Payroll ApplicationsH’MM

• Payroll systems normally involve the use of batch processing. This usually means that the tiles that are needed are stored on separate magnetic tapes.

• There are two data files involved. The first is called the master file and this holds all the data about the workers. This data includes the employee number, their name, their contact details, their rate of pay and the pay they have received so far this year as well as the taxes and insurance they have paid so far this year.

Introduction

• The employee number is used as the key field and the file is sorted in that order. There is less data on the second tile - the transaction file. 'This is a temporary file as it contains some data which can change from week to week or month to month. It contains details of the number of hours worked and any overtime with, of course, the employee number. The transaction file also has details of any new workers or workers who have left the company or any worker whose details have changed.

• At the end of the week or month, depending on how often the workers are paid, the master file is processed using the transaction tile. Before processing, the transaction tile has to be sorted into the same order as the master file, i.e. records in order of employee number

• The computer calculates the pay of each worker using the number of hours worked contained in the transaction tile and the rate per hour from the master tile. Payslips are then printed, together with reports showing overall statistics as well as error reports. The records from the old master file are read and updated using these calculations and any deletions, additions or amendments are made. These records are written to a new tape which becomes the new master file.

• The reports consist of financial reports, error reports and, of course, payslips.

• The old master file contaiJ1s the data that was up to date at the end of the previous week/month. The update. process involves the calculation of the employees wage for this week/month using the hours worked from the transaction file. The wages are calculated together with any National insurance payments and tax payments.

• These values are used to bring the year- to-date totals up to date so that they can be written to the new master file. The following week the new master file becomes the old master file and is used with a new transaction file to produce new payslips.

• The payslip contains information that can be found on the new master file and also information from the transaction file.

• The master file provides information such as the employee number, the department worked in, the pay rate per hour, the tax code, National lnsurance number, year-to -date values etc.

• To create the payslip, the above information is linked to the transaction file containing the employee number and the hours worked .

Payslips

Most payroll software has a report generator facility. Thisprovides detailed payroll listings and exception reporting.Examples of rypical reports are as follows:

• information about all employees of the company• information about employees in a given department• information about the salaries of all employees • National Insurance contributions for all employees• the total amount of National Insurance contributions paid to

the tax• the income tax that each employee has paid

Financial reports

• the total amount of income tax paid to the tax authorities

• the amount of money paid to each bank that employees have an account with

• all the earnings and deductions of employees

• the earnings and deductions of each employee by

• department• a summary of all the totals of the earnings

and deductions of each department.

Exception reports - reports of certain validation rules being broken -are also produced from the system.

Examples might be:• an employee earning an unusually large

amount of money• an employee who has been on an emergency

tax code for a long period of time• two employees having the same National

Insurance number.