What is Payroll cycle?

Definition

The payroll cycle is the period a salary payment covers, together with the cut-off date after which attendance and changes move to the next month.

How it works

The cut-off is the part that causes trouble. If attendance closes on the twenty-fifth but salary is paid for the calendar month, the last few days are estimated and corrected the following month, which is why an employee who took leave on the twenty-eighth sees the deduction a month later than they expect.

What it means in India

Section 5 of the Payment of Wages Act 1936 sets time limits for employees the Act covers: wages must be paid before the expiry of the seventh day after the last day of the wage period in establishments with fewer than one thousand employees, and the tenth day where there are one thousand or more. Wage periods themselves may not exceed one month under section 4.

What people get wrong

• Never writing the cut-off down, so employees and managers work from different assumptions about which month a leave falls in.
• Paying late and treating it as an administrative matter. Where the Payment of Wages Act applies, the deadlines are statutory.

Terms this one depends on

More on pay and salary structure

Where this shows up in practice

Almost everything on this page ends up as a line on a payslip or a figure in a register. Shiftelio keeps attendance, leave, salary structure and the statutory deductions in one place, so the number in the letter and the number in the payslip come from the same record.