Attendance and Payroll Procedures

  1. Manual Method:

Under this method the attendance time of employees are recorded either by the time keeping officer or by employees themselves.

The manual methods of time keeping are as follows:

  1. Attendance Register Method:

Under this method, an attendance register is maintained for recording the attendance time. This method is followed in small sized concerns. This method is more suitable for recording the attendance time of clerical staff and other staff officers. Under this method two separate columns are maintained corresponding the names of every employee.

One column is to record arrival time and second column for recording departure time. The attendance time can be marked by the time keeping officer by calling out the name of every employee or alternatively the attendance register may be signed by every employee.


(1) It is simple to maintain attendance register.

(2) It is an economical method in comparison to other methods.


(1) This method is not suitable for medium and large sized businesses.

(2) Where the attendance is marked by calling out the names of employees, there will be hold-ups near the factory gate.

(3) Dishonest employees may mark the attendance of absentee employee.

(4) Time keeping officer may show step motherly treatment to his friends and this will defect the purpose of time keeping.

(5) It involves additional work for posting the entries into the individual working record.

  1. Token or Disk Method:

Under this method, each worker is allotted an identification number and that number is suitably painted on engraved on a round metal to ken (or disk) with the hole in it. All such token are hung in a serial order on a board at the factory gate.

As the worker arrives he takes his token from the board and puts it in a box kept nearby, which is specially kept for this purpose. After the fixed time the second board is removed. Those coming late have to hand over their token personally at the time office so that exact time of their arrival can be noted.

The time office records attendance on the basis of token in the box. The absentees are indicated by the missing tokens. Similar procedure is followed at the departure time in the evening.


(1) It is simple to operate.

(2) It does not involve heavy investment.

(3) It suits to a factory which employs more number of employees.


(1) Dishonest practice of inserting a disc of an absentee worker by another employee may take place.

(2) It involves more clerical work to prepare an attendance record with the help of disc, where any mistake is committed in recording attendance time on the basis of disc and in case of any disputes between an employee and time keeping officer, disc cannot offer any proof.

  1. Mechanical Method:

In modern age, mechanical methods of time keeping are used to save time and ensure greater accuracy. The machines record the exact time of the arrival and departure of employees. Thus, they avoid possible disputes and difference of opinions between employees and time keeping officers. Mechanical methods are used in medium and large sized industries as small sized concerns cannot afford to invest more capital on such equipment.

Following are the important mechanical methods of time recording:

  1. Dial Time Recorder:

This method consists of a large dial on which there are about 150 holes corresponding to the number of workers. A clock is fitted within the circles of the dial together with a dial arm which operates from the centre of the circle.

The worker while entering into the gate turns the dial arm. He then presses the button corresponding to his clock number. The time of his arrival is recorded on a sheet of paper kept inside the machine.

The same procedure is followed before the employee leaves the factory gate.


(1) Time is recorded strictly according to pay roll order.

(2) Provision can also be made out not only to record time but also to calculate wages.


(1) A worker can record the time of an absentee worker.

(2) Time of arrival and departure and separated out in two different sheets of paper which require additional clerical work.

(3) A worker cannot see the time he has booked and disputes may arise afterwards.

  1. Card Time Recorder:

This is a machine which is fitted with a clock on each side of which there is an ‘in’ and ‘out’ rack which contains the cards of the employees. The worker who enters the gate takes his and from the ‘in’ rack, inserts it in the machine.

On pressing a lever the time of arrival is recorded on the card. Then the card is placed in the ‘out’ rack. At the time of departure from the factory the worker removes his card, inserts it in the machine to record the time of departure and finally places it in the ‘in’ rack.


(1) For each and every worker’s time is recorded individually.

(2) The absence of worker can be checked by a mere look at the ‘out’ rack.

(3) This can be taken as a basis for wage calculation.


(1) An employee can record the time of absentee worker.

(2) Controlling and checking of cards becomes difficult.

iii. Autograph or Signature Type Time Recorder:

This type of machine is most commonly used in small sized business enterprise where supervision for time recording does not arise.

Its features can be summarised as follows:

(1) It is a machine which is fitted with a clock and is connected to a printing mechanism on a roll of paper.

(2) To operate the machine, the employee opens the shutter by pressing a lever which is at the side of the machine. This enables to uncover a small signature window.

(3) The employee signs in this signature window and as he signs, the day and time is automatically recorded.

(4) When the lever is released, the paper roll inside the machine is advanced, the shutter slides back over the signature window, and the machine is ready for the signature of the next worker.


(1) Recording of time is automatic and accurate.

(2) Employees cannot see the recorded time.


(1) The worker’s name does not appear as per the pay roll order.

(2) Breakdown in the machine leads to stoppage in the recording of attendance time.

Payroll Procedures

Payroll is a list of employees who get paid by the company. Payroll also refers to the total amount of money employer pays to the employees. As a business function, it involves:

  1. Developing organization pay policy including flexible benefits, leave encashment policy, etc.
  2. Defining payslip components like basic, variable pay, HRA, and LTA
  3. Gathering other payroll inputs (e.g., organization’s food vendor may supply information about the amount to be recovered from the employees for meals consumed)
  4. The actual calculation of gross salary, statutory as well as non-statutory deductions, and arriving at the net pay
  5. Releasing employee salary
  6. Depositing dues like TDS,PF, etc. with appropriate authorities and filing returns

A payroll officer needs to do careful planning. There are always ongoing tasks that need attention and a constant need to monitor changes to withholdings, contribution to social security funds, etc. The entire process can be split into three stages, pre-payroll, actual payroll and post payroll activities.

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Pre-payroll activities

Defining payroll policy

The net amount to be paid is affected by multiple factors. The company’s various policies such as pay policy, leave and benefits policy, attendance policy, etc. come into play at that time. As a first step, such policies need to be well defined and get approved by the management to ensure standard payroll processing.

Gathering inputs

Payroll process involves interacting with multiple departments and personnel. There can be information like mid-year salary revision data, attendance data, etc.

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In smaller organizations, these inputs are received from a consolidated source or fewer teams. However, in a larger organization, the task of gathering data may look overwhelming. If you are using a smart payroll software having integrated features like leave and attendance management, employee self-service portal, etc. inputs collection process does not remain a problem.

Input validation

Once inputs are received, you need to check for validity of the data concerning adherence to company policy, authorization/approval matrix, right formats, etc. You also need to ensure that no active employee is missed out and that no inactive employee records are included for salary payment

Actual payroll process

Payroll calculation

At this stage, the validated input data is fed into the payroll system for actual payroll processing. The result is the net pay after adjusting necessary taxes and other deductions. Once payroll process is over, it is always a good practice to reconcile the values and verify for accuracy to avoid any errors.

Post-payroll process

Statutory compliance

All statutory deductions like EPF, TDS, ESI are deducted at the time of processing payroll. The company then remits the amount to the respective government agencies. The frequency can vary depending on the type of the dues. In most cases, payment of dues is made via challans. After all dues are paid return/report are filed. E.g., for filing PF return, ECR is generated and filed.

Payroll accounting

Every organization keeps a record of all its financial transactions. Salary paid is one of the significant operating costs which has to be reported in the books of accounts. As part of payroll management, it is essential to check that all salary and reimbursement data is fed accurately into accounting/ERP system.


You can pay salary by cash, cheque or bank transfer. Typically organizations provide employees with salary bank account. Once you complete payroll, you need to ensure that company’s bank account has sufficient funds to make the salary payment. Then you need to send a salary bank advice statement to the concerned branch. This statement is issued with particulars like employee id, bank account number, amount of wages, etc. If you are opting for a payroll software that has employee self-service portal, you can easily publish the payslips and employees can log-in to their account and access the payslips.


Once you complete payroll run for a particular month, finance and high management team may ask for reports such as department wise employee cost, location wise employee cost, etc. As a payroll officer, it becomes your responsibility to dig into the data and extract required information and share the reports.

Statutory compliance in Indian payroll

When you run payroll, being statutory compliant means that you are paying as per the applicable employment norms set by the central and state legislation. The common statutory requirements that apply to Indian businesses include the provision for minimum wages, payment of overtime wages to workers, TDS deduction, contribution to social security schemes such as PF, ESI, etc.

While computing salary you need to consider all these deductions and contributions. Income tax is one such deduction. At the beginning of the year, the employee is asked to make a declaration about his additional incomes, tax saving investments, etc. called as ‘income tax declaration.’ Accordingly, employee’s tax liability is calculated, and TDS is deducted.

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