Payroll Operating Procedure
Reaping the benefits of a consistent payroll operation
A payroll standard operating procedure (SOP) is a document which describes the regularly recurring operations required within
payroll. It can act as the repository for payroll processing and is created to ensure that the steps required for processing a
payroll are carried out correctly and efficiently.
Let's explore the benefits of having an SOP:
Reference document Consistent approach and employee
An SOP summarises the required steps for a
satisfaction
smooth payroll operation and the relevant Having an SOP with clear instructions and plan
timelines for each activity. This would help to assists the team in delivering consistent results
ensure that each activity is completed and makes them more confident and efficient. It
accurately and in an orderly manner while also helps to provide a sense of direction about
processing a pay run, hence decreasing the the required steps to be taken in case of any
chance of omitting a required step. error/issue.
Knowledge retention Reduces the risk of regulatory
Since the SOP incorporates all the required
violations
procedures and standards and gets updated as Not following statutory rules and regulations
a live document, it ensures that team is aware may result in penalties, audits or lawsuits being
of any changes and is able to operate and issued by the statutory body. This may also
deliver as required with minimal impact due to impact the organisation's reputation in the
changes within the team: such as employee market and not attract future talent.
turnover or if a team member is on leave etc.
What is in an ideal SOP?
Employee setup Process pay run Salary disbursement & payslip
1 Validate employee records have been 5 Run the standard payroll 9 Handling of bank file for payment for
setup and are up to date. process. salaried employees. Payslip generation
and disbursement.
Clarity on payroll input Verify payroll results
2 Statutory handling for joiners and
Address various sources and conditions 6 Perform analysis for accuracy of 10 leavers
of payroll data such as overtime, data and review statutory Perform any required statutory
allowances, employee movement etc. deductions. requirements for employee new hires
Validation of payroll input data and terminations.
3 Payroll reports
To verify data received for accuracy
7 Generate and review payroll Statutory contributions
and completeness. 11
reports and send for approval. For contributions to the relevant
Action adhoc requests statutory bodies (prior to the deadline).
4 Such as overtime payments, Provide clarification
8 Guidance/FAQ on response to Year-end compliance
deductions, new hires and resignees. 12
queries. Pertinent information required for year
end compliances.
Start a conversation with our specialists today… Link to Managed
Services microsite
Kartina Abdul Latif Lee Shuk Yee
Partner, Workforce Leader Director, Workforce -Tax
[email protected] [email protected]
© 2023 PricewaterhouseCoopers Taxation Services Sdn Bhd. All rights reserved. "PricewaterhouseCoopers" and/or "PwC" refers to the individual members of the
PricewaterhouseCoopers organisation in Malaysia, each of which is a separate and independent legal entity. Please see www.pwc.com/structure for further details.
