strong audit control, in part because of the large amount of paperwork involved.
While the Payroll system is not an ITS function, it usually receives many inputs from the various ITS systems. This can include the daily driver assignments and hours worked from the AVM and rostering system; and revenue amounts and bonus thresholds from the Fare Collection System.
Technologies, data and resources
The Payroll function is a software application. Some companies use ‘off-the-shelf’ packages, some companies purchase customised software, while other companies develop their own payroll software (most typically large companies with in-house ITS department).
Input data is required from multiple sources, including:
- Employee data (from Human Resources department)
- For each employee: salary, pay rates, overtime rates, payment rules, tax bands and allowances, mandatory and voluntary deductions etc. (from Human Resources department)
- Daily assignment and hours worked (from AVM, rostering system, dispatcher records)
- Sick leave, holiday and other absence information (from AVM, rostering system, depot records, Human Resource Department)
- Bonus/deduction data (from AVM, Fare Collection system, Human Resources Department, Safety Department)
Output data for Payroll usually consists of data files for payment authorisation, accounting and MIS.
Advantages and cautions
The primary advantages of ITS-supported Payroll Function are:
- Input data is generated automatically by the various ITS systems (especially the AVM and staff assignment functions). This saves substantial time and cost.
- Data can be transferred automatically, both as imports and exports. This saves on data inputting costs, and eliminates human errors.
- Information is consistent across all systems
- Reliability of the processes
- Speed of data transfer and report production, so that same-day or following-morning reports are available
The primary cautions are:
- Since it is automatic, there may be a ‘disconnect’ by those analysing and using the data, so that they may not notice errors and fail to test its integrity