Guide of employee payroll records
As an entrepreneur, keeping your company’s payroll can be a complex activity. Mainly because you do not have basic knowledge about the elements that we must take into account when establishing labor relations. Knowing the requirements and information necessary to comply adequately will help us to facilitate the organization of our human resources and keep the appropriate employee payroll records.
In this article, we will define the payroll as the record of the days worked and the wages received by those workers at the service of others (employers of record service), in which the concepts of perceptions and deductions are established for each of these people, in a given period.
- What is payroll management?
- Payroll management: what tasks does it include?
- When does a company requires payroll management?
- Payroll management: better to do it in-house or outsource?
- How can we help you obtain more information about employee payroll records?
1. What is payroll management?
The payroll is the document that collects the different economic perceptions that make up a worker’s salary, with the corresponding deductions, and that accredits their payment.
Payroll management is the activity that is responsible for managing the calculation and payment of the employee’s payroll in Dubai. As well as their registrations, cancellations, or the payment within the company. This activity is crucial in any company with employees and professionals in this field requiring knowledge of accounting, labor law, or tax law, among others.
In addition, the results obtained in payroll management serve as a basis for the company to determine personnel expenses. Among which are wages and salaries, compensation, expenses in kind, etc. To carry out this scheming correctly, papers such as: the employ of record service in Dubai contract or the communal pact are taken into account.
Moreover, payroll management also includes other tasks such as, for example, the maintenance of personnel data, the registration and cancellation of workers in social security, or sick leave, and accidents.
2. Payroll management: what tasks does it include?
The cost of payroll management depends not only on the size but also on the type of company. The form of remuneration is another determining element. Since it does not require the same effort to calculate the salary of employers of record in the UAE who are paid by the hour or by shifts as those who are paid the same amount every month.
Also, the employment policies of the company influence the level of difficulty of payroll management. It will be a much more complex job in companies where there are constant personnel changes, compared to those in which the workforce is relatively fixed. But what are the tasks of payroll management?
2.1 Create and manage employee payroll
Employee payroll records must respect the standardized payroll format under current legislation on the individual receipt model justifying the payment of wages.
2.2 Parts of a payroll
A payslip has three parts, the header, the earnings, and the deductions. The following data of the worker must be in the payroll header:
- Full name.
- Type of contract.
- Professional group.
- Affiliation to social security.
- Date of registration in the company.
- Date of seniority (does not have to be the same as the date of discharge).
- Settlement period.
- Total days worked.
Until 2012, the professional category of the worker was determined by their qualifications or experience. However, now it depends on your tasks or responsibilities in the company, as well as the knowledge that is required to perform that job. The social security contribution base, as well as its minimum and maximum, will change depending on belonging to one professional group or another. This will also play a notable role in the calculation of the minimum wage, dismissal, disability pension, or unemployment benefit.
The following company data must also appear on a payroll:
- Legal name.
- Tax residence.
- Tax identification code.
In the next section, you will find the accruals. These are all the salary concepts that correspond to the employee for having performed his job in a given period, normally in a month, to which the corresponding deductions have not yet been applied. Earnings, therefore, constitute the employee’s gross salary.
There are two types of accruals: salary and non-salary perceptions. Salary perceptions are the amounts that correspond to the worker as compensation for carrying out their work, while non-salary perceptions are the goods and services by the company that is not taxed as salary. For example, restaurant tickets or uniforms. Non-wage earnings cannot exceed 30% of wage earnings.
2.3 Salary perceptions
The base salary is the fixed amount of money that the worker receives according to his position based on the days worked.
Salary supplements may or may not be practical depending on the specific circumstances of each worker. Complements can be charged for having certain responsibilities, for night shifts, availability, seniority, or dangerousness, among many other factors.
Overtime is an item that corresponds to the extra hours that the worker performs in addition to the hours in his contract and it is additionally, whether they are voluntary or mandatory. It should be clear that labor regulations prohibit part-time workers from working overtime, except in cases of force majeure.
2.4 Non-salary perceptions
This is the remuneration that the worker receives from the company through goods or services and that is part of his salary. Receiving these bonuses is optional. The non-salary perceptions that appear in the accruals of payroll do not have deductions nor do they contribute to social security. These compensate for the expenses incurred in the development of the work, such as allowances or transportation bonuses.
Also included in this category are compensation and social security benefits, compensation for transfer or suspensions or dismissals. Non-wage payments are by collective agreement or through negotiation between each worker and the company.
If we add all the accruals, that is, the salary and non-salary perceptions, of payroll, we will obtain the gross salary of the worker, that is, the total accrued. To the gross salary of a worker, it is necessary to apply a series of withholdings and salary deductions. Which are in the third and last section of a payroll.
This category mainly includes the withholding on account of the Income Tax on Individuals. Also, the deduction of the social security fee. Personal income tax withholding is an advance payment by workers on a forecast of the taxes that they will have to pay with a basis on their income. Once the income statement has its conclusion, it is determined if the worker paid more or less and, as appropriate, the surplus will be back or he will have to pay what was missing.
2.5 The obligation to contribute to social security
This arises from the beginning of the work activity and persists for the duration of it. Even in situations of temporary disability, birth, care of a minor, and risk during pregnancy or breastfeeding. The contribution base is the amount following the applicable regulations to which a percentage is functional, the contribution rate, to quantify the obligation to contribute. Influencing the calculation of the contribution base are factors such as the worker’s gross salary, age, type of contract, and working day. And the number of payments. On the social security website, on the page that deals with contributions, the minimum and maximum contribution bases are depending on the scheme in which you are registered.
The contribution rate related to common contingencies represents 4.7% payable by the worker. Common contingencies refer to risk situations derived from a common illness and non-occupational accidents that may cause a situation of temporary incapacity for work.
However, it also includes retirement benefits and disability. In addition to death due to common illness or non-occupational accident. As well as situations of maternity, paternity, risk during pregnancy, and during natural breastfeeding, among others.
The unemployment contribution varies depending on the type of contract. If you have an indefinite part-time or full-time contract, a permanent intermittent contract, a fixed-term training or internship contract.
Also, for an interim contract, relief contract, or any contract made to a worker with a disability of at least 33%, the percentage of the deduction will be 1.55%. With a full-time and part-time fixed-term contract, the amount borne by the worker amounts to 1.60%.
2.7 Registration and cancellation of employees
One of the basic tasks of payroll management is to register new employees. Also, cancel both outgoing employees and those who are not working due to illness or other reasons. Since it is the concern of the company.
To register, cancel or modify the data of a worker, it is necessary to fill in a series of forms. This, with data that varies depending on the change that you want to make.
Registration applications must be before the employment relationship begins, generally up to 60 calendar days before. On the other hand, leave applications must be within three calendar days. This, once the employment relationship between the company and the employee ends.
The models that you must show to process the registration, cancellation, or variation of worker data can be on the page of the Social Security website with relation to Affiliations in a table with the different pertinent regimes.
3. When does a company requires payroll management?
Payroll management is necessary from the moment a company has employees under its charge. It does not require the same work to manage the payroll of a micro-enterprise as that of an SME or a large company. In any case, payroll management is an essential activity. Regardless of the number of workers in the company, it must be done well.
4. Payroll management: better to do it in-house or outsource?
The tasks related to payroll management are varied and extensive. Even in the smallest companies, these tasks are labor-intensive and time-consuming. Consequently, carrying them out correctly is also of decisive importance. Since otherwise errors quickly lead to uncalculated additional payments or even sanctions. This makes it even more important for payroll to be carried out by experts, be it an in-house team or an external service provider.
The advantages of outsourcing payroll management are multiple. Not only is greater efficiency that you will achieve. Since the company specializes in that, it is also up to date with the new regulations and therefore errors are less.
5. How can we help you obtain more information about employee payroll records?
If you are looking for a company to handle your payroll and other HR management duties, EOR Middle East is the perfect place to go. Our firm provides the best employee payroll records services in Dubai. Our services are accessible in the following zones:
We have spent a lot of time assisting industries on their way to victory. Assisting them in expanding and developing new markets. EOR Middle East boasts a 98 percent success rate, numerous awards, and over 800 ratings, demonstrating our status as the best consultant firm in the UAE. With our support, you can quickly enter the Middle Eastern market.
EOR Middle East provides the best Professional Employment Organization solutions in the UAE to boost your company’s productivity quickly. Furthermore, we have a devoted squad of agents who will guarantee that your experience with us is one-of-a-kind.
Do you want EOR Middle East to handle your employee payroll records? Contact us at [email protected] if you need assistance with payroll outsourcing and a top employer of record service in Dubai and the entire UAE. You can also call us at +971 43 316 688 and our agents will answer all of your important questions.
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