Salary Structure
Before you can run payroll, each employee needs a defined salary structure. The salary structure breaks down an employee's total compensation into its components: basic salary, allowances, deductions, and tax. This page explains how to configure each part.
Basic Salary Configuration
The basic salary is the core component of an employee's compensation. All other calculations -- allowances, deductions, and end-of-service benefits -- typically reference the basic salary as their base.
To set an employee's basic salary:
- Open the employee record.
- Navigate to the Salary or Payroll section.
- Enter the Basic Salary amount.
- Save the record.
The basic salary is a monthly figure. If your organization pays on a different frequency, the basic salary still represents the monthly amount, and payroll calculations adjust accordingly.
Allowances
Allowances are additional payments on top of the basic salary. Common allowances include:
| Allowance | Description |
|---|---|
| Housing Allowance | Compensation for housing costs, often a percentage of basic salary |
| Transportation Allowance | Covers commuting and travel expenses |
| Food Allowance | Meal or sustenance allowance |
| Phone Allowance | Mobile phone or communication costs |
| Other Allowances | Any additional allowances specific to your organization |
Configuring Allowances
Allowances can be set as:
- Fixed amount -- A specific monetary value added each month
- Percentage of basic -- Calculated as a percentage of the basic salary
To add or modify allowances:
- Open the employee's salary details.
- Add each applicable allowance with its type (fixed or percentage) and value.
- Save.
If most employees receive the same allowance structure, configure one employee's salary fully, then use it as a reference when setting up others. This ensures consistency across your workforce.
Deductions
Deductions reduce the gross salary to arrive at net pay. They fall into two categories:
Standard Deductions
| Deduction | Description |
|---|---|
| Social Insurance (GOSI) | Government-mandated social insurance contribution |
| Health Insurance | Employee's share of health insurance premium |
| Other Insurance | Any additional insurance deductions |
Variable Deductions
| Deduction | Description |
|---|---|
| Absence Deductions | Salary reduction for unapproved absences |
| Late Penalty | Deductions for repeated tardiness |
| Loan Repayment | Monthly installment for active employee loans |
| Advance Recovery | Repayment of salary advances |
Loan repayment deductions are managed automatically when an employee has an active loan. You do not need to manually enter loan deductions each month -- the system calculates and applies them during payroll processing. See Employee Loans for details.
Tax Configuration
If applicable to your jurisdiction, configure tax deductions:
- Income Tax -- Percentage or bracketed calculation based on gross income
- Tax Exemptions -- Any tax-free allowances or thresholds
In Saudi Arabia, there is no personal income tax for residents. However, non-resident employees may be subject to withholding tax depending on their contract structure. Configure tax settings according to your legal requirements.
Payroll Settings and Policies
Organization-wide payroll settings affect how salary structures are processed:
- Pay period -- Monthly
- Currency -- The currency used for salary payments
- Working days per month -- Used to calculate daily rates for absence deductions (typically 30 or actual calendar days)
- Overtime rate -- Multiplier applied to hourly rate for overtime work
These settings are configured in HR Management > Settings and apply to all employees.
Attendance-Based Adjustments
Salary structures interact with attendance data during payroll processing:
- Full attendance -- Employee receives their complete salary with all allowances.
- Partial absence -- The system calculates deductions based on the number of absent days and the daily rate (monthly salary divided by working days).
- Unpaid leave -- Days of unpaid leave are deducted from the gross salary.
- Paid leave -- Approved paid leave does not affect salary.
These adjustments are calculated automatically during payroll runs, but payroll administrators can review and override them before finalizing.
Loan Deduction Integration
When an employee has an active loan with a repayment schedule, the monthly installment amount is automatically included as a deduction in their salary structure during payroll processing.
The loan deduction:
- Appears as a separate line item on the salary slip
- Is calculated based on the loan's repayment schedule
- Stops automatically when the loan is fully repaid
- Can be paused or adjusted if needed
See Employee Loans for details on setting up loans, and Payroll Processing for how deductions are applied during a payroll run.
Salary Structure Summary
A complete salary structure follows this formula:
Gross Salary = Basic Salary + Allowances
Net Salary = Gross Salary - Deductions - Tax
Where:
- Gross Salary = Basic + Housing + Transportation + Food + Phone + Other Allowances
- Deductions = Insurance + Absences + Loan Repayment + Other Deductions
- Net Salary = The final amount paid to the employee
Always verify salary structures before the first payroll run. Incorrect basic salary or missing allowances will produce wrong salary slips and may require corrections after the fact.