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Payroll - Employer Contributions

Hi All,

Was curious as to how Indian Payroll Users configure Employer’s contribution towards Employee Provident Fund. As we understand it, its neither an Earning of Employee(not part of Salary) nor a deduction(its not being deducted from Employee’s Salary). Its an additional Expense which a company books.

Some companies show it on Salary Slip separately. Some others issue a separate slip indication what amount was contributed by Employer. Note that Employee’s share of contribution towards the fund is actually a deduction and is mentioned on Salary Slip.

Can anyone share their implementation methods or workarounds used?

Thanks,
Vamyip

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Talking as per v11.1.6

As rightly said

its neither an Earning of Employee(not part of Salary) nor a deduction(its not being deducted from Employee’s Salary). Its an additional Expense which a company books.

But company do prefer to show it in Salary Slip to inform the employees their indirect earnings.

According to me “Employer PF Contribution” Salary Component would be with flag “Do not include in total”.

image

The Salary Slip would look like below , assumption 12% is Employer Contribution and 11% is Employee Contribution of the basic salary.

All goes right, until the Journal Entry for Payroll Payable is created on click of “Submit Salary Slip” via Payroll Entry.

The expected JV Should look like below.

Chart of Accounts
PF Payable ( will be group account) & parent of Employer , Employee PF Payable Account
JV for Payroll Payable on Salary Slip Submit
Account Head Dr Cr
Salary (Expense) 20000
Employer PF Payable 2400
Employee PF Payable 2200
Payroll Payable 17800
Employer PF Contribution (Expense) 2400
Total 22400 22400
Actual Payment/Bank Entry for Salary
Account Head Dr Cr
Payroll Payable 17800
Bank 17800
Total 17800 17800
Actual Payment/Bank Entry for PF to Govt
Account Head Dr Cr
Employer PF Payable 2400
Employee PF Payable 2200
Bank 4600
Total 4600 4600

Whereas the actual Payroll Payable JV looks as below, here Employer PF Payable is treated as expense account as there is only provision to define expense account in salary component.

I think there should be provision as below in the Salary Component doctype for each components which are excluded from total to define

  1. if it is Payable > then Payable Account and Expense Account.
    At present for all components Expense is booked against the account defined in the account child table (first row) of the Salary Component Doctype . whereas for all components the final payroll payable set in Company Default Payroll Payable Account. is treated as payable account.

Looking out for experts view on this .

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Same issue I’m having on the linked article below. We’ll need to create an Issue on Github and see how we can help get it done.

Has this issue of Employer Contributions been solved?

Employer Contribution implementation

Hey guys check my implementation above

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