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Payroll Overview


Payroll Definition

Payroll is used to calculate the remuneration for work done for each employee. SAP Payroll delivers powerful and efficient gross-to-net, net-to-gross, regular and off-cycle payroll processing. SAP’s complex Payroll process handles everything including vacation policies, compensation programs, work schedules, Holidays, overtime pay etc.


Payroll accounting calculates the payment of work done by an employee. Payroll function does the following:

  • Compute employees gross salary
  • Make necessary deductions
  • Calculate Net salary
  • Generate Checks or direct deposits.

Payroll components include:

  · Payroll area – groups employees based on the frequency of their paydates. eg. Z1 for salaried staff paid monthly.

  • Control Record – It determines the current payroll period for a payroll area.
  • Period Modifier – Period in which payroll accounting is carried out. Example. 10 – for monthly pay periods.
  • Date Modifier – Distinguishes periods with same frequency but different date. Eg. 10 – for monthly pay period but with the pay date being 5th of every month.
  • Payroll Calendar – Generating calendars for cumulating wage types to get monthly, quaterly or yearly sum totals.
  • Payscale type – used for segregation of employees payscales based on the type of union contracts in a company. Eg. 10 – non union workers 20 – collective agreement for secretaries contract.
  • Payscale area – Differentiates Payscale based on geographical area. Eg. 10 – California.
  • Payscale group – Differentiates employees payscales based on functionality. Eg. GR01 – grouping for junior clerks, GR02 – for senior clerks.
  • Payscale level – Subdivision of employees Payscale. Eg. L1 – level 1 clerk, L2 – level 2 clerk.
  • Wage types – The payments and deductions for an employee are coded as wage types. Eg. A001 – salary payment, B001 – 401K deduction.
  • Payroll Infotypes: Payroll data is stored in various infotypes, which includes, 0001, 0007, 0008, 0009,0014,0015,0057,. These infotypes maintain personal details, payment and deduction info, , tax data, etc.

Payroll Process involves:

  • Maintaining payroll related infotypes
  • Periodic payroll run
  • Transferring data to FI/CO
  • Transferring third party remittance data to Accounts Payable
  • Tax reporting
  • Standard reporting

SAP HR Payroll Overview

In a broad sense, payroll accounting is the calculation of remuneration for work performed by an employee. More specifically, payroll accounting consists of a variety of processes that are becoming increasingly important due to the employer’s increased obligation to supply benefits and medical welfare.

These benefits are products of:

  • Tax law
  • Contribution law
  • Benefits law
  • Reporting law
  • Information law

The remuneration is calculated in the following steps:
1. Calculation of gross remuneration
2. Calculation of net remuneration

Gross and net pay comprises the individual payments and deductions which are calculated during a payroll accounting period, and are received by an employee. These payments and deductions are included in the calculation of pay by uniquely distinguishable wage types.

Payroll is predefined in the SAP HR system for many countries specifically

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