This article will provide complete and detailed instructions on how to organize a salary management system (also known as salary system) in an enterprise.

1. Understanding Payroll Management System

Salary management system, Salary system, or Salary system, is a system consisting of components that are organized in a strict manner to implement the entire salary policy applicable to the staff. personnel.

Directors and business owners have the full right to choose how to manage their company's salary, but no matter which way is done, the salary system of the enterprise needs to ensure that it meets 2 contents:

• Must be effective.
• Must comply with relevant legal provisions.

1.1. The salary system must be effective.

An effective salary system is an appropriate and good enough system to help enterprises successfully carry out the work of building human resources for their production and business activities. Therefore, when building a salary system, it is necessary to meet 4 basic requirements or:

• Salary must be competitive in terms of market prices.
• Salary must be commensurate with the capacity and contribution of each person, ensuring fairness in the enterprise.
• Salary structure must be flexible, must have hardware and software to be able to adjust up and down when necessary.
• The way to calculate salary must be simple, easy to understand, clear so that everyone can understand and check their salary.

1.2. The salary system must comply with relevant legal provisions:

The salary system of the enterprise must ensure that, when implemented, it meets the following legal requirements:

• Regulations on labor and salary in the Labor Code;
• Regulations on compulsory insurance (social insurance, health insurance, unemployment insurance) in the Law on Social Insurance, Law on Health Insurance, Law on Employment;
• In order to be able to account wages into the enterprise's expenses and present them in the financial statements, it must comply with the Law on Accounting and the Law on Corporate Income Tax;
• Wages are subject to personal income tax, so they are subject to the Personal Income Tax Law.

2. Process of building and implementing a salary management system

The process of building and implementing a salary management system includes the following 5 contents:

• Formulate salary payment regulations;
• Building a salary scale (also known as a salary scale);
• Timekeeping;
• Payroll;
• Payment of wages;

2.1. Develop salary payment regulations

Salary regulation is a document developed by enterprises on the basis of the provisions of the Labor Code and the Government's Decrees guiding the formulation of salary regulations in enterprises, which is published and applied used in business. 

The salary regulation regulates wages, salary-related issues and other payables to employees such as bonuses, allowances, welfare policies, etc. Thereby determining the basis and How to calculate salary for employees working at the enterprise.

⚠️ Important note: The salary mechanism or salary policy cannot be immutable but it needs to be continuously reviewed, evaluated and amended to suit the business situation of the enterprise, changes in labor laws and new requirements.

2.2. Build a salary scale

Salary scale (more precisely, Salary scale system) is a system of salary groups, salary grades and salary levels designed as a basis for paying salaries to employees. Depending on the capacity, job position and complexity of the job, the enterprise will pay salaries to employees based on the established salary scale.

The role of the salary scale in the enterprise

Building a salary scale helps businesses ensure fairness in salary payments, helping employees know their actual income and have expectations of striving to achieve higher-paying positions in the salary scale.

The payroll scale also shows the professionalism in the enterprise's labor management system, helping businesses easily plan their salary budget and manage salary costs extremely effectively.

Building a salary scale is the responsibility of the enterprise. When developing the salary scale, the employer must consult the representative organization of the labor collective at the grassroots level and make it public at the employee's workplace before implementation.

2.3. Timekeeping

Timekeeping is the monitoring of actual working days, leave, leave enjoying social insurance, ... to have a basis for calculating salary, social insurance to pay wages for each person and manage wage labor in the enterprise.

Currently, the forms of attendance are quite diverse. The most commonly used forms of timekeeping today include:

• Time attendance by paper card
• Time attendance by magnetic card
• Face recognition
• Fingerprint time attendance
• Online attendance…

Regardless of the means of timekeeping, all are for the purpose of determining the number of working days in a month according to the labor regulations, the salary of the enterprise and in accordance with the law.

2.4. Calculation of salary

Salary calculation is the calculation of the monthly salary that the employee receives based on all the provisions of the enterprise's salary system.

In order to calculate the salary, the payer needs to collect all the parameters that form the employee's salary. Depending on the salary system of each enterprise, there are different calculation methods. 

Salary calculation requires meeting the following requirements:

• Salary calculation must be accurate.
• Salary calculation must be timely and on time.
• The calculation of salary must “Testable” for the purpose of Self-Inspection of the enterprise; Workers check again; Labor, insurance and tax agencies check when inspecting, tax finalizing.

The result of salary payment is Payroll. Due to too many salary parameters, the Payroll is a table with a lot of information, this information is closely linked, related to many branches of law, it is easy to make mistakes, so businesses need pay attention during implementation.

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2.5. Salary payment

Salary payment is the payment of money to employees.

Common payment methods:

• Make pay slips to be paid in cash directly to each person.
• Make salary slips and pay in cash and pay for a representative to receive for enterprises with specific team and works.
• Transfer via bank account.
• Authorize salary payment through the salary payment service of the bank where the business opens an account.

Salary payment deadline:

Contrary to the meaning of most businesses, you want to pay whenever you want. In fact, the salary payment time must depend on 2 factors:

• Agreement in the Labor Contract, Salary Regulations.
• The salary payment time is specified in the Labor Code.

FAQ - Common mistakes in payroll management