Chapter 11 Payroll

Jul 17, 2026

Uploaded by Violet

Chapter 11 Payroll provides a practical framework for calculating and administering employee wages and salary payments, including the distinction between gross pay and net (take-home) pay. The content explains statutory deductions such as income tax and social security, along with non-statutory voluntary deductions including pensions, trade union subscriptions, and savings or charitable schemes. It outlines core payroll processing steps, payslip preparation, and employer responsibilities for remitting deductions and employer contributions.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages30

Reading Time1 h 16 min

AccessFree to download

Chapter 11 PAYROLL For many businesses, a major item of expense is the cost of its work force, referred to as 'payroll costs' . This chapter explains how wages and salary payments are calculated and paid. It covers the syllabus area for payroll. CONTENTS 1 Payroll system 2 Processing the payroll 3 Basic pay calculations 4 Overtime pay, bonuses and commission 5 Authorisation 6 Security and control 7 Accounting for payroll LEARNING OUTCOMES At the end of this chapter, you should be able to: • understand payroll systems • understand the duties of employers in relation to taxes, state benefit contributions and other deductions • record hours worked: timesheets, clock cards • calculate gross wages for employees paid by hour, by output (piecework) and salaried workers • define and calculate bonuses, overtime and commission given the details of each scheme • describe the documentation required for recording various elements of wages and salaries • recognise the need for payroll to be authorised and identify appropriate authorisation, security and control procedures • make other deductions from wages – trade union subscriptions, payroll saving, pension contributions and payroll giving • identify various methods for making payments to employees • account for payroll costs and payroll deductions. 1 PAYROLL SYSTEM The payroll is a list of the employees of the organisation and the money due to each. A payroll list is produced each time that employees are paid. • Wage earners are paid weekly. • Salary earners are paid monthly. Sometimes, employees earn a fixed amount every week or every month. Sometimes there are variations in the amount employees earn, due to overtime payments or bonuses or commissions which add to their pay. 1.1 GROSS PAY AND NET PAY: DEDUCTIONS The total amount earned in a week or month by an employee is called his or her gross pay. This is not the amount of money that the employee receives, because deductions are taken away from the gross pay, and the employee receives just the gross pay less deductions. This is known as the employee's net pay. The deductions from pay are usually a combination of: • statutory deductions, and • non-statutory or voluntary deductions. Statutory deductions are deductions from pay that are made by law, for example: income tax and social security. These are deducted from gross pay by the employer and paid to the relevant taxation authority. In this manner employers act as the agent of the taxation authority, both calculating and collecting taxation and social security amounts. For example; in the UK income tax for employees is deducted under the ‘Pay As You Earn’ scheme along with National Insurance and paid over to HM Revenue and Customers by their employers. Non-statutory deductions are voluntary deductions from pay that the employee chooses to make. Examples of these are: • subscriptions to a trade union • contributions by the empl

Jul 17, 2026

Uploaded by Violet