Pay Codes are also known as pay categories or wage types, serve as unique identifiers assigned to specific components of an employee’s compensation. These codes help employers classify and track various aspects related to payroll, such as earnings, deductions, and other payroll-related transactions.
Here are some key points about pay codes:
Earnings Pay Codes:
These represent the different types of income an employee receives. Examples include regular wages, overtime pay, bonuses, commissions, and holiday pay.
You may refer to the link below on how to set up Earning Codes:
Deduction Pay Codes:
Deduction codes are used to subtract specific amounts from an employee’s paycheck. Common examples include: Company Advances, HMO
You may refer to the link below on how to set up Earning Codes:
Loans Codes:
Loan Codes are used to manage repayments for employee loans, automating deductions directly. They cover all loan types, such as Salary Loan, Multi-purpose Loan, or Company Loans.
Setup involves defining repayment terms and integrating them into the payroll system for consistent processing.
Importance of Pay Codes:
Pay codes are essential for ensuring accurate employee compensation and appropriate deductions, crucial for compliance with labor laws, and maintaining financial transparency. They enable the precise generation of pay slips and payroll tax calculations.
Additionally, pay codes handle a broad spectrum of payroll transactions, including reimbursements, allowances, bonuses, commissions, advances, and loans, ensuring comprehensive tracking and implementation of all compensation forms within the payroll system.
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