How to revise the salary of an employee? What is its impact on the calculation of arrears?

Salary revision refers to a change in the salary structure of employees that affects the primary components of their pay, including basic pay, PF, and gratuity. Some companies may also include other allowances such as house rent, special allowance, medical, and travel allowance. For instance, if there is a 10% salary revision, it implies a 10% increase in all the components of the salary structure. Effective salary revisions can help enhance employee satisfaction and retention.

How to revise the salary of an individual employee

Use the search bar and search out the employee.

Once the employee profile opens, go to the Finance (1) tab and select Pay (2). Under Salary (3), select Revise Salary (4).

Now, the Revise Salary window will appear. Here, you can add the new salary as well as the date from which the new salary becomes effective. You can also add bonuses, if any, on the same window.  Once done, click on Revise.

How to revise salaries in bulk

Navigate to Payroll (1) and select the Payroll Admin (2) tab. Click on Operations (3) and then go to the Payroll Imports (4) section. 

Now, click on Import Salaries with Effective Date.

When Import Salaries with Effective Date is clicked on, another window would open.  Under Upload Data, use the drop-down to select the pay group (if you have multiple groups set up). Then, click on Download the Excel Template. 

The downloaded Excel file will look like the one below. Make necessary updates in the sheet and save it.

Note: Fields with red headings are mandatory ones.

After updating and saving the Excel file, get back to the portal and click on Upload Excel File.  Now, upload the Excel file you have just saved and proceed from there.

The next window will prompt you to match the columns in the excel file to the fields in the system. Make sure that it is properly matched. Once done, click on Continue to go to the preview of the data. Once you have reviewed the data, click on Continue to finish uploading the data. 

The effective date for the revised salary given during the bulk imports should be different from the effective date of the previous salary or else the portal will throw an error.

If you want to learn how to upload/download data, click here.

The impact of salary revision when calculating arrears

Suppose the salary revision happens in April but the increased amount was not disbursed in the same month. Then, the increased amount needs to be disbursed along with the regular salary in the upcoming month (May). Although we revise the salary from the past-dated finalized payroll, the arrear will be calculated automatically and paid in the upcoming payroll.

For example:

Old salary: 30,000 per month.

The date salary revised effective from 1st April.

New salary: 35,000.

Increased amount: 5000.

Salary released in April: Rs 30,000. 

Release month: May

Then, the regular salary for May would be calculated as 35,000/- (Revised salary to be paid out in May) + 5000/-(arrears from April) = 40,000/-.

Hope this helps you understand how you can revise salaries for one or more of your employees. Write to us if you have more questions!