Configure your payroll schedule, calculation rules, and salary components here - once set, payroll runs follow these automatically.
This is where you set up the rules behind every payroll run - when payroll happens, how salaries are calculated, and what earning and deduction components apply to your employees.
To access Payroll Settings:
Dashboard → Settings → Organization Settings → Payroll & Compensation
Payroll Processing Schedule
Defines your payroll cycle and the key dates involved.
Payroll Frequency - how often payroll runs: Monthly, Bi-Weekly, or Weekly
Payroll Cutoff Date - the last date attendance, unpaid leave (LOP), and attendance corrections are counted for the current cycle. Example: if the cutoff is the 25th, any attendance change made after the 25th rolls into next month's payroll instead.
Processing Date - the date HR finalizes and locks the salary calculations for that cycle
Salary Payment Date - the date employees actually receive their salary in their bank account
The flow, in order:
Attendance & adjustments captured (until Cutoff Date) → Payroll calculated and locked (Processing Date) → Salary credited (Payment Date)
Calculation Logic & Rules
Controls how PrimeHR handles specific payroll scenarios automatically.
Rounding Rules & Arrears - set how salary amounts get rounded, and whether arrears (pending amounts from a previous cycle, like a delayed raise) get added into the current payroll
New Joiners & Exiting Employees - PrimeHR automatically calculates pro-rata salary for anyone who joins or leaves mid-month — meaning they're paid only for the days they actually worked, not the full month
Loss of Pay (LOP) Basis - choose how unpaid leave deductions are calculated:
Working Days Basis - based only on actual working days
Calendar Days Basis - based on all days in the month, including weekends/holidays
Overtime Basis - choose how overtime pay is calculated: based on working days, or calendar days (e.g., a fixed 30 or 31-day month)
Salary Components
Manage the individual pieces that make up an employee's salary - what they earn, and what gets deducted.
Earning components
These are the parts of an employee's salary. By default, PrimeHR includes:
Basic Salary - the main taxable part of salary, 50% of total compensation
House Rent Allowance (HRA) - taxable, 25% of total compensation
Special Allowance - taxable, 15% of total compensation
LTA (Leave Travel Allowance) - taxable, 10% of total compensation (confirm this is the correct name)
(These four together make up 100% of an employee's compensation by default.)
All earning components are processed monthly.
Deduction components
These are statutory (legally required) deductions, applied automatically during payroll:
Provident Fund (PF) - 12%, deducted monthly
Employee State Insurance (ESIC) - 0.75%, deducted monthly
Professional Tax (PT) - a fixed amount, deducted monthly
These are applied automatically to keep payroll compliant with statutory requirements.
Adding a new component
Go to Salary Components.
Click + Add Component.
Choose whether it's an Earning or Deduction.
Enter the component name and how it should be calculated (fixed amount or percentage).
Set the frequency (e.g., monthly).
Click Save.