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Pay Group Configuration

After creating a Pay Group, configure its salary components to define the earnings and deductions that apply to employees in the group.

Think of this as the salary template for the Pay Group — when you assign an employee to this Pay Group, these components become their default salary structure.

Navigate to: Payroll → Settings → Pay Groups → [Pay Group Name] → Salary Components tab

How to Access Configuration​

  1. Go to Payroll → Settings → Pay Groups.
  2. Click the Pay Group name to open the detail page.
  3. Click the Salary Components tab.
Roles Listing Page

Configuration Overview​

The Pay Group detail page shows:

  • Pay Group Summary — Name, Legal Entity, Pay Frequency, Country
  • Basic Information tab — all configured pay cycle and payrun settings
  • Salary Components tab — component library for this Pay Group

Salary Components Tab​

The Salary Components tab is split into four sub-tabs:

Earnings​

Salary components that increase gross salary.

Examples: Basic Pay, HRA, Special Allowance, Performance Bonus

Earnings are included in the Gross Salary calculation.

Benefits​

Non-direct salary additions that may affect CTC.

Examples: Employer PF Contribution, Insurance Contribution, Gratuity

Benefits may or may not impact net pay depending on configuration.

Deductions​

Components that reduce salary.

Examples: Provident Fund (PF), Professional Tax, Income Tax (TDS), ESI, Loan Recovery

Deductions reduce Net Pay.

Reimbursements​

Repayments for employee expenses.

Examples: Travel Reimbursement, Internet Reimbursement, Meal Reimbursement

Reimbursements are usually paid separately or added after payroll approval.

How to Attach and Configure Components​

  1. Open the Salary Components tab on the Pay Group detail page.
  2. Select the relevant sub-tab: Earnings, Benefits, Deductions, or Reimbursements.
  3. Click the Add button. Select a component from the dropdown — the list shows all components you have already created under Payroll → Settings → Components.
  4. Set the Calculation Type — flat amount or percentage of gross/basic — and enter the value.
  5. For statutory deductions (PF, ESI, PT, LWF, TDS), additional configuration panels appear. Fill in the applicable rates, wage ceilings, and regimes.
  6. Ensure components are ordered from foundational to dependent. For example, Basic must appear above HRA (which is a % of Basic) so it is calculated first.
  7. Click Confirm after each addition.
NOTE

If a component is calculated as a percentage of another component, the base component must appear higher in the list so it is calculated first. For example, if HRA = 40% of Basic, Basic must be listed above HRA. Special Allowance should always be last, as it is calculated from what remains of the CTC after all other components.

TIP

Always add Special Allowance as the last earning component. It is auto-derived as CTC minus the sum of all other components, ensuring the salary always adds up exactly to the employee's CTC.

Important Rules​

  • A component must be created under Payroll → Settings → Components before it can be added to a Pay Group.
  • The required flow is: Create component → Attach to Pay Group → Set calculation type and amount → Save.
  • Different Pay Groups can have entirely different sets of components.
  • Avoid removing components from a Pay Group once a pay run has started for the current period.

How Salary Calculation Works​

When payroll runs, the system processes components in this order:

  1. Earnings are calculated first (from top to bottom in the list order)
  2. Benefits are processed
  3. Deductions are applied
  4. Reimbursements are added (if applicable)

Net Pay formula:

Gross Salary + Benefits − Deductions + Reimbursements = Net Pay

Why Configuration Is Separate​

Separating Pay Group creation from component configuration allows:

  • Reusing components across multiple pay groups
  • Country-specific payroll structures
  • Different salary models for different employee categories
  • Better payroll scalability

Best Practices​

  • Attach Basic Salary first before other percentage-based components.
  • Verify deduction formulas before running payroll.
  • Review component ordering if formulas depend on Gross Salary.
  • Do not modify components after payroll is finalized for a cycle.