What is a 'Payroll'?

The 'payroll' of a business is the system used to calculate the salary (how much they are paid for their work) of each employee.

The inputs to a payroll system are:
  • Employee code (used to lookup the employee's other details, e.g. name, bank account, etc.)
  • Hours worked
  • Rate of pay (e.g. $25 per hour)
The processing involves the following calculation:

Pay = Hours Worked X Rate of Pay

The outputs from a payroll system are:

  • A printed payslip (given to the employee to show how his/her pay was calculated)
  • A cheque, or an EFT payment directly into the employee's bank account

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How is a Payroll Processed?

The payroll is usually processed once a week or once a month (depending upon how often the business pays its employees).

This means that batch-processing is ideal for payroll processing:
  • Working hours data is collected into a batch
  • The data can be processed in one go at the end of the week/month
  • The same calculations will be performed on all the data
  • No user input is required during the processing
  • The processing can be done during quiet times when the computer system is not being used for other things (e.g. at night)
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Many places of work automatically record hours worked by the employees using systems such as swipe-cards or fingerprint readers.

When an employee arrives at work, they swipe their ID card, and then do the same when they leave.

Hours worked = Time out - Time in
Sometimes money may be added on to a person's pay (e.g. for working extra 'overtime')

Sometimes pay is taken away (e.g. as tax, or health insurance payments)

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