Payroll Template

What Is a Payroll Template?

A Payroll Template is a pre-prepared template that lists all employees in your company and manages their salaries based on each employee's employment arrangement, whether daily, monthly, or hourly. The template includes all additions and deductions related to each employee.

What Are the Elements of a Payroll Register Template?

The elements of an employee payroll register include:

• The company's wage policy structure, including leave payout and overtime policies.
• Payment options, allowances, tax-saving components, and other related salary components.
• Gross salary and net salary after deductions and additions.
• Annual raises and cost-of-living adjustments.

How Is a Payroll Template Used?

In the attached Excel template, you can follow the steps below to get the intended benefit from the template:

1- Enter Employee Names and Identification Numbers

To make it easier to review and track each employee's entitlements throughout their employment period, link each employee's name to an identification number that makes it easier to search for the employee. You can define the ID number in two parts: the first number represents the employee's department, and the second represents their order within the department by experience, job grade, or alphabetically (the most common approach). After filling the table with employee names and ID numbers, move to the next step.

2- Review Employee Citizenship and Work Details

Is the employee a Saudi national or a resident? This is an important detail to specify in the employee payroll, because the insurance percentages deducted from salary may differ depending on the employee's status. It is also preferable to specify the employee's branch (if the company has more than one) and whether they receive a transportation allowance.

3- Specify Allowances and Overtime Available to the Employee

Identify the employees who will receive overtime pay, transportation allowances, or housing allowances, as these amounts are added to the employee's basic salary.

4- Record Deductions from Salary

Deductions may appear as advances or withdrawals the employee receives against their salary and that are deducted monthly. Social insurance also falls under deductions, but the amount may vary depending on the employee's nationality.

How Are Salaries Calculated?

Salary is calculated in two steps as follows:

1- First Step

• If the employment arrangement is hourly: Gross Salary = Hourly Rate x Number of Hours + Overtime Rate x Number of Hours + Commissions + Allowances.
• If the employment arrangement is monthly: Gross Salary = Monthly Salary + Overtime Rate x Number of Hours + Commissions + Allowances.

2- Net Salary

Net Salary = Gross Salary - Deductions.

Why Is a Payroll Template Important?

A payroll is one of the most important templates used by the Human Resources department, for the following reasons:

1- It Saves a Lot of Time

Having an effective, pre-prepared template helps create a smooth payroll process. Once the system records the amounts deducted from and added to the salary, it can determine the amount to pay the employee within seconds.

2- It Supports Accuracy

To comply with legal requirements and align with the applicable national system, the company must ensure all paid salaries are correct and accurate. An employee payroll register helps achieve this.

3- It Makes Reporting Easier

Because payroll entries are a core expense, a payroll register makes it easy to determine total salary expenses. This simplifies preparing reports and financial statements for the accounting period.

Who Benefits from a Payroll Template?

There are two main parties that benefit from an employee payroll:

• Company management, because it can determine the monthly amounts paid in employee salaries.
• Employees, because they can receive a copy of each employee's entitlements so they can understand their salary breakdown accurately. If an employee finds any issue or notices amounts that differ from what they expected, they can send their comment to the HR officer to verify the matter.