Salary components

Salary components are the various elements that make up an employee's total compensation. Each component can have different attributes to define how it is calculated and applied. In Digital HR, you can set up salary components with specific details such as name, type, value type, and component value on a monthly basis.

Key Attributes of Salary Components

1. Name:

   • The name of the salary component, such as "Basic Pay," "Housing Allowance," "Transport Allowance," or "Health Insurance."

2. Type:

   • Earnings: Components that add to the employee’s gross salary, such as basic salary, allowances, bonuses, and incentives.

   • Deductions: Components that subtract from the employee’s gross salary, such as taxes, insurance premiums, retirement contributions, and other withholdings.

3. Value Type:

   • Fixed: A fixed amount that does not change from month to month. For example, a fixed transport allowance of $100 per month.

   • CTC Percentage: A component calculated as a percentage of the employee’s Cost to Company (CTC). For example, a health insurance premium that is 5% of the total CTC.

   • Basic Percentage: A component calculated as a percentage of the employee’s basic salary. For example, a housing allowance that is 20% of the basic salary.

4. Component Value (Monthly Basis):

   • The specific value of the salary component calculated on a monthly basis. This could be a fixed amount or a percentage-based calculation depending on the value type.

Setting Up Salary Components in Digital HR

1. Navigate to Salary Components:

   • Access the Payroll Settings menu and click on "Salary Components."

2. Add New Component:

   • Click on "Add Salary Component" to create a new salary component.

   • Enter the Name of the component.

   • Select the Type (Earnings or Deductions).

   • Choose the Value Type (Fixed, CTC Percentage, Basic Percentage).

   • Enter the Component Value based on the selected value type.

   • Save the component.