Salary Calculation

Payroll calculation creates or updates Salary Records for a completed period.

Calculation workflow

flowchart TD
  A[Active Salary Profile] --> B[Attendance Summary]
  B --> C[Overtime and Under-Hour Adjustment]
  C --> D[Allowances]
  D --> E[Gross Salary]
  E --> F[Income Tax]
  F --> G[Benefit Deductions]
  G --> H[Net Pay]
  H --> I[Salary Record]

Inputs

Input	Source
Base salary	Active salary profile.
Expected working hours	Attendance calculation for the selected period.
Total working hours	Attendance records for the selected period.
Overtime details	Attendance overtime policies and multipliers.
Buffer hours	Attendance buffer policy usage.
Allowances	Active salary profile allowances that overlap the period.
Benefit deductions	Active salary profile benefit deductions that overlap the period.
Tax slabs	Active income tax year and configured slabs.
Leave bonus	Cashable leave balances and leave policies.

Verified formulas

Value	Verified behavior
Hourly rate	Base salary divided by expected working hours.
Under hours	Expected working hours minus total working hours, not less than zero.
Overtime compensation	Buffer hours cover under-hours first. Then raw overtime covers remaining under-hours, using highest multipliers first. Only leftover overtime is paid.
Overtime pay	Paid adjusted overtime hours multiplied by hourly rate.
Under-hour deduction	Remaining uncompensated under-hours multiplied by the full-precision hourly rate, capped so gross salary cannot become negative.
Gross salary	Base salary + overtime pay + allowances - under-hour deductions.
Income tax	Calculated from taxable salary divisions using the active tax year and year-to-date counters.
Benefit deductions	Calculated after tax, using net pay after tax as the base for percentage deductions.
Net pay	Net pay after tax - benefit deductions, capped at zero.

Simple example

If an employee has 7 under-hours, 4 buffer hours, and 4.5 raw overtime hours split across higher multipliers:

1. Buffer covers 4 under-hours.
2. 3 under-hours remain.
3. Overtime raw hours cover the remaining under-hours.
4. Only overtime left after this compensation is paid.

Tip

The Overtime Hours column stores adjusted overtime hours for display, while overtime pay is based only on paid adjusted overtime after under-hour compensation.

Restrictions

• Payroll cannot be generated for a future period.
• A valid active income tax year must exist.
• The salary profile must be active and valid for the selected period.
• Invalid salary profile configuration is returned as a per-profile failure.
• Payroll records are unique by employee and period.