Manage Payroll Records: D1.HFI - CL8.04 D1.HFA - CL7.06 Trainee Manual

Manage payroll records
D1.HFI.CL8.04
D1.HFA.CL7.06
Trainee Manual
D1.HFI.CL8.04
D1.HFA.CL7.06
Trainee Manual
Project Base
William Angliss Institute of TAFE

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Melbourne 3000 Victoria
Telephone: (03) 9606 2111
Facsimile: (03) 9670 1330
Acknowledgements
Project Director: Wayne Crosbie

Chief Writer: Alan Hickman
Subject Writer: Emma Gronow
Project Manager/Editor: Alan Maguire
DTP/Production: Daniel Chee, Mai Vu, Riny Yasin
The Association of Southeast Asian Nations (ASEAN) was established on 8 August 1967. The Member
States of the Association are Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia,
Myanmar, Philippines, Singapore, Thailand and Viet Nam.
The ASEAN Secretariat is based in Jakarta, Indonesia.
General Information on ASEAN appears online at the ASEAN Website: www.asean.org.
All text is produced by William Angliss Institute of TAFE for the ASEAN Project on “Toolbox
Development for Front Office, Food and Beverage Services and Food Production Divisions”.
This publication is supported by Australian Aid through the ASEAN-Australia Development
Cooperation Program Phase II (AADCP II).
Copyright: Association of Southeast Asian Nations (ASEAN) 2013.
All rights reserved.
Disclaimer
Every effort has been made to ensure that this publication is free from errors or omissions. However,
you should conduct your own enquiries and seek professional advice before relying on any fact,
statement or matter contained in this book. ASEAN Secretariat and William Angliss Institute of TAFE
are not responsible for any injury, loss or damage as a result of material included or omitted from this
course. Information in this module is current at the time of publication. Time of publication is indicated
in the date stamp at the bottom of each page.
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http://creativecommons.org/licenses/by/2.0/deed.en
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File name: TM_Manage_payroll_records_Final.docx

Table of contents
Introduction to trainee manual........................................................................................... 1
Unit descriptor................................................................................................................... 3
Assessment matrix ........................................................................................................... 5
Glossary ........................................................................................................................... 7
Element 1: Establish procedures for the management of payroll ...................................... 9
Element 2: Prepare payroll data ..................................................................................... 33
Element 3: Authorise payment of salaries ...................................................................... 47
Element 4: Administer salary records ............................................................................. 61
Presentation of written work ............................................................................................ 75
Recommended reading................................................................................................... 77
Trainee evaluation sheet................................................................................................. 79
© ASEAN 2013
Trainee Manual
© ASEAN 2013
Trainee Manual
Introduction to trainee manual

To the Trainee
Congratulations on joining this course. This Trainee Manual is one part of a „toolbox‟
which is a resource provided to trainees, trainers and assessors to help you become
competent in various areas of your work.
The „toolbox‟ consists of three elements:
 A Trainee Manual for you to read and study at home or in class
 A Trainer Guide with Power Point slides to help your Trainer explain the content of the
training material and provide class activities to help with practice
 An Assessment Manual which provides your Assessor with oral and written questions
and other assessment tasks to establish whether or not you have achieved
competency.
The first thing you may notice is that this training program and the information you find in
the Trainee Manual seems different to the textbooks you have used previously. This is
because the method of instruction and examination is different. The method used is called
Competency based training (CBT) and Competency based assessment (CBA). CBT and
CBA is the training and assessment system chosen by ASEAN (Association of South-
East Asian Nations) to train people to work in the tourism and hospitality industry
throughout all the ASEAN member states.
What is the CBT and CBA system and why has it been adopted by ASEAN?
CBT is a way of training that concentrates on what a worker can do or is required to do at
work. The aim is of the training is to enable trainees to perform tasks and duties at a
standard expected by employers. CBT seeks to develop the skills, knowledge and
attitudes (or recognise the ones the trainee already possesses) to achieve the required
competency standard. ASEAN has adopted the CBT/CBA training system as it is able to
produce the type of worker that industry is looking for and this therefore increases
trainees chances of obtaining employment.
CBA involves collecting evidence and making a judgement of the extent to which a worker
can perform his/her duties at the required competency standard. Where a trainee can
already demonstrate a degree of competency, either due to prior training or work
experience, a process of „Recognition of Prior Learning‟ (RPL) is available to trainees to
recognise this. Please speak to your trainer about RPL if you think this applies to you.
What is a competency standard?
Competency standards are descriptions of the skills and knowledge required to perform a
task or activity at the level of a required standard.
242 competency standards for the tourism and hospitality industries throughout the
ASEAN region have been developed to cover all the knowledge, skills and attitudes
required to work in the following occupational areas:
 Housekeeping
 Food Production
 Food and Beverage Service
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Trainee Manual 1
 Front Office
 Travel Agencies
 Tour Operations.
All of these competency standards are available for you to look at. In fact you will find a
summary of each one at the beginning of each Trainee Manual under the heading „Unit
Descriptor‟. The unit descriptor describes the content of the unit you will be studying in the
Trainee Manual and provides a table of contents which are divided up into „Elements‟ and
„Performance Criteria”. An element is a description of one aspect of what has to be
achieved in the workplace. The „Performance Criteria‟ below each element details the
level of performance that needs to be demonstrated to be declared competent.
There are other components of the competency standard:
 Unit Title: statement about what is to be done in the workplace
 Unit Number: unique number identifying the particular competency
 Nominal hours: number of classroom or practical hours usually needed to complete
the competency. We call them „nominal‟ hours because they can vary e.g. sometimes
it will take an individual less time to complete a unit of competency because he/she
has prior knowledge or work experience in that area.
The final heading you will see before you start reading the Trainee Manual is the
„Assessment Matrix‟. Competency based assessment requires trainees to be assessed in
at least 2 – 3 different ways, one of which must be practical. This section outlines three
ways assessment can be carried out and includes work projects, written questions and
oral questions. The matrix is designed to show you which performance criteria will be
assessed and how they will be assessed. Your trainer and/or assessor may also use
other assessment methods including „Observation Checklist‟ and „Third Party Statement‟.
An observation checklist is a way of recording how you perform at work and a third party
statement is a statement by a supervisor or employer about the degree of competence
they believe you have achieved. This can be based on observing your workplace
performance, inspecting your work or gaining feedback from fellow workers.
Your trainer and/or assessor may use other methods to assess you such as:
 Journals
 Oral presentations
 Role plays
 Log books
 Group projects
 Practical demonstrations.
Remember your trainer is there to help you succeed and become competent. Please feel
free to ask him or her for more explanation of what you have just read and of what is
expected from you and best wishes for your future studies and future career in tourism
and hospitality.
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Unit descriptor
Unit descriptor
This unit deals with the skills and knowledge required to Manage payroll records in a
range of settings within the hotel and travel industries workplace context.
Unit Code:
D1.HFI.CL8.04
D1.HFA.CL7.06
Nominal Hours:
50 hours
Element 1: Establish procedures for the management of payroll

Performance Criteria
1.1 Establish security procedures that ensure the confidentiality and security of payroll
information
1.2 Ensure procedures for claims ensure allowances are substantiated
1.3 Establish control measures to safeguard the organisation's financial resources in
accordance with legislative and organisational requirements
1.4 Establish systems to ensure statutory obligations are met and records are kept for
the period determined by government legislation
Element 2: Prepare payroll data

2.1 Use nominated industrial awards, contracts and government legislation to calculate
gross pay and annual salaries
2.2 Calculate statutory and voluntary amounts using government and employee
documentation
2.3 Provide payroll data to payroll processor for calculation within designated timelines
Element 3: Authorise payment of salaries

3.1 Check payroll, salaries and wages are authorised for payment in accordance with
organisational policy and procedures
3.2 Reconcile salaries, wages and deductions in accordance with organisational policy
and procedures
3.3 Deal with salary, wage and related enquiries in accordance with organisational policy
and procedures
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Unit descriptor
Element 4: Administer salary records

4.1 Process declaration forms for new and existing employees in accordance with
Taxation requirements
4.2 Forward periodic deductions to nominated creditors within designated timelines
4.3 Prepare payments to government authorities accurately and despatch in accordance
with the relevant government legislation and/or designated timelines
4.4 Calculate group tax amounts and/or transcribe payments made in accordance with
taxation procedures
4.5 Prepare and reconcile employee group certificate amounts from salary records
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Assessment matrix
Assessment matrix
Showing mapping of Performance Criteria against Work Projects, Written
Questions and Oral Questions
Work Written Oral

Projects Questions Questions
1.1 Establish security procedures that ensure

the confidentiality and security of payroll 1.1, 1.2 1,2,3,6 1
information
1.2 Ensure procedures for claims ensure

1.2 1,2,5 2
allowances are substantiated
1.3 Establish control measures to safeguard

the organisation's financial resources in
1.1, 1.2 1,3,4,16 3
accordance with legislative and
organisational requirements
1.4 Establish systems to ensure statutory

obligations are met and records are kept
1.2 1,7 4
for the period determined by government
legislation
2.1 Use nominated industrial awards,

contracts and government legislation to 2.1, 2.2 8,9,10,11 5
calculate gross pay and annual salaries
2.2 Calculate statutory and voluntary amounts

using government and employee 2.1, 2.2 9,10,11,12 6
documentation
2.3 Provide payroll data to payroll processor

2.1, 2.2 8,9,11,13,14 7
for calculation within designated timelines
3.1 Check payroll, salaries and wages are

authorised for payment in accordance with 3.1 15,16,17,18,19 8
3.2 Reconcile salaries, wages and deductions

in accordance with organisational policy 3.1 16,17,19,20 9
and procedures
3.3 Deal with salary, wage and related

enquiries in accordance with 3.2 21,22 10
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Assessment matrix
Work Written Oral

Projects Questions Questions
4.1 Process declaration forms for new and

existing employees in accordance with 4.1 23,24 11
4.2 Forward periodic deductions to nominated

4.1, 4.2 25,26 12
creditors within designated timelines
4.3 Prepare payments to government

authorities accurately and despatch in
4.1,4.2 25,26 13
accordance with the relevant government
legislation and/or designated timelines
4.4 Calculate group tax amounts and/or

transcribe payments made in accordance 4.3 27,28 14
with taxation procedures
4.5 Prepare and reconcile employee group

4.4 28,29 15
certificate amounts from salary records
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Glossary
Glossary
Term Explanation
System that collects and processes data and

Accounting information system
communicates financial information
Period used for calculating annual financial statements

Financial year
and summaries
The collection of accounts that capture all the financial

General ledger
activities of an organisation
System of procedures and forms established in a

Internal control system business to safeguard its assets and ensure the reliability
of accounting information
Legislation is laws that have been made by governments

Legislation
or governing bodies
Organisation of workers who have come together to

Trade Union
promote and protect their interests
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Glossary
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Element 1:
Establish procedures for the
management of payroll
1.1 Establish security procedures that ensure the
confidentiality and security of payroll
information
Introduction
The hospitality and tourism industry is considered to
be a labour intensive industry. This means that
organisations rely on people to deliver the goods or
services that they are selling. It is difficult to imagine a
machine replacing a chef or an automated driver as a
tour guide. Payroll costs are very often the highest
cost next to the cost of sales (as a percentage of
revenue) for hospitality and tourism businesses.
Along with this, the hospitality and tourism industry experiences a much higher employee
turnover rate than other industries. The turnover rate is the percentage of employees that
leave and need to be replaced compared to total employees for a given period.
It is therefore very important that the management of the payroll function includes
effective and efficient processes and procedures. These should include managing the
movement of employees and the accurate and timely preparation of payroll information.
The scope of responsibilities and tasks required to manage payroll ultimately depends on
the nature and size of the business. Larger hospitality and tourism organisations assign
payroll responsbilities within the Finance or accounting department to dedicated payroll
personnel. The owner, general manager or financial controller may be responsible for
payroll in smaller organisations.
What is payroll?
Payroll is all the relevant financial information associated with salaries, wages, bonuses,
tips and gratuities, commissions and entitlement such as holiday leave, deductions. The
term payroll includes all the payments made to employees for work performed.
Salaries and Wages
The terms salaries and wages describe payments made to employees. Although these
terms are often used in place of each other, their meaning is different.
A salary is a periodic payment (weekly, fortnightly, monthly) from an establishment to the
employee that is usually specified in an employment contract. The contract quotes an
annual amount which is divided equally across the pay periods in a year. Expected hours
of work will also be detailed in the employment contract. When employees who earn a
salary take leave, periodic payments based on the annual salary are still made.
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A wage is a payment to an employee from their employer based on an hourly rate and the
actual number of hours worked. Sometimes payment is based on the goods and services
produced rather than an hourly rate.This is called commission and is classified under the
category of wages. Wage earners are paid simply for hours worked so do not receive any
payment if leave is taken.
Each of these different options for payment must be handled appropriately by the payroll
system so that each employee receives the correct pay for the pay period. Information
detailing the basis for which an employee is paid, such as timesheets,rates of pay and
employment contracts must be accessible and available to those managing the payroll
function. There are also deductions that must be calcuated on each employee‟s pay
depending on the location of the business and the personal circumstances of the
employee. These include taxation, health care payments and other statutory
requirements. Documentation provided by the employee when hired for such deductions
is also required by those managing the payroll function.
Legislative requirements
To manage payroll effectively, processes and procedures must
adhere to the current labour laws of the region or location in which
the business operates. Due to historical, political and economic
reasons, these laws are quite diverse across ASEAN countries.
As part of the ASEAN charter,the ASEAN community is working
towards reaching common regional standards of labour laws in
relation to areas such as employment contracts, collective
bargaining agreements, temporary work and individual dismissals.
The ASEAN Labour Ministers Work Programme 2010-2015 is an example of a program
that ASEAN labour ministers have adopted.
In this changing environment, it is important that those managing the payroll function
remain well-informed of the current laws and that the payroll system reflects these
changes in a timely and efficient manner. Examples of this information include but are not
limited to:
 Government legislation such as a minimum wage and conditions for which
employment can take place
 Occupational health and safety conditions
 Guidelines as to amounts that must be paid to the government on behalf of employees
such as taxes
 Industry codes of practice.
Underlying these legislative requirements for the payroll function is the responsibility of
the establishment to maintain a high level of security and confidentiality.
In addition to the legislative requirements above, many countries have passed laws to
ensure that all payroll information remains private and confidential. There is often a fine or
even orders to cease trading if these laws are not followed. This is primarily because
employee details and the conditions under which they are employed are private and
sensitive. You will need to know the relevant laws that apply to your workplace.
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Payroll information
Procedures to manage payroll must primarily reflect the need to keep payroll information
secure and confidential. This information will be both electronic and paper-based
documentation, depending on the payroll system of individual establishments. Tasks and
responsibilities are designed to ensure the competent and efficient management of payroll
as well as effective internal control measures. They may also provide assurance that:
 Legislative requirements are met
 Transactions are processed in a timely manner
 Payroll information is accurate and current
 Reports and forms are prepared in a timely manner
 Authorisations are appropriate and provided correctly
 All transactions are entered correctly into the payroll
system
 All payroll related documentation is stored securely.
Employee files or records
Employee files or records are created for each employee when they begin employment
with an organisation. There may be legislative requirements that govern the nature of the
information that must be held for each employee or this may be specified by workplace
policies and procedures. This information includes:
 Remuneration details such as salary, wages or payments for commission
 The name of the law or other directive that details the agreement under which the
person is employed. This also includes an individual employment contract.
 The hours to be worked including overtime and shift work if applicable
 Start and finish times
 Details of allowances or other entitlements
 If applicable, details of leave entitlements
 Any deductions to be applied to salaries and wages, either on request from the
employee or to meet legislative requirements such as:
 Taxation or other social security requirements
 Health care benefits
 Union contributions
 Social
 Personal details of the employee such as:
 Date of birth
 Home and postal address
 E-mail address
 Contact phone numbers
 Emergency contact details (next of kin)
 Bank account information for deposit of wages and salaries
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 Driver‟s licence (if applicable)

 Passport or other government issued identification, if applicable.
Unauthorised access to this personal information could put the employees and the
establishment at risk from illegal activity such as identity theft. It is therefore very
important that there are appropriate security measures in place surrounding employe
records.
Organisational payroll documentation
Another source of payroll information is the documentation that is required to process
payroll data. This information can be categorised by documentation that supports the
integrity of the payroll system and forms and reports used when payroll is processed.
Examples of documentation supporting the management of payroll are:
 Numbered payroll registers – manual or electronic
 Passwords to access payroll data and the payroll function
 Back up files
 Offsite storage for information.
Examples of documentation required to process payroll are:
 Timesheets where applicable
 Lists of authorised signatories to approve timesheets
 Authorised access to enter, reconcile and produce payroll reports
 Details of payments required to external agencies.
Also, managers and owners require certain reports to be prepared on a periodic basis that
summarise payroll information. When an establishment has multiple departments or
functional areas, the manager for that department should only receive payroll information
for their department. It is only the general manager and owners that require an overview
of the entire establishment.
Security procedures
Throughout all stages of the payroll process, security procedures must ensure that payroll
information is kept confidential and secure. Organisations establish internal control
measures to address this that include:
 Clear policies regarding the screening and selection of new employees
 Training of new employees to be cost efficient and appropriate to the position
 Separation of responsibilities from hiring new staff, approval of pay rates, authorising
hours worked and processing of payroll
 Pre-numbered documents such as identification number for each employee,
processing documents are used
 Reconciliations performed to check calculations
 A separate bank account is maintained for payroll to provide more accurate means of
verifying and reconciling payments to employees.
This is discussed further at 1.3 Establish control measures to safeguard the organisation's
financial resources in accordance with legislative and organisational requirements.
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Workplace policy and procedure manuals are the most common way to document
guidelines for the security of payroll information. Employees are expected to know the
ethical and moral responsibilities set out by the organisation with regard to the payroll
function. These include personal traits and attitudes such as honesty, teamwork and co-
operation. Also detailed will be explanations of any legislative requirements which
employees are expected to know and understand.
There are a number of different ways that policies and procedures will approach the
security of payroll information. The type of information, how often it is used and any
government regulations regarding the time a business must keep records often governs
this. There is also an economic cost to consider. Hospitality and tourism businesses can
often be restricted by the size of their premises. Giving up space that may generate
revenue to store records may not be wise. Even in larger premises, allocating secure
workspaces is an expense that management needs to consider. Nevertheless, there are
general policies and procedures that each workplace should adopt and may modify for
their own purposes.
Audit trail
An audit trail tracks transactions and documentation through the
payroll system. In a computer-based system, the audit trail will
show who accessed information, when the information was
accessed and if any adjustments were made. If any fraudulent
activity has occurred, it can be traced.
Authorised access
Access to the payroll system should be restricted to authorised personnel only. Electronic
systems usually require passwords and can limit access not only to the payroll function
but to the various tasks and responsbilities within the payroll function. If payroll is
processed manually, secure procedures are physical measures such as keys,swipe cards
or other secure access.
Passwords should be changed or required to be changed on a regular basis and keys or
cards protected through “not to be copied” mechanisms and tracking systems.
Back up files and storage off site
All employee files and payroll information relating to employees
and the organisation must be backed up to minimise potential
loss of data. Copies of back up files should also be stored off-
site.
In addition to this, lists of authorised signatories, passwords,
secure keys and other forms of security must also be kept in a
form of secure storage. It should only be accessible by senior
personnel.
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Employee details
As mentioned earlier, employees will have their own employee file with documentation
relevant to their employment conditions. It is very important that this information is stored
in a secure location with limited access. For example, employee files may be in a lockable
cabinet in the Accountant or Human Resource Manager‟s office. The relevant manager
approves access to appropriate personnel. In a computerised system, the system itself
would allow access to private information by password or other secure identification.
Once again, you would expect senior payroll staff, the Accountant and Human Resources
to be allocated access. In a smaller business, the owner may be the only person with
access to the records.
Employees should have access to their personal information. This should again be
password protected or require identification to be shown, depending on the payroll
system.
When payment of salaries and wages or other remuneration is processed through secure
bank transactions, bank details should be signed by the employee to indicate that they
are true and accurate. This ensures the funds are transferred into correct and secure
accounts. These bank details will also be kept securely, often with employee records.
Processing payroll
There are a number of different ways that organisations process payroll. Some systems
are manual and some are computerised or a mix of both. However, the manner in which
information is treated so that it is kept secure and confidential is similar.
In a manual payroll system, a payroll register is used to
process payroll. This is a numbered document and must
only be used by those authorised to process payroll. It is
kept in a safe, similar to cash. If employees are paid by
cheque, these too are kept in a safe and only accessed
by those authorised to process payroll. A computerised
payroll system also utilises a payroll register as part of
the internal programming features.
Payroll is processed when payroll officers receive an
authorised instruction, such as a timesheet. This instruction substantiates the employee‟s
remuneration and is used as the basis for calculating amounts that must be sent to
government agencies. Payroll offices often use a checklist to ensure all pay instructions
are received and appropriately authorised.
When processing payroll data, payroll officers are often physically located in a secure
workspace of their own. This ensures that information given to them remains confidential.
In some situations, employees receive pay in notes and coins and must produce
identification and sign to indicate that the payment has been received. It is good practice
to encourage the employee to check the notes and coins in front of payroll personnel to
ensure the amount is accurate.
At the completion of processing, payroll officers must also ensure that the reports
generated, either manually or electronically, regarding the payroll, are also secure and
confidential. These are for the eyes of appropriate department managers and other senior
management only.
Reports should also be stored in a lockable storage solution in the offices of the
accountant or payroll manager.
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Usually, payroll data for at least one financial year is stored in this manner as it is often
needed to prepare additional reports or for management reference. For records older than
a year or so, storage is usually in an alternative location. This depends on the size of the
business and the physical space the business has for this purpose. Government
regulations will often specify the period of time for which organisations must hold their
payroll information.
1.2 Ensure procedures for claims ensure

allowances are substantiated
Introduction
In addition to receiving a wage or salary for hours worked, employees are sometimes
entitled to other payments from their employers. These additional payments are often
referred to as allowances. It is important to distinguish between allowances and employee
benefits for this purpose. Government legislation in ASEAN countries refers to employee
benefits as payments an employer makes to the government on behalf of the employees -
for example, social insurance or social security payments.
Allowances on the other hand, are payments made to the employee directly. They form
part of the employment conditions and are detailed in each employee‟s personnel file.
Sometimes, legislation requires certain allowances to be paid and in some instances,
allowances have been agreed before employment commenced. It is important to note that
allowances are not generally accepted conditions of employment and will vary across
locations and regions. Only those allowances that have been agreed as a condition of
employment must be paid.
Allowances can be separated into two broad categories that relate to:
 The function or location of the work undertaken such as recognition of a particular skill
 A specific event or activity, such as a tool allowance, an overtime meal allowance or a
travel allowance. For example, chefs may be able to make a claim for their knives or a
tour guide claim an allowance for travel.
The volume and variety of allowances in the hospitality and tourism industries is extensive
and will be detailed in the policy and procedures manuals at individual establishments.
You should be familiar with these allowances. As a guide, the types of allowances can be
further categorised as:
 Travel allowances
 Employment allowances – these are often specified by
government legislation
 Tool allowance
 Overtime meal allowance
 Remote area allowance
 Qualification allowance
 Laundry allowance
 Relocation allowance.
Allowances are usually paid to employees as part of their
normal wages or salary. They will be shown as an allowance
on a separate line with the description of the particular type of allowance and, where
relevant, the rate associated with that allowance.
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Substantiation procedures for claims of allowances

To ensure that procedures guarantee the substantiation of claims for allowances, it is
essential to establish clear policies and procedures in relation to the payment of
allowances. But first, the payroll system must very clearly reflect the allowances that each
establishment has authorised or is required to pay to employees. For this purpose,
allowances can be considered as:
 Set allowances
 Specific event-linked allowances
 Specific event or activity claimable allowance.
Set allowances
Set allowances are based on an agreed standard or condition of employment. A laundry
allowance for a work uniform is a typical example. This allowance is assigned when the
employee is set up in the payroll system for the first time and is paid consistently with the
regular salary or wage.
Specific event-linked allowances
This allowance is based on actions linked to the standard payroll process such as an
overtime meal allowance. Payment will be calculated as prompted by other information in
the payroll system such as hours worked in this case. A timesheet or other record of
hours worked would always support this allowance.
Specific event or activity claimable allowance
Payment of these allowances is based on an application and approval process such as
the submission and authorisation of a claim form. There must always be appropriate
documentation supplied to support the amounts claimed such as receipts or other
evidence. For example, a chef may claim an amount for expenditure on knives as part of
a tool allowance. Once approval is granted, the allowance will be included as part of the
next salary or wages payment.
Creating allowances in the payroll system

The most common way to set up allowances in the payroll system is to assign each
allowance a unique code. This is recorded in the payroll register of a manual system or
assigned electronically by a computerised payroll system. The payroll manager or other
senior payroll staff maintains a record of each code along with the documentation that
supports the approval of the allowance such as the employment contract or reference to
legislation. Records also include a clear description of each allowance. For example,
tools in the hospitality and tourism industry mean something different to tools when
working as a builder. Does travel mean to and from the place of employment or travel to a
destination to meet a tour group? These definitions should be noted or attached to the list
of unique codes and available for reference as required. As with all payroll information,
this documentation is kept secure and confidential according to organisational policy.
The payroll manager is responsible for maintaining the unique allowance codes and must
ensure that they are informed of any changes that may occur. They may subscribe to
relevant mailing lists, online alerts or other means of notification especially in regard to
legislative changes. When a new allowance is approved or an employee becomes entitled
to an allowance, the payroll manager must receive this notification from authorised
managers. In a larger hospitality and tourism business, the department manager, or
perhaps human resources or other appropriate senior management, would provide
appropriate authorisation.
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For a smaller business the owner, manager or both would be provide authorisation.
Authorisation and details of the allowance are added to the employee‟s manual and
electronic records according to workplace procedures.
It is important to note that the payroll manager or other senior accounting personnel must
be the only employees authorised to add, alter and delete allowances in the payroll
system. Such changes must always be made in a timely manner so that the next payroll
to be processed is accurate and employees are paid correctly.
Application process for receiving or paying the allowance
Once allowances are created and assigned to employees where relevant, they can be
processed by payroll. Procedures to guarantee the substantiation of claims vary
depending on the allowance categories described earlier.
Set allowances
When employees are entitled to claim set allowances,
the claim is verified by the terms and conditions of
employment, whether that be a contract, an
agreement or legislative requirements. When the
employee is created in the payroll system for the first
time, the relevant allowance code is assigned to the
employee with reference to these terms and
conditions.
Adjustments may need to be made over time as mentioned earlier and are supported by a
review of the new terms and conditions of employment.
Specific event-linked allowances
The procedure for verifying allowance claims that relate
to a specific event requires approval from the employee‟s
manager or supervisor. This may be part of the
employee‟s timesheet for the pay period or may be on
another form such as a Variation of Pay form. Whatever
format the document takes in individual organisations,
payroll officers must be sure that the claim is authorised.
Generally, the payroll manager maintains a list of
authorised signatories, including the allowance codes that each signatory can approve.
One of the most common allowances in this category in hospitality and tourism
establishments is the overtime meal allowance. To substantiate the claim, an employee
will submit a timesheet or other record of hours that is approved appropriately. When this
information is entered in the payroll system, the system recognises that for this employee,
overtime hours meet the requirements for the allowance to be paid. In a computerised
system, a prompt may appear and in a manual system, procedures will ensure that payroll
personnel perform this check.
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Specific event or activity claimable allowance

Claims for allowances under this category may be less
frequent that claims that relate to hours worked. Often,
there is either a set quantity or value for which the
employee is entitled to claim over a given time period.
For example, you may be allowed to claim for a new
uniform once every six months or a chef for knives just
once per year of employment.
A standard form should always accompany these allowance claims. This will describe the
claim and record appropriate management approval. Attached to the claim form should
always be documentation that substantiates the claim. This may be a receipt for a uniform
or tools or some other proof that the employee incurred the expense. Even if there is
management approval of the claim form, the claim should not be processed without this
supporting documentation. Some organisations may also require the purchase to be
sighted by the manager although this is difficult to prove.
Once the claim is received by payroll, payroll officers check that all documentation is
included and complete. They may also check that the claim meets other criteria such as
frequency or value limits. The claim may then be forwarded to senior payroll staff for
approval and returned for processing.
Sometimes employees may have agreed different allowances as part of the terms and
conditions of their employment even though their duties and responsibilities in the
organisation are the same. To maintain confidentiality, the most senior payroll personnel
may process allowance claims that may be sensitive in nature.
Implications of allowances
When an allowance is paid to employees as part of their salary

and wages, there may be implications for the calculation of
deductions that must be reflected in the payroll system. For
example, Singapore imposes a tax on salaries and wages,
ranging from 0 to 20 percent on the individual income of a tax
resident. If the definition of income includes allowances, then
the payroll system must first add the allowance to the ordinary
salary or wages payment and then calculate the tax. If the
allowance is not included, then the tax is calculated just on the
ordinary salary or wage amounts.
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1.3 Establish control measures to safeguard the

organisation's financial resources in
accordance with legislative and organisational
requirements
Introduction
As was mentioned earlier, the cost of labour is always a high proportion of total operating
costs for establishments in the tourism and hospitality industry. To ensure that the cost is
monitored and controlled effectively and efficiently, organisations adopt certain policies
and procedures that form part of the internal control system. The purpose for control
measures in the payroll function is to:
 Protect the establishment from fraud or theft
 Minimise errors through prevention and detection procedures
 Increase organisational efficiencies by providing analytical information.
The main objectives focus on ensuring that payroll transactions are:
 Valid - employees exist
 Complete - all hours worked are paid
 Accurate - correct hours and pay rates are used
 Accountable - responsibility for tasks is clearly
defined.
There are a number of internal control principles that
govern the measures an organisation will implement.
For the payroll function, these principles include:
 Establish responsibility
 Separate or divide the responsibility for related
transactions
 Documentation procedures
 Use of mechanical and electronic equipment
 Internal review.
Confidentiality and privacy

The payroll function holds private and personal details of all employees as discussed
earlier. Family information, contact details, medical history and details of remuneration
and conditions of employment are all examples of information stored.
There are ethical and legal requirements an establishment must follow to ensure that this
documentation remains confidential and is only accessed by personnel with appropriate
authority. Paper copies of documents are usually kept in a form of secure storage and
computerised records are only accessed with the relevant password or other security
measure.
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The bank account

To facilitate control of payroll payments to employees, most establishments will set up a
separate bank account from that used for other cash payments. This makes it easier to
ensure that there are always sufficient funds to meet payroll commitments for each pay
period. It also streamlines bank reconciliation procedures by separating payroll cheques
from other cheque payments. Any potential payroll issues surrounding payments will be
evident.
New employees and changes to conditions of employment

The authority to hire employees for new positions or to
replace departing personnel should be charged to one or
two senior people in an organisation. A large establishment
may have a personnel department who are responsible for
this task and smaller hospitality and tourism organisations
may assign this responsibility to a general manager or
senior personnel in a department or functional area. It is
important that those with the authority to hire new staff are
completely separate from the function that prepares payroll.
In addition to this, any changes to employee conditions, such as a change of position,
change to a pay rate or even when an employee leaves the organisation, should be co-
ordinated by the same person or persons. There will be documentation to complete and
authorise in each of these cases that will be forwarded to those processing payroll in
accordance with individual workplace policies and procedures.
Recording and authorising hours worked

To ensure that payroll costs are valid, accurate and complete, an effective system of
internal control will feature appropriate recording and authorisation procedures. Such
procedures are dependant on the nature of employment, the size and scope of the
organisation and management policies.
Salary
Authorisation to process salaries for each pay period will follow one of the following
procedures.
 Senior personnel in functional areas, department managers and the general manager
utilise a pre-prepared payroll listing of all salaried employees and verify that each
employee was present and working for the pay period. Any variations, such as holiday
leave, absence due to illness, extra remuneration for hours worked would be noted on
this form and sent to payroll for processing
 Designated personnel receive or have access to a draft payroll report from the
computerised accounting system detailing the employees and the monetary amounts
that will be processed. This is verified using appropriate system functions and can
automatically advise those preparing payroll that authorisation has been given
 Designated personnel as mentioned in the first point above, only advise payroll of any
changes required in processing salaries. This is called exception reporting.
It is assumed that all employees on a fixed salary should be paid their normal salary for
that pay period. It is only exceptions that need authorisation. There will be appropriate
documentation for such variations to be recorded.
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Wages
It is important that the internal control system captures an accurate account of the hours
worked so that employees are paid their wages and on time. This requires procedures to
record hours worked and a process for authorisation and independent verification of these
hours.
There are a number of formal time-keeping systems an organisation can adopt to record
hours worked. Each system will feature a mechanism for recording the time an employee
started work, sometimes called clock-in or check-in. It will also capture the time they
finished, sometimes called clock-out or checkout. The cost and the benefits each system
provides must be considered by management to be appropriate for the degree of internal
control required in each establishment. Three options used in hospitality and tourism
establishments are:
 Paper-based time cards for each
employee that are inserted into a machine
that record the clock-in and clock-out time
on the card. These are collected and
reviewed at the end of a pay period
 A secure key, password or other device
that records the time an employee logged
into and logged out of the computerised
information system. This is collated for the
pay period on a report that is sent to
supervisors or managers
 Manual or system based timesheet where the employee manually enters the time the
shift started and finished.
Each option may also require supervisors to maintain a summary sheet that is updated
manually each shift with start and finish times for each employee.
It is important to remember that no system is guaranteed to prevent fraud or error but
minimise the opportunity for either to occur. For example, one employee could clock in
and out for another in a paper-based time card system. Errors may occur in a system
where manual timesheets are used.
No matter which system is used, hours worked for each pay period need to be approved
and sent to payroll for processing. This process can be separated into two stages. Firstly,
at the end of a pay period, employee records and supervisor summary sheet are collected
and reviewed. Supervisors or manager verify hours worked by authorising employee
records. These authorised records along with the summary prepared by the supervisor
are sent to payroll.
The second stage is a review by payroll personnel. Documentation completed by
employees is compared to the information provided by managers or supervisors. Any
differences are investigated by discussing the issue with the supervisor, employee or
both. When there are no differences or problems are resolved, the payroll is approved for
processing.
Sometimes, the summary sheets prepared by department heads are sent directly to
payroll and it is simply verified employee documentation that is forwarded at the end of
the pay period. In this way, internal controls are strengthened by minimising the chances
of dishonest activity between managers and their staff but also by confirming that all
wages paid are complete and accurate. Remember that independent verification is a key
feature of an effective internal control system.
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Overtime
Overtime is any time worked by an employee that is beyond their
ordinary hours of work. For an employee on an annual salary,
ordinary hours often refer to a weekly number of hours. For an
employee paid by wages, ordinary hours refer to the number of
hours in a shift. Internal control procedures would require the
overtime hours to be recorded on appropriate documentation
such as an overtime approval form. This form would be approved
by designated personnel and forwarded to those responsible for
payroll processing. Similar to the process for wages, payroll
personnel would compare the overtime information to other
documentation and approve for processing.
Processing and distributing payroll

For effective internal controls, it is necessary to ensure that internal control measures
segregate the duties of preparing the payroll, authorising payroll to be processed,
distributing pay to employees and reconciling payroll.
Preparing payroll
Documentation supporting hours worked is forwarded to appropriate payroll personnel by
supervisors and managers in departments or functional areas within the establishment.
The size and nature of the organisation usually determines how many personnel are
required to process payroll and it is usually part of the accounting department or back
office in an accommodation venue.
Processing payroll
To process payroll, documentation summarising hours worked is reviewed. From time to
time, an independent accounting office employee will spot check payroll sheets to verify
that hours worked, pay rates and calculations are accurate. In either a manual or
computerised system, payments for all employees are prepared. These payments are
then authorised by either a senior payroll employee or other manager charged with this
task.
Once authorisation has been granted, payroll can be processed. Payments are generally
made to employees from one of the following options:
 Cheques
 Electronic transfer - an electronic file is sent to the bank with instructions for the
amount that is to be transferred electronically to the employee‟s nominated bank
account.
Some organisations will offer both options to employees and some, depending on size
and management policies, will just use one payment method. The internal controls
surrounding cheque and electronic payments are the same as other cash disbursements
discussed earlier.
Wherever possible, organisations should avoid making payroll payments in cash.
However, this is sometimes unavoidable for hospitality and tourism organisations because
often people are hired as needed. For example, if a number of guests check-in to an
accommodation venue without prior reservations, housekeeping may need to call on
additional staff to service rooms more quickly than planned. It would be unfair to ask
these employees to wait for their wages until the next pay period which could be a week
or two away.
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In cases like this, establishments use a pre-prepared cash payment form that details
hours worked, pay rate and employee details. This form is authorised by the supervisor
and manager and forwarded to the employee assigned with cash disbursement duties
such as the cashier. It is important that the authorisation and payment duties remain
separate.
Distributing payroll
Internal control measures should always require the duties of payroll processing and
payroll distribution to be carried out by different personnel. This minimises the opportunity
for fraudulent activity such as a pay cheque being written to a fictitious employee but
cashed by another genuine employee.
When payroll cheques are prepared, cheques should be handed to employees or mailed
to their home address. Any cheques that cannot be delivered should be given to senior
accounting personnel or the general manager who have no responsibility for preparing the
payroll cheques. If electronic transfers are made, a pay slip is prepared summarising the
monetary amount and bank account details for each employee. This should be distributed
under the same guidelines as cheques.
In smaller hospitality and tourism establishments, employees may pick up their pay
cheque or slip from the payroll office.In larger operations, department managers may
distribute them. Usually, in these cases, the payroll office or managers know each
employee. Sometimes, pay cheques and slips are issued only when photo identification or
a signature that matches the original job application is shown. To take this internal control
measure one step further, this responsibility is assumed by a member of the accounting
department that has no other involvement with the payroll function.
Reconciling payroll
When payroll is processed each period, the general
ledger in the accounting information system is updated
with payroll cost details. This enables reports to be
produced that not only advise managers about payroll
information but include payroll data with other financial
information that may be required.
To ensure that the general ledger is accurate, a
reconciliation is always performed between the payroll
costs and information produced by the payroll function and the general ledger. An
effective internal control system will give this responsbility to an employee that is not part
of the payroll function thereby minimising the risk of fraudulent activity.
As payroll is processed, there will be control totals that need to be checked and
reconciled before the next step can be performed. For example, the total hours calculated
on each timesheet are compared to a report summarising these hours. Once this is
accurate, the pay for each employee can be prepared.
At the end of each pay period and also at the end of the financial year, reconciliations of
all payroll totals are prepared. Employees who are responsible for this task may perform
some or all of the following:
 Reconcile a random selection of individual pay records and ensure that the total paid
for each period equals the total for this employee for the year
 Reconcile allowances paid to employee records and to the general ledger
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 Reconcile all deductions to payroll reports and the general ledger. There may also be
periodic sport checks to employee records
 Any other payroll data that is updated from the payroll function to the general ledger.
Any errors or discrepancies that are found must be invetigated. Sometimes, the payroll
function will produce exception reports that highlight any unusual occurrences. Any
adjustments to payroll data must be approved and verified by personnel that are separate
from the payroll function.
Budgetary controls
As part of an effective internal control system, organisations set standards of performance
so that actual results can be monitored and compared to these standards. For the payroll
function common standards of performance include:
 Average hourly rate
 Average time taken to perform certain tasks such as
cleaning rooms in an accommodation venue
 Average number of employees per cover for a food
and beverage outlet
 Total budgeted daily payroll costs by department or
functional area
 Total budgeted monthly payroll costs.
When actual results are compared to the budgeted results, management can monitor the
performance of the business and adjust operations as required. For example, if payroll
costs for the month are higher than what was planned, the manager compares the plan to
the actual results to investigate either the average rate paid or the total hours worked.
Action can then be taken to address any issues and better control payroll costs next
period as required.
At the same time, the department manager may compare the report to previous periods.
Significant variations from the standard or a concerning trend can be identified and action
taken as required.
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1.4 Establish systems to ensure statutory

obligations are met and records are kept for
the period determined by government
legislation
Introduction
Employers must meet certain legal obligations when managing payroll. Personnel that
establish payroll systems, process and prepare payroll for distribution must be familiar
with the range of government legislation and statutory requirements and ensure that the
payroll system complies with each obligation.
As was mentioned at 1.1 Establish security procedures that ensure the confidentiality and
security of payroll information, these laws are quite diverse across ASEAN countries. The
legal obligations in each country can arise from both government legislation and common
law, depending on the historical basis of the legal system. In addition, laws are changing
as ASEAN countries attempt to reach common standards that will affect the payroll
systems in each region or location. Rather than attempt to include each and every
relevant condition or standard, a general outline of the kinds of obligations you may find in
your workplace are discussed along with the implications for payroll to ensure the
obligations are met.
Conditions of employment
Nature of the obligation

These obligations describe the conditions under which personnel are employed. They
include the following:
 Work agreements such as collective agreements
and flexible working contracts
 Working hours including overtime and restrictions
on employment of certain special categories of
employees at certain times of day
 Conditions for special categories such as children
and employees with disabilities
 Minimum wages
 Leave entitlements
 Mandatory benefits
 Rest times
 Probationary periods
 Termination of employment
 Labour inspections
 Criminal sanctions for breach of obligations.
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Payroll responsibilities to ensure compliance

To ensure the relevant conditions of employment are reflected in the payroll system, it is
necessary to determine the conditions that are relevant to the hospitality and tourism
establishment. Appropriate pay rates, allowances, standards and time lines for calculation
are just some examples of the data that must be incorporated into the payroll system.
Labour management relations
Nature of the obligation

Labour management relations refers to the rules or guidelines that govern and organise
employment in an organisation. These can describe:
 The way in which agreements on the terms of
employment are reached such as labour contracts or
collective bargaining agreements
 The terms such agreements must include
 Trade union membership arrangements
 Industrial relations dispute settlement
 Job training and placement policies.
The payroll system must adequately document the appropriate agreements and
conditions under which employees in the hospitality and tourism industry are employed.
This can include ensuring that standard agreements for new employees are on hand,
trade union membership forms or other documentation are available for employees to
complete at any time during their employment, appropriate training policies and
documentation as just some examples.
Employment of migrant workers

Under the ASEAN Economic Community framework, members are working towards
several changes to the employment conditions for migrant workers. This includes the
conditions of employment for those employees that choose to relocate to a different
ASEAN country and the rules and regulations employers must meet to hire such
employees. You will need to be clear on the specific obligations for your workplace.
For example, in some countries, migrant workers can only be employed if there are no
suitable local workers to take the position. Certain reports and permits must be completed
and maintained before the migrant worker was approved for employment. If this obligation
is relaxed, the payroll system no longer needs to maintain such paperwork.
Occupational Health and Safety
Both government and common law obligations across the ASEAN countries require
employers to adopt policies and procedures that maintain a safe workplace. For example,
for a food and beverage outlet, workplace practices would require employees to follow
guidelines regarding their behaviour around hot kitchen equipment, lifting heavy articles
and other practices.
The payroll system will maintain documentation that is completed if an incident occurs
where safe work practices were breached, not followed or were not effective. Sometimes,
employees are entitled to additional pay entitlements and reports or forms must be
submitted to relevant authorities.
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Income tax
The nature of the obligation

Income tax is a charge imposed by the government or governing body of an ASEAN
country on the personal earnings of individuals. The definition of personal earnings
depends on the:
 Residency of individuals
 Country where the income is earned
 Nature of earnings included as income –
particularly relevant for hospitality and
tourism is whether tips or gratuities are
included as income.
Generally, the rate of tax is applied to earnings
before any deductions or allowances are
considered. This is called gross pay and will be discussed further at Element 2: Prepare
payroll data.
The personal tax rates that are applied to income as defined in each country are known
as progressive tax rates - the more income you earn, the higher the tax rate will be up to a
certain limit. Each country sets their own income thresholds and limits as well as the
applicable tax rates.
The employer must retain the income tax owed by each employee and will forward the
total amount to the government or appropriate authority according to set time lines.
The payroll system must of course reflect the progressive tax rates that must be used to
calculate income tax for each employee. Often governments or statutory bodies provide
documentation that details common pay periods such as weekly or monthly and show the
monetary amount to be deducted for income tax. This should be incorporated into the
payroll system.
When an employee is hired, a form is usually required to be completed that stipulates the
income tax details that need to be applied by the payroll system. This must be maintained
by the payroll system and usually remains with the employees personnel records.
Reports from the payroll system are produced at the end of each pay period or other time
that will total the income tax collected so that a payment can be made to appropriate
external authorities. Sometimes, a particular form or document must also be completed.
Payroll tax

Payroll tax is determined by the total payroll costs of a business for a pay period. It is
imposed by government or other statutory bodies on each employer, it is not collected
from employees. However, not all ASEAN countries are currently required to pay this tax
so you must be aware of the obligation for your workplace. The payroll tax is expressed
as a percentage that is applied to total payroll costs.
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If payroll tax is imposed on a hospitality and tourism establishment, the payroll system
should provide a report detailing the total relevant payroll cost for the pay period.
There may be certain deductions and exemptions that the business can include that this
report should reflect. Also reported will be the monetary amount of payroll tax for the
period.
As with income tax deductions, timelines for payment of payroll tax are set by relevant
authorities. Reports from the payroll system must be produced to meet such deadlines.
Other deductions and relief

In addition to the deduction of income tax from employees pay, there are several other
deductions or relief that an establishment may have to calculate on employees pay.
These include:
 Social security or social welfare deductions
 Trade union membership fees
 Health insurance contributions
 Personal allowances such as spouse
allowance, dependent children allowance or
carers allowance
 Voluntary deductions such as contributions to a
pension fund or a life insurance premium
 Tax relief on the above voluntary reductions.
Whatever the nature of the deduction or relief that is relevant to the country in which the
tourism and hospitality business operates, the payroll system must reflect the appropriate
amounts for each employee. This should only occur when authorisation from the
employee is received in writing, signed and approved by senior payroll personnel. A
unique code for each deduction or relief category is set up in the payroll system and
assigned to the employee.
At the end of a pay period, month or other time, the deductions collected are forwarded to
the relevant agencies. The payroll system should be designed to report a summary of
relief granted to each employee and in total as this information may be requested by
governing bodies at any time.
Records and record keeping

A range of records are associated with preparing and processing payroll for all
establishments. These include:
 Pay advice slips
 Cash analysis sheets detailing payroll costs
 Employee summary reports
 Electronic funds transfer reports
 Taxation and deduction reports
 End of month and end of year reports.
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There is often a legal requirement to retain payroll records for a

number of years for auditing and verification purposes. This varies
depending on the country or location in which the organisation
operates, for example in Singapore, records must be kept for four
years, Indonesia – five years and Thailand, two to five years
depending if tax evasion or avoidance is suspected. Records must
always be legible and readily accessible to an inspector.
Most organisations keep payroll records in both electronic and
hard copy format. They must be stored securely with access and
control by authorised payroll personnel only. Electronic systems
may keep a system log of who has accessed records, when and
for how long. Manual systems may use a manual recording sheet
to keep track of access to payroll documentation.
When payroll records are no longer needed, organisational policy regarding the
destruction of confidential and secure documentation must be followed. This will include a
record of what has been destroyed.
Legislation that governs labour laws often details the information that must be included in
payroll records. You must be aware of the payroll information required for your workplace
be reviewing the relevant local legislation. Some examples of the information that should
appear in employee records are:
 Who and When:
 The name of the hospitality and tourism establishment and the name of the
employee
 The date the employee commenced employment.
 Type of employment, hours and rate of pay
 If the employee is full-time or part-time (or equivalent)
 If the employee is permanent, temporary or casual (or equivalent)
 The rate of pay including gross and net amounts paid and any deductions from the
gross amount
 Any monetary allowances, bonuses, penalty rates or other entitlements that can
be highlighted
 If a penalty rate for overtime applies, records must reflect the number of hours of
overtime worked
 Hours worked if the employees works casual or irregular part-time hours and is
guaranteed a pay rate set by reference to a period of time worked
 A copy of the written agreement if employee hours are averaged over time
 If an individual arrangement has been agreed between the organisation and the
employee, a copy of the agreement along with a copy of the termination should
such an agreement cease
 Leave entitlements for all types of leave to which the employee is entitled. This
includes the balance of leave, agreements to pay out leave owed, the rate of
payment and any details if a payment was made
 For all deductions, statutory or voluntary the amount paid, the pay period, the
name of the deduction and the name of the organisation to which the deduction
relates
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 Details of terminations. This includes the names of personnel involved in the

termination, reasons why the termination occurred and any other relevant details.
Record management policies
Some hospitality and tourism organisations are required to

comply with international standards regarding the managing
of all records, including payroll. Policies and procedures
regarding payroll documentation will be governed by these
standards. You can refer to the policy and procedure
manuals for individual workplaces to discover if these
standards apply so you are aware of your responsbilities.
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Work Projects
It is a requirement of this Unit that you complete Work Projects as advised by your
Trainer. You must submit documentation, suitable evidence or other relevant proof of
completion of the project to your Trainer by the agreed date.
1.1 By referring to the theory you have learnt regarding the security and confidentiality of
the management of payroll, use this as a checklist to report on how your workplace
addresses these key issues. Are payroll staff aware of the need for security and
confidentiality?
1.2. Identify the different allowances that exist in your workplace. Provide a description of
each allowance and categorise them into one of the following areas:
 Set allowance
 Specific event-linked allowance
 Specific event or activity claimable allowance.
Explain the internal control procedures that are used in the payroll system for these
allowances.
What records are kept in relation to the allowances that you have identified?
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Summary
Establish procedures for the management of payroll
 The protection of employee‟s privacy and maintaining confidentiality is paramount in relation to

payroll management. Organisations have a legal responsibility to protect privacy which
personnel who are responsible for the payroll function must know and understand
 Security procedures should be in place to secure all electronic and hard copy payroll records
 Any claimable expenses or allowances to which an employee is entitled must be substantiated
by following strict procedures
 The internal control system reflects appropriate internal control measures to minimise the risk
of fraudulent activity, theft and error in the payroll function
 These measures may be governed by legislative or organisational requirements
 The payroll system must be designed to reflect both statutory and common law obligations
regarding the calculation and reporting of various aspects of the payroll function. Records
must be kept in accordance with organisational policy for the appropriate period of time
specified by legislation.
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Element 2:
Prepare payroll data
2.1 Use nominated industrial awards, contracts
and government legislation to calculate gross
pay and annual salaries
Introduction
The first step in calculating the amount paid to employees during a given payroll period is
determining gross pay in the form of wages or salaries.
Gross pay is defined as the sum of an employee’s wages or salary earned in the
payroll period plus any allowances, commissions, bonuses or entitlements before
any deductions are made.
The details of an employee‟s gross pay are agreed when the hospitality and tourism
establishment as part of their particular employment contract hires them. Government
legislation often sets the minimum wages that can be made and allowances and benefits
that an employer must provide. This not only varies across the ASEAN countries but can
also vary within regions of the same country, depending on where the hospitality and
tourism organisation operates.
In the first instance, you will need to find each employee‟s gross pay from their particular
contract of employment as described here:
 Collective agreements – these agreements are made by a
trade union on behalf of its members and accepted by
both employees and employers
 Workplace agreements (sometimes called enterprise
agreements) are an agreement made between the
hospitality and tourism establishment and the employees.
It is often unique to the workplace but must still consider
any legal obligations
 Minimum wages and conditions are set by government legislation or other governing
bodies and detail salary, wage allowances and other conditions that apply to the
hospitality and tourism industry
 Individual employment contracts – formal arrangements that include details of the rate
of pay for services or the amount paid on completion of a job.
It is important that the information held in the payroll system for the calculation of gross
pay is current and accurate for each payroll period.
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Items required for calculation of gross pay

Gross pay depends on a number of considerations in addition to the
hourly rate, hours worked or agreed salary.
The following is a list of some of the items or information that may be
included depending on the type of employment contracts that apply
within the establishment. You must be aware of the information
required in your workplace.
Remember that expense reimbursements as described at 1.2 Ensure
procedures for claims ensure allowances are substantiated do not
form part of gross pay and are added to an employee‟s pay after
gross pay and deductions are calculated.
Employment history records
Employment history records may be in electronic or hard copy format and are sometimes
called employment history cards. For each employee, this card contains their personal
information, terms of employment, qualifications, training and leave information. In some
computerised systems, gross pay is clearly specified and even updated automatically
when employments agreements change.
Appropriate pay structure
Some hospitality and tourism establishments are governed by employment contracts that
detail levels of pay according to a set structure. The purpose for this is to provide a fair
and consistent basis for encouraging and rewarding employees to further their skills and
responsibilities. For example, the pay structure for an accommodation venue may
encourage a front office employee to seek further training and become a supervisor by
rewarding them with a higher salary or wages when the training is complete. Some other
events that may be specified in pay structures are:
 Length of service
 Temporary cover for other roles or positions such as a food and beverage supervisor
assuming manager responsibilities for a shift
 New agreement negotiations
 Changes to statutory conditions.
Records of hours worked
In most hospitality and tourism organisations, timesheets, time cards or other forms of
documentation to record hours worked are completed and approved in order for gross pay
to be calculated. Employees who receive wages will always be required to record hours
worked this way and employees who received a salary may complete a record of hours
worked if this is outside the normal hours for a payroll period.
Overtime
One of the most common allowances that employees receive in the hospitality and
tourism industry is overtime. Overtime represents the hours worked beyond the normal or
agreed working hours for a shift, day, week or other agreed time frame.
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The rate at which overtime is paid is detailed in employment agreements where

applicable. The terms penalty or overtime rates are commonly used. When employees
receive their pay advice slips or other documentation that describes their pay for the
period, overtime payments usually appear as follows:
 Normal pay hours x rate = amount of pay
 Overtime hours x rate = amount of pay
 Total pay for the period = TOTAL AMOUNT PAID.
Penalty rates
Penalty rates are an extra payment for ordinary hours
worked late, on weekends or public holidays. These are a
common rate of pay in the hospitality and tourism industry
because many establishments are open for operation all
day, every day. For example, a food and beverage outlet in
a holiday location may have its busiest operating time
during a national holiday. Employees may be paid a penalty
rate for working on this holiday. A similar example applies to
accommodation venues. It is not possible to close on national holidays, for example, so
employees who work on such days are often paid penalty rates.
Allowances
Allowances are payments made to employees that can be divided into the following
categories:
 Working conditions such as laundry allowances for cleaning uniforms
 Qualification allowances for specific training that is related to the hospitality and
tourism establishment
 Special allowances to cover certain costs such as travel between work and home
 Work-related expenses that may be incurred such as travelling away from home for
work. This may include meals, accommodation or other incidental expenses or a daily
rate to cover these costs.
Employment benefits in kind
A benefit in kind is a payment to an employee other than salary and wages. For example,
employment agreements may state that employers pay for employees‟ housing costs, that
is rent or drivers for personal use. Some hospitality establishments provide meals to their
employees as a benefit in kind. If these benefits are subject to tax on the value of the
benefit, they monetary amount must be added to gross pay, as if the amount was
received as wages or salary.
Employers may also be subject to a tax on the monetary value of benefits in kind provided
to employees.
Sick leave
Sick leave is where an employee is paid for a period of time by their employer when they
are absent from work due to illness. There are often minimum sick leave entitlements and
these are detailed in employment agreements. Certain conditions may have to be met
such as:
 Verification of the illness from a doctor or other authorised medical personnel
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 Prompt notification by the employee to their employer of the illness according to

workplace procedures.
Many establishments include in employment agreements consequences to paying sick
leave if the above conditions are not met.
Annual leave
Annual leave is paid holiday time that certain employees receive for each completed year
of employment. There are a variety of conditions or principles that may apply to annual
leave depending on employment contracts and organisational policies. These may
include:
 Amount of annual leave expressed as weeks or days
 Impact of shift work arrangements
 Notice of termination while on leave
 Impact of transferring employment to another organisation
 Payments for annual leave made if the employee is not yet
eligible to receive the entitlement
 Extra payments added to annual leave are sometimes
agreed in employment contracts.
Long service leave
Long service leave is a period of paid leave granted to an employee to recognise a long
period of service to an employer. Entitlements to long service leave are specified in
employment agreements.
Other leave
In addition to sick, annual and long service leave, there are other leave entitlements that
may be applicable to an employee. These are usually the result of government legislation
and establishment policy. Examples that you might find in your workplace are:
 Family leave
 Maternity leave
 Carer‟s leave
 Bereavement leave
 Cultural leave
 Volunteer service leave.
Salary packaging items or salary sacrifice
Another arrangement that can exist between employers and employees in the hospitality
and tourism industry is where the employee agrees to forego a part of their salary or
wages in return for employer provided benefits. This is referred to as salary packaging or
salary sacrifice. The process results in:
 A lower gross pay for which deductions are calculated
 Employers may be subject to tax on the monetary value of the benefit provided to
employees.
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Note that salary sacrifice or packaging is different to benefits in kind as employees do not
sacrifice part of their wages or salary when benefits in kind are received. The benefit is
added to gross pay, not subtracted from it.
Termination payments
When an employee leaves an organisation, their final pay may include a termination
payment as detailed in their employment contract. This may or may not be included in the
total final gross pay calculations depending on the location of the establishment.
Tips, gratuities and service charges
In some circumstances, customers, guests or clients make an additional payment on top
of the bill or account to acknowledge the quality of the goods and services that have been
provided. This is commonly called a tip, gratuity or a service charge. Note that a service
charge differs slightly as this is listed on the bill or account by the establishment.
Some establishments create a common fund called a Tronc in which such amounts are
paid for distribution to the staff. The tronc is added to each employee‟s gross pay for the
payroll period depending on the policy in the establishment, perhaps a percentage of
hours worked or other calculation.
Note that tips, gratuities and service charges are generally not accepted or expected in
many ASEAN countries. Establishments in the hospitality and tourism industry should
ensure there are policies and procedures to follow as many international guests may still
make these payments.
2.2 Calculate statutory and voluntary amounts

using government and employee
documentation
Introduction
The actual amount an employee receives as wages or salary is called net pay. This is
less than the gross pay because of certain deductions that must be made. These
deductions fall into two categories:
 Statutory deductions which are required by law such
as income tax
 Voluntary deductions are made at the employee‟s
request and authorise the employer to deduct certain
amounts to cover items such as union fees, medical
insurance and pension contributions.
Deductions can only be made from an employee‟s wages
with the written consent of the employee. Sometimes this
is in the form of government issued documentation for which copies must be sent to the
relevant agencies or recorded on forms designed by individual establishments.
The payroll system must manage the range of deductions that apply to all employees of
the organisation not only to ensure the correct calculation of net pay for the employee but
also to keep a record of all deductions collected. These must be passed on to the relevant
government bodies, agencies or private entities. This is discussed further in Element 4:
Administer salary records.
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Statutory deductions
Income tax
Income tax is calculated on the wages and salaries earned on the basis of a series of
rates which become progressively higher as income levels increase. It is paid as income
is earned. For example, if the hospitality and tourism establishment pays employees
weekly, an appropriate amount of tax is deducted on that income. If employees are paid
fortnightly, tax will be deducted based on the fortnightly salary or wage amounts. In this
way, income tax is paid in instalments. Government bodies often provide a schedule or
similar documentation that lists the gross pay for the payroll period (weekly, fortnightly,
monthly) and the alternative amounts of tax to be deducted.
There are circumstances in which an individual may be subject to a flat rather than a
progressive rate of income tax such as non-residents in Malaysia. You may need to seek
clarification of the income tax particulars that apply in your workplace.
It is also important to note that income tax may not be deducted from gross pay at all,
depending on the taxation system of the country in which the business operates. This
strategy is often adopted by goverments who wish to attract workers to expand or develop
a particular industry such as hospitality and tourism.
Relief or rebates
In certain locations and under specific circumstances, the income tax calculated on an
employee‟s gross pay is reduced or adjusted. These adjustments are called relief or
rebates and are applied when the employee:
 Earns the minimum salary or wage for which no
tax is payable
 Is of a certain age
 Supports a spouse
 Supports dependants including children
 Provides occupational support
 Is employed in a remote location
 Makes certain voluntary contributions such as pension fund payments, life insurance
payments or social security contributions.
Usually, income tax on gross pay is calculated without any relief or rebates. Then the
amount of tax calculated is reduced by the relief or rebate amounts that apply for that
employee. The pay advice slip may look something like this:
Gross pay XXXX
Income tax XXX
Subtract relief or rebates (XX)
Total income tax payable XXX
Net pay XXXX
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Medical insurance
Government legislation requests employers to collect a
percentage of employee‟s wages or salaries for contribution
to national health care systems. The percentage is based on
gross pay. In some countries, medical insurance deductions
are included under the umbrella of all social security
deductions such as in Singapore or are treated separately as
will be the case in Indonesia when the scheme becomes fully
operational.
Pension and retirement funds and schemes
To assist with funding retirement benefits and schemes, deductions are also taken from
employee‟s gross pay to meet statutory obligations. A percentage of gross salary or
wages is calculated and retained by the employer to forward to the relevant government
agency or body.
It is important to note that both medical insurance and retirement fund deductions
mentioned are employee contributions. This should not be confused with other
requirements that may be imposed on the employer with regard to these kinds of
obligations. You will need to be clear for your workplace when a deduction must be made
from the employee and when the obligation relates to the employer only.
Other deductions
There may be other deductions that an employer is required to calculate from employees
gross pay relating to government schemes or legal requirements. For example, the
government may provide a loan to students which is repaid once employment is
commenced. Sometimes, court orders require payments to be made to government
agencies to recover or pay debts directly from wages or salaries. These are deducted
from gross pay.
Voluntary deductions
Employees are often provided with the opportunity to have
certain deductions made on their behalf from their wages
and salaries. It is important that written authorisation is
always given and that the pay advice slip clearly states the
purpose and monetary amount of the deduction. Some
examples are listed here.
Note that certain voluntary deductions give rise to a relief or
rebate from income tax in some countries. You will need to
know the specific circumstances that apply for your
workplace so that deductions are calculated accurately.
Insurance policies
Employees may request deductions be made to cover periodic insurance premium
payments. These may relate to life, health or other insurance policies. The hospitality and
tourism establishment retains the amount deducted and forwards to the relevant entity
according to arranged timelines.
Donations to charities
Some organisations offer employees the opportunity to contribute part of their salary or
wages to certain programs or charities.
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Deductions are sent to the charity by the employer and the employee receives a summary
of total contributions made at the end of the financial year.
Union fees
Employees who are members of trade unions may request that their membership fees are
deducted from their gross pay and forwarded to the relevant union. This can occur for
each payroll period or may only be once a year if fees are paid annually. Requests in
writing from employees will specify the arrangement the employee prefers.
Additional taxes
Occasionally an employee will request an additional amount of income tax be deducted
from their wages. This is sometimes used as a means of saving as the government refund
excess tax paid at the end of a financial year. Some employees who have a number of
sources of income or work irregularly also ask for extra income tax to be deducted to
ensure they do not fall short at the end of the financial year.
Voluntary social security payments
Employees are able to elect to make extra payments to
pension funds or schemes to fund their retirement. This usually
requires verification from both the fund or scheme and the
employee. You will need to check relevant guidelines in your
workplace as these payments are not possible in some
countries.
Other deductions
The policies and procedures for individual organisations in the hospitality and tourism
industry may also allow other deductions for which you must be aware. Authorisation from
employees along with the details of the agency or entity to which the deduction is
forwarded must support all deduction requests.
Payroll levies for the organisation

When deductions are made from employees‟ gross pay, it is the responsibility of each
establishment to ensure that the amounts are forwarded to the appropriate organisation.
The payroll system must be designed to maintain adequate records to monitor the details
of all deductions and to ensure that payments are made on time.
In addition to this, businesses are required to pay certain taxes based on the total gross
pay for each payroll period. These amounts are not deducted from employees wages and
salaries and are added to total gross payroll to calculate total payroll costs for the pay
period. Common obligations the payroll system must recognise are:
 Social security contributions in addition to those already collected from employees
 Payments to pension funds and schemes
 Medical insurance levies or premiums
 Taxes on any salary packaging benefits.
Each country usually calculates the obligation using a percentage of total gross pay as
reported by the payroll system. Employers forward the total amounts owing to government
agencies periodically as required by legislation.
It is important that you are aware of the obligations and timelines in your workplace as
there can be severe penalties imposed if obligations are not met.
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2.3 Provide payroll data to payroll processor for

calculation within designated timelines
Introduction
For most employees, it is essential to be paid on time. Many employees have
commitments that depend on monetary amounts from wages or salaries to be in their
bank accounts at a certain time. The payroll system must therefore meet the designated
timelines for the processing and payment of salaries and wages.
Sometimes, national holidays or other deadlines set internally and externally may mean
that variations to pay dates are needed. The payroll system must be able to manage this
and still ensure that employees receive wages and salaries as expected.
The nature and size of the organisation influences the responsibilities for processing
payroll. These responsibilities may fall to one or more payroll processors and be guided
by a manager or supervisor in larger hospitality and tourism organisations. Often one
senior person such as an office manager or similar acts as payroll processor in smaller
organisations. Whatever the size of the establishment, payroll processing involves
preparing and entering the key payroll information into the payroll system. The payroll
processor may be responsible for reviewing salary and wage calculations for accuracy as
well as entering data from timesheets and other relevant documentation. Payroll
processors required a knowledge of the agreements under which employees are paid and
the necessary items or information to calculate net pay. Also required is attention to detail,
good keyboard and communication skills and problem solving abilities.
Some hospitality and tourism organisations use an external company to prepare and
process payroll. If this is the case in your workplace, you must be aware of the dates
payroll information is required. There will also be certain documentation of data files that
need to be prepared so that the payroll company can enter or transfer payroll details
efficiently.
Preparing a payroll register

The payroll register is a detailed listing of the hospitality
and tourism organisation‟s complete payroll for a
particular pay period. Each employee‟s earning and
deductions are reported in the register. The format of the
payroll register is defined by the organisation to meet
individual requirements. For example, an
accommodation venue may divide the payroll register
into categories according to department or functional
area. Columns will specify:
 Hours worked, normal and overtime
 Gross pay
 Categories of deductions and allowances that apply to the establishment
 Net pay
 Cumulative gross pay totals.
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It is important to note that the payroll register provides information at the end of the payroll
period. Totals calculated are used to evaluate total payroll costs and indicate the amounts
to be forwarded for deductions and other obligations to appropriate organisations.
In this way, it becomes the document from which all other payroll reports are derived.
These include:
 Employee earnings cards
 Employee pay advice slips
 Payment analysis sheets if a number of forms of payment are used
 Cheques
 Bank transfers.
Also, the accounting information system must be udpated with payroll data. The payroll
register is used to update the general ledger with all relevant costs, obligations and cash
movements.
Key organisational timelines

In order to pay employees on time, organisations set timelines for preparing, processing
and distributing payroll. Often these timelines are designed by
first considering the time it will take to produce cheques and
transfer electronic files to the bank for payment into employee‟s
bank accounts. It is standard in hospitality and tourism
organisations that a pay period will finish a number of days
before the payment of salary and wages occurs and the funds
are with employees. This is in part due to the nature of payroll
for the industry – there are usually many more employees who
are paid wages than salaries. These take longer to process as
hours worked and appropriate pay rates must be checked
carefully for accuracy.
Individual establishments will design their payroll systems to take into account the timely
payment to employees, deadlines for meeting statutory and other other requirements and
the personnel available to process payroll. For example, a small food and beverage outlet
may set a weekly payroll cycle because the number of employees are low and many
employees are called to work as demand requires. The expectation would be that wages
payments would be made promptly.
Other organisations such as larger accomodation venues employ a greater number of
employees and often utilise a stable pool of casual employees. It is reasonable to expect
payroll periods to extend to fortnightly payments.
Workplace policies and procedures surrounding the payroll function will clearly stipulate
the timelines that govern the processing of payroll. Details such as the following will be
addressed:
 Pay period for wages and salaries - weekly, fortnightly, monthly
 The days of the week the pay period starts and the pay period finishes
 The day of the week wages or salaries will be paid into an employee‟s nominated
bank account, cheques will be available to collect or cheques posted to the
employee‟s preferred address
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 The details recorded on pay slips and the manner in which payslips are distributed –
by post, internal mail or collected in person by employees.
An example of the timeline and responsibilities that an establishment might use are
outlined in the following table.
Documentation Payroll activity time line Authorising person
 Timesheets are to be received by the payroll

processor by 9.00am the day after the end  Authorised signatories
of the pay period for approving timesheets
Timesheets such as supervisor
 Information is entered into the payroll
system on a daily basis as timesheets are  Payroll processor
received during the pay period
Managers or personnel
Any changes to employee pay rates, deductions,
responsible for authorising
Employee details allowances or leave claims must be received the
changes to employee
day before the end of the pay period
conditions
Payroll register to be completed by 4.00pm on

the first day after the end of the payroll period.
Payroll register Payroll processors
This includes verifying timesheets and reporting
errors
Payroll register to be sighted and authorised by

Payroll register Payroll processors and
senior management by 5.00pm on the first day
authorised senior manager
after the end of the payroll period
Check files the day after the payroll register is

Payroll processors and
Transfer of funds completed and send to the bank for distribution
senior manager
before close of business
Employee payslips prepared after the payroll
register finalised which is the day before
Payslips employees receive their net pay. Payslips are Payroll processors
issued by internal mail to the department the
employee is based
All timesheets, payroll registers and employee

earnings records are to be stored according to
Storage Payroll processors
policies and procedures and legislative
requirements
As well as the timelines for preparing and processing payroll, there are other deadlines
you must know about.
New employee information
When a new employee is hired, documentation detailing the deductions for income tax as
well as any applicable reliefs and rebates is usually required to be forwarded to
government agencies within a particular timeframe and almost always before the first pay
period for the employee. The hospitality and tourism establishment keeps a copy with
employee records in case it is needed.
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Income tax payments

Any income tax deducted from gross pay for employees must be sent to the relevant
government authority in accordance with the timeline set down by that authority. This
varies from every month to every quarter depending on the location of the establishment.
There is usually particular forms or reports that must be completed and accompany the
payment of income tax deductions collected.
Medical insurance
When medical insurance is deducted from an employee‟s
gross pay, the organisation must also forward the total
amount collected to the relevant government agency or
authority. A detailed form or report with employee
information will be sent with the payment.
The timeline for amounts to be sent is either monthly or
quarterly, depending on the country in which the
establishment operates.
Pension and retirement funds and schemes
Pensions or retirement fund deductions may be both statutory and voluntary. Businesses
must take care to adhere to timelines set by authorities that administer the statutory
schemes and organisations that accept voluntary amounts from employees. Reports from
the payroll system should be relied upon to provide the total amount collected for each
pension fund or scheme.
Statutory timelines often request funds to be forwarded every quarter and other
organisations that accept voluntary payments may request contributions to be made
monthly. You must know the requirements for your workplace.
Employment termination payments
When an employer leaves the hospitality and tourism organisation, additional payroll
calculations may be made where entitlements are to paid out in accordance with the
employment agreement or contract.
Generally, if the departure is amicable, the final salary or wages is paid within the normal
pay period. There are occasions though where termination pay will be processed
separately. This is subject to workplace policies and the nature of individual
circumstances.
Other tax liabilities
When employers offer a benefit in kind to employees or enable the employee to sacrifice
part of their gross salary or wages for employer provided benefits, the employer may have
to pay a charge or tax on the monetary value of the benefit. This tax is usually forwarded
to authorities or agencies every quarter. Documentation detailing the benefit and the
value is required to be completed.
AND REMEMBER:
It is always good practice to incorporate additional time into the payroll process so any
problems that may arise can be resolved and the rest of the payroll process is not
delayed.
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Work Projects
2.1 For the pay period in your workplace, prepare a timeline for processing payroll.
Ensure that specific days and times are included and that all responsibilities are
considered.
2.2. For your workplace, research taxation laws and other government information to
discover the following rules and obligations:
 Income that is included and excluded from gross pay

 Deductions – both statutory and voluntary
 Rebates or relief applicable for employees
 Other obligations.
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Summary
Prepare payroll data
 All details relating to collective agreements, government legislation and employment contracts
should be identified and the details entered into the payroll system
 All information should be gathered and recorded that is required to calculate gross pay
 All statutory deductions are required to be identified by the payroll system and applied to the
employee‟s gross pay where relevant
 Voluntary deductions must be requested and approved by the employee in writing and
deducted from gross pay
 Net pay is calculated by reducing gross pay by all statutory and voluntary deductions. It is the
actual monetary amount of salaries or wages received by the employee
 The payroll must always be processed on time in accordance with organisational requirements
 The payroll timelines must consider all timelines set by government authorities, agencies and
other organisations for documentation and amounts collected to be forwarded.
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Element 3:
Authorise payment of salaries
3.1 Check payroll, salaries and wages are
authorised for payment in accordance with
Introduction
As part of the payroll process, it is always important to check
payroll data for errors. This must occur before payroll is finalised
and payments made to employees and external organisations.
Some computerised payroll systems produce reports called
exception reports that are designed to highlight errors or
discrepancies.
Source documentation such as timesheets and claims for
allowances with relevant substantiation shoud have been
authorised by supervisors as part of the process for preparing
payroll data. All other documentation that provides data or information into the calculation
of gross pay should also have been approved for data entry into the payroll system.
These measures aim to ensure that the payroll system holds valid and accurate
information. Other control measures have been discussed at 1.3 Establish control
measures to safeguard the organisation's financial resources in accordance with
legislative and organisational requirements that also aim to ensure the validity of data in
the payroll system.
Making relevant data adjustments

Information regarding pay rates and entitlements is initially entered into the payroll system
when an employee commences employment with the hospitality and tourism
establishment. These details can change over time for some of the following reasons:
 A change in pay rates or terms and conditions due to a new collective agreement or
change in minimum wages
 A change in income taxation rates
 A change to statutory deductions such as the introduction of medical insurance in
Indonesia
 The anniversary of employment so the next increment on the pay scale now applies
 Completion of a qualification or certificate that changes the applicable pay scale.
When such changes occur, adjustments are made automatically in the payroll system.
Other adjustments to information that can affect payroll result from changes to individual
employee circumstances. This may include:
 Advice indicating that income tax calculations need to be changed such as a new
dependant
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 Joining or withdrawing from a union or professional association and adjusting

deductions from the wage or salary
 Voluntarily requesting the deduction of additional income tax
 Joining or withdrawing from donations to charities.
Good internal control measures will require data to be independently checked against
source documents when changes have been made. This should always be personnel that
are not involved in payroll processing duties.
Checking the data

Electronic payroll systems can be designed to report exceptions or
variations to salary and wage amounts for individual employees that
exceed a certain limit or threshold. For manual systems, payroll
personnel must review all pay information prepared and use their
experience and knowledge to find exceptions and variations.
When a salary or wage calculation exceeds the limit and needs to be
investigated, payroll personnel review source documentation such as deduction
authorisations. Any errors must be corrected and if the variation can be verified, notes are
made for future reference.
Authorising payment
Before a payroll register is authorised, payroll personnel should ensure that:
 The payroll has been prepared in accordance with workplace procedures
 Reconciliations have been performed and documented as required
 The payroll register is reconciled – this indicates that all errors have been identified
and corrected.
Payroll personnel forward the reconciled payroll register to appropriate senior personnel
who review the details and authorise the payroll to be finalised. The actual nature of the
auhtorisation varies depending on the size and structure of the hospitality and tourism
organisation and the specific policies and procedures that have been created.
Arranging payment
Funds are transferred to employees for wages and salaries electronically or by cheque
according to payroll timelines. Cash should be used sparingly to pay employees as the
risk of theft or fraud is high. However, in some smaller hospitality and tourism
organisations, it remains the most practical means of ensuring wages and salaries are
received by employees in a timely manner. The process for the three most common
payment methods is considered here.
Electronic transfers
Salary or wage payments are made directly into the employee‟s bank account. Each
employee provides the necessary details to the payroll function when they commence
employment or when they wish to change their payment arrangements. A standard form
is usually completed.
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The process for preparing electronic transfers can be summarised as follows:

 A payment listing is prepared detailing the account number and amount of net pay
 Two copies of the listing are prepared and authorised by appropriate personnel
 One copy is retained by the payroll function and the other is sent to the bank for
processing
 The bank transfers the total net pay from the bank account of the establishment and
distributes it into the employee‟s bank accounts according to the payment listing
 Pay advice slips are prepared and distributed to employees confirming the deposit into
their bank account.
Note that the payment listing may also be recorded as an electronic file and delivered to
the bank using secure mail or other suitable program.
Cheque payments
Cheques are prepared for each employee based on the net pay
calculated in the payroll register. Electronic payroll systems may
provide a feature where cheques are printed automatically when
instructed by payroll personnel. Each cheque will contain the
employee‟s name and the net pay for salary or wages for the pay
period.
If this feature is not available, cheques are written manually with reference to the payroll
register.
In either case, each cheque should be signed by two authorised signatories before it is
distributed to the employee. Signatories are usually senior managers and accounting
staff.
Cash payments
Cash payments are made to employees in the form of notes and
coins of the local currency. A cash analysis sheet or similar is
prepared that calculates the breakdown of notes and coins
required for distribution to employees. The payroll register
provides the net pay each employee receives.
The total notes and coins is obtained from the bank or other
source. Some organisations may not bank takings for the day to retain the cash on hand
for payroll, for example and cash is placed into an envelope or other storage according to
the analysis sheet for each employee.
Employees collect their wages and salaries from a secure location and should be required
to check the contents of their envelope. An acknowledgement to verify the accuracy of the
payment is signed. This procedure allows for an audit trail and a further check that
payments made are correct and complete.
Pay slips
The salaries, wages and deductions for an employee for a pay period are shown on an
employee‟s pay advice slip. Elements on each pay slip will form part of a payroll activity
summary for each employee.
Pay slips must be produced and provided to employees each time they are paid. They are
a formal record of the salary and wages provided to an employee for a specific pay
period.
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Pay slips contain at least the following details:

 Name of the employer
 Name of the employee
 Classification of the employee under the governing
legislation or collective agreement
 Status of employment – full time, part time or casual
 Date when the payment was made and period of
employment to which the payment relates
 Gross pay, including details of all the payments that may
be included
 Overtime payments
 Amount deducted for income tax
 Any applicable relief or rebates
 Amounts deducted for statutory and voluntary deductions listed separately
 Employer contributions to social security, pension funds or schemes or medical
insurances
 Net pay.
Many pay slips also contain
 Gross year to date pay
 Year to date Income tax and perhaps other deductions
 Net year to date pay.
Pay slips can be distributed electronically via email or by employee‟s password access to
their electronic personal files. Hard copies can be delivered using internal mail, collection
or post. It is only when the payroll register is reconciled that pay slips should be
distributed. Good internal controls usually separate the distribution of payroll from
personnel that process payroll to minimise the risk of ghost employees receiving a pay for
the payroll period.
Post payroll errors

Once a payroll has been run and monies distributed, there may be occasions when errors
arise such as a payment rejected by the bank because an account is closed or a number
is incorrect. Such rejections are usually advised by the bank or may be noted as a deposit
in the payroll bank account. The matter should be investigated by checking the bank
details to the information in the employee‟s file. If a new account number should have
been used, the bank and the employee are notified and the payment transferred
immediately.
In an attempt to monitor payroll costs, large accommodation venues often request payroll
personnel to check overtime amounts that have been paid to employees. Usually, all
overtime must be approved by the appropriate supervisor. The payroll register is reviewed
for all employees who have been paid overtime for the pay period and the source
documentation checked to ensure that it was authorised. Any errors are investigated and
adjustments to payroll made in the next pay period.
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3.2 Reconcile salaries, wages and deductions in

accordance with organisational policy and
procedures
Introduction
When payroll is prepared and processed, it must be appropriately authorised before funds
can be distributed to employees and the payroll for the pay period finalised. Authorisation
is generally given when appropriate checks for accuracy have been conducted and may
even be withheld until the particulars of the payroll such as deductions are reconciled.
Any potential errors or discrepancies should be identified or highlighted by this process
and resolved before the pay period can be finalised.
Reconciling salaries, wages and deductions is an important internal control measure as it
safeguards the assets of the organisation, in this case mainly cash but also ensures that
payroll data is reported accurately and correct amounts are transferred to all relevant
external authorities, agencies and organisations.
Each hospitality and tourism establishment will determine their own timelines for checking
and reconciling payroll information. This is influenced by the size and nature of the
business as well as the preferences and needs of senior managers, the available
personnel and the systems in place.
Reconciling and checking processes

A payroll register must reconcile in order to be sure no
errors have occurred. This means that the total of all net
pays must equal the total gross pay for the pay period
less total deductions. If the two calculations do not agree,
they have not been reconciled and errors exist in the
payroll register. If the two calculations agree, the payroll
register is reconciled. However, that does not necessarily
mean the payroll register is error free. There may still be
calculation errors in the data that is entered into the payroll register such as incorrect tax
calculations, overtime rates used incorrectly and other such errors.
It is important to note that a payroll register must reconcile to ensure employees are paid
correctly. It is for this reason that approval for final pays to be processed should not be
given until the reconciliation is complete.
Wherever possible throughout the payroll function, reconciliations should be performed
that confirm the accuracy of the payroll register and protect the pays prepared and
distributed to employees.
Reconciliations may be made in the following ways:
 Employee numbers
 The number of employees paid for the period should be checked against the
number of employee records and timesheets submitted for the pay period. If a
discrepancy is found, the relevant supervisor should be informed and an
investigation conducted to determine the reason for the difference. This prevents
fictitious or ghost employees from appearing on the payroll
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 Normal and overtime hours

 A comparison can be made between the normal
and overtime hours recorded on employee
timesheets and entered in the payroll register. If a
discrepancy is found, the payroll processor
checks their calculations for errors first. If this
does not resolve the problem, a relevant
supervisor is informed and the error investigated
and resolved. This reconciliation process also
prevents a pay from being prepared for a ghost
employee
 Leave entitlements
 The comparison described above can also be extended to include leave
payments. A difference between leave approved on appropriate documentation
and leave appearing in the payroll register must be investigated and resolved
 The number of pays prepared
 The number of cheques or pays prepared for employees must agree with the
number of employees on the payroll register. This ensures that all employees who
have worked during the pay period are going to receive their salaries and wages. It
also prevents payments being made to ghost employees
If the payroll register does not reconcile, check the calculations for clerical errors.
If the register remains unreconciled, a supervisor or manager should be alerted to
assist with identifying and correcting any errors
 Income tax deductions and relief or rebates
 The payroll register summarises all amounts deducted from employee‟s gross pay
for income tax deductions, including adjustments for relief or rebates. The general
ledger is updated at the end of each pay period with the total deductions so that
accounting reports can be prepared. The amount appearing in the general ledger
must always agree to the payroll register. This may require multiple pay periods to
be added together depending on the payroll system. It is always necessary to
resolve any differences, either by correcting the payroll register or advising
accounting personnel of adjustments to the general ledger
 Other statutory and voluntary deductions
 Other statutory and voluntary deductions are reconciled in a similar way to income
tax deductions. However, each deduction must be reconciled individually to its
corresponding general ledger account. You may find that the same general ledger
account contains both statutory and voluntary deductions. When this occurs, both
amounts from the payroll register can be reconciled together
 Gross payroll wages and salaries
 The total gross payroll for the period is also reconciled to the general ledger to
ensure the accounting records have captured the payroll costs for the pay period
accurately. As with all other reconciliations, it is important that any errors are
investigated and resolved.
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It is always necessary to perform any other reconciliations that are necessry to ensure the
payroll register balances. Individual establishments will design workplace policies and
procedures that you should know and follow. These include the timelines for reconciliation
and the documentation, if any, that should be completed.
For example, some organisations will use pro-forma reconcilation documents that are
signed, authorised and subsequently filed for future reference. Such documents provide
evidence that reconciliations have been performed.
3.3 Deal with salary, wage and related enquiries in

accordance with organisational policy and
procedures
Introduction
Employees may from time to time query certain elements of the pay they have received
such as the amount for deductions, the basis for calculating allowances or other such
concerns. Appropriate procedures must be in place in the payroll function to manage such
queries.
Some hospitality and tourism organisations have established systems that enable
employees to access their pay information from the information system by using a unique
code or password. Employees can view their leave entitlements and employment history
as well as update contact information. However, in many establishments, employees
simply receive their pay slip each pay period. Any queries or questions are directed to
payroll officers.
Inquiries from employees are likely to cover a variety of situations ranging from informal
questions to serious complaints. They may include inquiries
about:
 Hours worked and the calculation of gross pay
 Allowances paid
 Amount of tax paid
 Amount of other deductions
 Net pay
 Holiday or other leave entitlements
 Organisational policies about pay rises and allowances.
To competently handle payroll inquiries, you must be familiar with legislative requirements
such as maintaining privacy, keeping records to meet statutory obligations, allowable
deductions, rebates and relief, current income tax rates and organisational policies.
Although some queries may be answered easily with prepared responses, others may
require you to access the employee‟s data file, particularly when leave entitlements are
questioned. In some cases you will need to be familiar with how to access information that
is not readily available.
It is good practice for payroll officers to prepare a set of responses for the most commonly
asked questions so that queries can be handled promptly and efficiently.
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Methods of handling inquiries

The options for handling payroll inquiries will depend on the size and nature of the
hospitality and tourism establishment. For example, employees may work in different
locations, work shifts or only work at certain times of day such as a night auditor for an
accommodation venue.
Consequently, the policies and procedures of individual organisations can vary
substantially.
Methods for handling inquiries may be:
 Face to face
 E-mail
 Telephone
 Written communication.
Sometimes a particular document detailing the inquiry will need to be completed.
Organisations will detail a clear policy on how forms should be submitted and a stated
timeline for a response.
There may also be procedures that need to be followed when an inquiry or complaint is
received, such as recording the complaint and details of follow up action taken.
The most important part of dealing wth payroll inquiries is ensuring that you deliver an
appropriate response that is in accordance with policies and procedures in a timely and
efficient manner. In general, payroll officers are encouraged to:
 Resolve simple inquiries immediately
 Make a record of the inquiry and responses
 Deal with inquiries in a professional and courteous manner
 Refer the employee to another appropriate person where applicable.
Communicate appropriately
Explaining information clearly to an employee is an important
skill. Financial matters often involve terminology that may need
to be explained in simplified terms. A list of commonly used
terms and their meanings can be a useful list to prepare that
payroll officers and other employees can refer to when
necessary.
In all situations, it is important to listen carefully to an employee and use appropriate
questioning skills to accurately identify the query. Some strategies you can use are:
 Summarise what the person has told you by repeating the query back to them. This is
a good way of ensuring that you have a clear understanding of the situation
 Be aware of cultural differences or differences of ability. This understanding will help
you to communicate more effectively
 There may be times when a person is upset or angry about their pay. As the person
handling the query, a professional and polite manner must always be maintained.
Calmly reassure the employee that the query will be addressed and explain the action
that will be taken to prevent the situation from occurring again or escalating further
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 Keeping the employee informed of the steps that are being taken towards resolving
the issue builds trust and helps to reduce any distress the employee may be feeling.
Sometimes you may have to collect information and get back to the person later.
Always give the employee a realistic timeframe within which you will expect to contact
them again
 Complaints should never be taken personally. When an employee is angry or upset,
they are often feeling scared or frustrated and usually simply wish to be heard so the
issue can be resolved.
Resources to handle inquiries

To address queries relating to employee‟s pay, you will need access to certain records
and documentation. It can be helpful to use a table as illustrated below to highlight the
information required from within the organisaiton to address different areas of inquiry.
Area of inquiry Documentation / records required
 Employment contract and applicable pay scales

Hours worked and
calculation of gross pay  Timesheets including overtime, shift details and
relevant pay rates
 Allowances to which employees are entitled
Allowances paid  Allowance rates
 Completed claim forms where applicable
 Current income tax rates applicable to each employee
Income tax
 Access to income tax information
 Rebates or relief that are applicable for each employee
Rebates or relief  Access to information regarding the calculation of
rebates or relief
 Documentation relating to employee approved
deductions
Other deductions
 Documentation on statutory deductions
 Relevant rates to apply to deductions
 Basis for calculations for all of the above and the
Net pay
supporting documentation.
Internal support information

Many hospitality and tourism organisations place information on internal websites or in
common areas that may assist employees in understanding the various components that
make up their net pay. This allows employees who work hours that are different to payroll
personnel to access information they may require. New employees are often provided
with brochures or similar materials that explain payroll information such as pay periods,
the calculations for gross and net pay and contact details for payroll personnel.
Support from external authorities and agencies

Government authorities and agencies often publish a significant range of materials that
can assist organisations in the hospitality and tourism industry to understand their
responsibilities in determining the net pay of employees.
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Similar information may also be available for individuals to explain the elements that need
to be considered for net pay calculations.
Materials may be available online through appropriate websites or hard copies requested.
For example, an employee wishes to check the amount of income tax that has been
deducted from their gross pay. Government authorities may provide income tax
calculators which cover a range of basic employment circumstances for employees in the
hospitality and tourism industry. These include:
 Income tax deductions on ordinary pay
 Income tax deductions if allowances or overtime are included in gross pay
 Variations to deductions for rebates or relief
 Additional statutory deductions that may apply depending on gross pay amounts.
In addition to information from government authorities, other organisations such as
accounting firms or organisations publish summaries of payroll responsbilities depending
on the location of the business. You can find examples of this information in the
Recommended Reading List in this manual.
Rectifying errors and recording outcomes

Errors to payroll calculations that have been discovered based on employee enquiries
should be corrected as soon as possible. In most situations, payroll personnel should
perform the correction but there will be circumstances in which the query or complaint
needs to be referred to other persons in the organisation.
In all cases, it is important to maintain confidentiality when
dealing with payroll inquiries. Employees should be
reassured that their enquiry will be handled in a sensitive
and private manner. When an enquiry needs to be
directed to other personnel, discussions to explain the
issue should be conducted privately so that confidentiality
ERROR
and privacy are maintained. Employees should always be
aware of all personnel that are involved in resolving their
issue.
To correct errors that have occurred due to data entry or other human processing errors,
payroll officers follow organisational procedures to adjust payroll information. This may
require an additional payment to the employee outside the normal pay period, an
additional payment included with the next pay or a series of adjustments over a number of
pay periods.
If obligations to outside parties have also been calculated incorrectly, for example,
deductions from employees pay were incorrect, then the outside party must be informed
as soon as possible. There is often a form or report where the details of adjustments can
be recorded and forwarded to the relevant authority or agency.
If errors are identified that indicate the organisation has breached their statutory
obligations, senior personnel must be advised and action will be taken by relevant
persons in accordance with policies and procedures.
Recording all inquiries made regarding payroll is essential. If the same error occurs a
number of times, this can indicate a problem with internal control or processing
procedures. This will need to be addressed and procedures altered as required.
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Some queries regarding payroll can lead to more formal investigations so a complete
record of all interactions between the employer and employees explains the history of the
complaint or query.
Some examples of common payroll inquiries, the knowledge required to address the issue
and possible responses follows. This may be used as a basis for creating a similar list in
your workplace as discussed earlier.
Enquiry - How is my pay calculated each week?
Knowledge required:
 Remuneration method for salary or wages
 Income tax deductions and rebates or relief
 Overtime policy
 Allowances
 Other deductions
 Leave entitlements.
Possible responses:
 Explain how gross pay, deductions and net pay are calculated
 Explain relevant organisational policies such as overtime
 Refer employee to their contract of employment.
Enquiry – Did you deduct my voluntary contributions?
Knowledge required:
 Policies and procedures for salary sacrificing and voluntary deductions
 The layout of the pay slip.
Possible responses:
 Explain where the information is found on the pay slip
 Explain relevant organisational policies.
Enquiry – Is the overtime rate correct?
Knowledge required:
 Overtime policies
 How overtime is recorded
 Overtime calculations.
Possible responses:
 Explain the system for recording overtime
 Check the employee‟s timesheet and the pay slip
 Show the employee how the calculation was performed using the pay slip.
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Enquiry – Do I have any annual leave?

Knowledge required:
 Policies for annual leave including categories of staff that are
eligible for the entitlement.
Possible responses:
 Explain annual leave policy
 Check the employee‟s leave history and calculate the leave
owing
 Show the employee how they can access the information in the future.
Enquiry – I thought I claimed an allowance – why isn’t it included in my pay?
Knowledge required:
 Policies for granting allowances
 Procedures for recording payroll data.
Possible responses:
 Explain how allowances are calculated and review the claim
 Check the employee‟s pay history and current pay advice slip.
Enquiry – My friend worked the same shift as me and got more net pay, why?
Knowledge required:
 Privacy and confidentiality obligations
 Employment contract
 Elements of gross pay, deductions, allowances, rebates and relief.
Possible responses:
 Explain how this employee‟s gross pay, deductions, rebates or relief and net pay are
calculated
 Other employee‟s pay can never be discussed, mentioned or even used as a
reference
 Refer employee to their contract of employment.
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Work Projects
3.1 Create a checklist to be inserted into a policies and procedures manual that you can
use for checking and reconciling all aspects of payroll in your workplace. Detail the
steps taken to rectify a discrepancy including reporting the matter to a supervisor.
3.2. Obtain a copy of the policies and procedures relating to payroll inquiries for your
workplace. Provide an overview of the policy and a summary of the procedures. Do
the procedures adequately address the information needed for handling inquiries?
Suggest at least two improvements and provide a revised procedure that includes
the improvements.
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Summary
Authorise payment of salaries
 Checks on payroll information should be conducted before payroll is finalised in order to

minimise errors and safeguard the assets of the business
 Errors or discrepancies should be corrected as soon as possible and reported to senior
personnel where appropriate
 Pay slips must be issued to all salary and wage earners in the organisation and must include
all pay details – gross pay, allowances, deductions, rebates or relief and net pay
 Reconciliations should be regularly performed in the payroll function and include all salary and
wage payments as well as all deductions
 Variations discovered during reconciliations should be investigated, rectified and any
systematic problems reported and corrected accordingly
 Hospitality and tourism organisations should have appropriate policies and procedures for
handling inquiries regarding salaries, wages and deductions
 Appropriate explanatory documentation and references to such information should be
available in order to assist with resolving all payroll queries.
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Element 4:
Administer salary records
4.1 Process declaration forms for new and
existing employees in accordance with
Introduction
Declaration forms are standard documents usually issued by government agencies or
authorities that are critical to the payroll function.Completed by employees, they provide
the details required to calculate income tax,rebates and relief and other statutory
deductions that may be applicable for the country in which the business operates. There
may be one declaration to cover all necessary information or employees may be required
to complete a number of forms. Every employee in the hospitality and tourism
organisation must complete the required declaration forms.
Employers are often obliged to submit declaration forms to government authorities within
a certain time of the employee commencing employment or if the employee completed a
revised declaration form. There can be penalties associated with late submission such as
higher amounts deducted from employee‟s gross pay or a fine for the employer. You must
be aware of these obligations and lodge or submit declaration forms in a timely manner.
Declaration forms may also include the authority employees give to have voluntary
deductions taken from their gross pay. They are also standard documents, generally
issued by the organisation that will receive the deduction. There may also be timelines
that need to be followed for submission of these declaration forms.
Whilst each region or country will have its own versions of declaration forms, the types of
forms and the information contained in each form is similar. Policies and procedures will
direct you to the appropriate declaration forms for your workplace.
Income tax declaration forms

Income tax declaration forms often have two sections, one that is
completed by the employee and one by the employer.
Employee or payee details
This section of the form may request the following information:
 Unique code that identifies the employee to the income tax authority. Sometimes this
is a combination of letters and numbers and may be called a social security number, a
citizen number or other such term
 Full name of the employee
 Date of birth
 Preferred home address
 Employment status or basis of payment such as casual, full-time or part-time
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 Residency status for taxation purposes

 Eligibility for rebates or relief (details will be included on another form)
 Eligibility for other statutory deductions such as pension funds and medical insurance.
This section of the form must be signed by the employee and returned to the employer.
Employer
When a completed declaration form is submitted by an employee, the employer
completes their section of the declaration. They may be asked for information such as:
 The registered business name
 Any unique identifying codes issued by government authorities
 The address of the business
 Name and phone number of a contact person for the business
 Employment status of the employee.
Declaration forms are usually duplicate forms so that one copy can be forwarded to the
relevant authority and one copy is filed with the employee records.
Revised income tax declaration forms
During the course of their employment, an employee‟s
circumstances may change. When this impacts on
income tax deductions, a new declaration form must be
completed. This replaces any existing forms. Examples of
changes may include:
 The employee reaches an age such as 16 or 18
where the income tax calculations change
 Circumstances that alter the employee‟s eligibility to
claim rebates, relief or other deductions occur
 Employment status changes, say from casual to full time.
Rebate or relief declarations

Another declaration form an employee and employers may need to complete is a form
detailing any rebates or relief to income tax deductions that may be applicable. Income
tax on gross pay can be reduced when the employee supports dependant children, is
married, cares for an elderly relative or supports other dependants such as housekeepers
or the like.
Each region or country will require information on this form particular to the rebates or
relief that apply to income tax deductions in that country or region. The following
information may be requested:
 Personal details of employee
 Indication of which rebates or relief are claimed
 The name or names of all dependants where relevant
 The details required to show eligibility for other rebates or relief.
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The form is signed and any documentation requested is attached and submitted to the
employer.The employer must note the details from the declaration form and enter the
information into the payroll system to ensure the employee‟s pay is calculated correctly.
Generally this declaration form is also forwarded to relevant government authorities and a
copy retained for employee records.
Other declaration forms

Other information that must be provided by the employee on relevant forms include:
 The employee‟s bank account details and account
number if salaries and wages are paid by electronic
transfer
 Emergency contact details should an accident occur
during working hours
 Social security or pension fund or scheme details if
the employee chooses to make voluntary deductions
 Details of the union or professional association
where fees need to be paid
 Any other form that instructs payroll to deduct amounts from gross pay.
It is important to be aware of declaration forms that are provided by the employer and
those that the employee must source themselves. Individual hospitality and tourism
establishments will include this in payroll policy and procedure documentation.
Storing and disposing of declaration forms

Hospitality and tourism organisations must use secure methods for storing and disposing
of all declaration forms. Record management policies will provide the procedures that
should be followed. Refer to 1.4 Establish systems to ensure statutory obligations are met
and records are kept for the period determined by government legislation for more
information.
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4.2 Forward periodic deductions to nominated

creditors within designated timelines
Introduction
Deductions made from salaries and wages can be statutory or voluntary as explained at
element 2.2 Calculate statutory and voluntary amounts using government and employee
documentation. In all cases employees must give permission to the employer to withhold
the relevant deductions. The amounts withheld do not belong to the hospitality and
tourism establishment and must be forwarded to the appropriate external organisation
within an appropriate time frame. The accounting system calls these amounts, liabilities
and the external organisations, creditors or accounts payable depending on the size of
the hospitality and tourism business.
Nominated creditors
Nominated creditors include both government and non- government
agencies such as:
 Tax collection agencies or authorisations
 Other statutory bodies
 Unions
 Medical funds
 Any external party for which employees request deductions to be
made.
For all nominated creditors, payroll officer must receive authorisation from the employee,
the details of the creditor, preferred payment options and due dates for deductions to be
sent.
Example of non-government creditors are discussed next and government creditors are
reviewed at 4.3 Prepare payments to government authorities accurately and despatch in
accordance with the relevant government legislation and/or designated timelines.
Pension and retirement funds or schemes
Most ASEAN countries are required to contribute a percentage of total gross payroll to
pension and retirement funds or schemes. The employer holds the funds on behalf of
each employee for payment to the fund or scheme. In addition to this obligation,
employees may also contribute to the pension fund or scheme. Such contributions may
be a statutory requirement, a voluntary deduction, or a combination of both. You will need
to ensure that you are aware of the responsibilities regarding these deductions for your
workplace.
Both payments withheld from employee‟s gross pay and contributed by the employer are
forwarded to the relevant pension fund or scheme in accordance with the payment
schedule set by that organisation. This is commonly a monthly or quarterly payment.
Note that the pension fund or scheme may be managed by the government and therefore
must adhere to guidelines set down in legislation. This will be clarified in workplace policy
and procedure manuals.
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Insurance policies
Subject to the policies and procedures of individual hospitality and tourism

establishments, employees may request that insurance premium payments are deducted
from gross pay. These periodic payments must be forwarded to the appropriate insurance
funds with all the employee‟s details at designated times.
When this request is made for health insurance, it is usually because the employees may
be international workers who cannot access the government funded health care services.
Union membership fees
When employees are members of a union or professional association, fees can be

deducted from gross pay as and when requested. Each union will specify the manner in
which fees should be forwarded and the timeline for sending payments. Appropriate
accounting and payroll personnel must be aware of these requirements.
Salary sacrificing or packaging
Governments sometimes offer employees the opportunity to reduce their gross pay and
therefore the income tax payable by allowing certain payments to be made by the
employer on behalf of the employee. This is called salary sacrifice as employees are
„giving up‟ part of their gross pay for a benefit provided by their employer. Common salary
sacrifice amounts in the hospitality and tourism industry are additional pension or
retirement fund payments, housing costs and perhaps even the cost of food and
beverages.
In all cases, agreements between the employee and the employer are made with regard
to the statutory amounts allowed. Written authorisation is always given and filed with
employee records.
The employer forwards the monies relating to the elements that have been sacrificed to
the various entities that provide the goods or services to the employee according to
designated timelines.
Workplace donations
When organisations arrange to collect donations for charities, it is common for a number
of charities to be part of the scheme. Employees choose their preferred charity from those
available. Funds are contributed from an employee‟s gross pay as either a percentage or
a set amount. Sometimes, organisations will match the total contributions for a pay period
or other time frame.
Charities will request their preferred method of payment and timelines when the scheme
is established and this should be incorporated into the payroll system. Often the charity
will acknowledge the contribution by way of letter at the end of a quarter or financial year
that can be displayed for all employees to view.
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4.3 Prepare payments to government authorities

accurately and despatch in accordance with the
relevant government legislation and/or designated
timelines
Introduction
The key payments that are dispatched to government authorities
include:
 Income tax deductions
 Social security contributions
 Medical fund payments
 Additional tax payments.
Government legislation usually specifies the manner in which
payments must be made, forms that must be completed to advise of payment details and
the submission dates and methods throughout the year for both documentation and
monetary amounts.
Late or delayed lodgements can incur fines and penalties so it is critical that both payroll
and accounting personnel keep a detailed calendar or list of deadlines.
Standard procedures in the payroll function must ensure that adequate time is left
between the completion of the pay run and the due dates so that documentation and
payments can be prepared.
Paying income taxes
The key statutory deduction for most hospitality and tourism organisations is income tax.
The individual amounts withheld for each pay period are accumulated for each employee
and paid as a lump sum to relevant statutory authorities at regular intervals. The size of
the organisation often influences the timing of payments so you will need to check the
appropriate schedule for your workplace.
A standard form issued by the statutory authority is completed to summarise the amounts
submitted. The structure and content of these forms is different but should at least contain
the following:
 Total of salary, wages and other payments
 Salary and wages for all categories of employees
 Commissions and bonuses
 Termination payments
 Amounts withheld from salaries, wages and other
payments
 This is the total of all amounts withheld from gross
payments calculated for all employees.
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66 Trainee Manual
Paying other taxes
When salary packaging is permitted in an organisation or when employees receive a

benefit in kind from their employer, the employer may be required to pay tax on the
monetary value of the benefit. There may be no such tax in your workplace or it may be
that organisational policy restricts these kinds of benefits to employees. In some
countries, this tax is removed temporarily so that new businesses can minimise their costs
until they are established. This is often the case in the tourism and hospitality industry.
To forward payments for this tax where relevant, documentation is completed detailing the
benefits and the basis for calculation of the monetary value. The tax is calculated as a
percentage of the benefit. There are strict deadlines for payments to be sent to the
relevant authorities that are governed by the value of the benefits and the size of the
organisation.
Medical fund payments
Another necessary deduction required by government legislation may be contributions to

a government managed medical fund. Employers calculate a percentage of total gross
pay for a pay period for each employee. The amounts are accumulated and sent to the
relevant agency or authority according to designated timelines.
Accompanying the payment will usually be a form specifying the employees for which the
payments have been made and the accumulated total collected.
Pension or retirement funds or schemes
As previously mentioned, the government may manage the pension fund or scheme for
which employees of the hospitality and tourism business contribute. When this is the
case, employers contribute a percentage of each employee‟s total gross pay. Legislation
may also require a percentage to be deducted from the employee‟s wages and salaries.
Timelines and methods of payment will be specified by the government authority.
Documenation will detail the accumulated amounts for each employee.
Other agencies
Sometimes an employee is required to pay amounts to particular government agencies as

a result of a legal order or other instruction from the government agency. Authorisation to
deduct the required amount from the employee‟s gross pay must be provided. At the
same time, the agency will specify when and how deductions should be forwarded to
them and will provide the necessary forms to record the details.
You will need to be aware of any such arrangements in your workplace, keeping in mind
the security and confidentiality of employee‟s records and circumstances.
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Trainee Manual 67
4.4 Calculate group tax amounts and/or transcribe

payments made in accordance with taxation
procedures
Introduction
The main requirement for determining group tax amounts is the reporting and payment of
income tax and other taxation obligations. Group tax is simply the sum of all taxes
collected from employees as determined by employment agreements and contracts.
Employers are not required to perform complex and time-consuming calculations when
deducting tax from employees‟ gross pay as government authorities usually provide
schedules covering weekly, fortnightly and monthly payroll periods. These schedules
specify the amount of gross pay and the appropriate income tax to be deducted.
Calculating income taxation

The monetary amount of taxation deducted from an employee‟s gross
pay is calculated according to the information provided on declaration
forms. As well as this, the amount the employee earns, the allowances
they receive and the claims made all influence the amount of income
tax that is deducted.
To calculate the amount of tax to deduct from an employee‟s gross
pay, the tax table or schedule that corresponds to the pay period in the
hospitality and tourism establishment is used. You need to be familiar
with the following aspects of the tables:
 The columns that list the monetary amounts of gross pay
 The location of the basic taxation deductions for each gross pay
amount
 Variations to the basic tax calculation that can occur if allowances or leave
entitlements are included in gross pay
 Any other amounts included in gross pay that influence the calculation of income
taxation.
When determining the applicable tax amount, gross pay is always rounded to whole local
currency amounts and not a fraction of these amounts.
Once income tax amounts have been calculated for each employee on the payroll for the
financial year, the total taxation is recorded on forms or reports as issued by government
authorities or agencies.
Calculating rebates or relief

When employees complete declaration forms, they may specify any rebates or relief that
can be claimed depending on their personal circumstances. These rebates or relief
reduce the amount of income taxation that is applicable to the gross pay calculated.
Tables or schedules similar to those compiled for income taxation may also be available
to assist with rebate or relief calculations.
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68 Trainee Manual
Some government authorities include the different rebate or relief amounts that are
applicable to each amount of gross pay in income tax schedules so that all information
can be reviewed from the same source.
To calculate rebates or relief, payroll officers locate the relevant table or schedule for the
pay period in the organisation. Each type of rebate or relief will be found in separate
columns that are listed alongside each amount of gross pay.
Once all rebates or relief have been applied, the total amount is recorded on the same
document that details group income tax amounts.
Calculating other taxes

Hospitality and tourism organisations that provide employees with payments in the form of
benefits in kind or salary sacrifice opportunities may be required to pay tax on behalf of
the employees based on the monetary value of the benefit. This is because the benefit is
considered to be a substitute for monetary amounts that should be added to gross pay.
Calculating the required tax on such benefits can be quite
complex. The rate of tax depends on the type of benefit
and the manner in which the tax rules categorise the
benefit. You will need to refer to information issued by local
government authorities that is applicable for your
workplace to accurately calculate this tax.
Total amounts for this tax are summarised periodically, in
standard forms or reports. It is important to be aware that
this documentation is often separate to income tax and
may be required to be submitted at different times.
Medical and pension or retirement deductions
Government authorities may also require deductions to be made from an employee‟s
gross pay for medical programmes and pension or retirement funds. Although not called a
tax, employers follow similar procedures to calculate group amounts for these kind of
deductions.
Tables or schedules detailing each amount of gross pay for the weekly, fortnightly or
monthly pay period are used to calculate the corresponding deduction for every
employee‟s gross pay. Total deductions are summarised and reported according to
statutory guidelines.
© ASEAN 2013
Trainee Manual 69
4.5 Prepare and reconcile employee group

certificate amounts from salary records
Introduction
Payment summaries or employee group certificates are issued to all employees at the
end of each income year. It is the employer‟s responsibility to produce this document. The
payment summary shows:
 Employee name and address
 The total amount of income earned
 Income tax deductions
 Other statutory deductions
 The period of employment
 Allowances
 Termination payments
 The value of benefits in kind
 Details of union fees
 Charitable donations.
Before preparing and printing payment summaries, it is critical that a series of checks are
performed to ensure that the summaries are accurate and complete.
End of payroll year checks and processes

The following are the steps that hospitality and tourism organisations should undertake
after the final pay for the year has been processed in order to check the details that will
appear on payment summaries. Using the relevant employee files or reports from the
payroll system, check the following:
 Name and address
 Date of birth
 Any unique numbers or codes used to identify employees to taxation authorities
 Dates of employment
 Dates for termination if that is applicable.
Employee entitlements
Reports from the payroll system will summarise the entitlements paid to employees
throughout the year. These must be reviewed to ensure they accurately reflect the
amounts paid to all employees. Also, many entitlements carry over to the next financial
year so you will need to make sure that the appropriate indicators are active in the payroll
system.
Payroll processing is complete
Once you have confirmed that all pays for the organisation have been processed for the
year, the following checks are necessary:
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70 Trainee Manual
 Confirm that all adjustments to any employee‟s pays are processed

 Check for any pays that have not cleared the bank account
 Ensure that pays processed by electronic transfer have been received.
Reconcile payroll
Various payroll reports should be printed prior to the commencement of a new payroll
year. Reconciliations can be performed both manually and electronically depending on
the system used in the hospitality and tourism organisation. The following can be used as
a checklist to ensure all appropriate reconciliations are performed.
 Reconcile the payroll summaries to the payroll
register summary for the year
 Reconcile the payroll register with:
 Gross wages and salary accounts in the general
ledger
 All statutory deduction accounts in the general
ledger
 All accounts where voluntary deduction amounts
are held in the general ledger
 Check that financial reports include the amounts for payroll expenses and liabilities
that are expected.
Produce payment summaries or group certificates
When payroll is processed using an electronic system, the program will provide the
feature whereby payment summaries can be automatically printed. There is usually a
standard format required in which the printer is set. For a manual system, payroll
personnel will need to manually complete the standard form for each employee.
Once the payment summaries are printed, income tax deductions should be checked to
the payroll summary as a final check for accuracy and completeness. Sometimes
duplicate copies of payroll summaries must be prepared with one copy distributed to each
employee and the duplicate forwarded with a covering form or report to statutory
authorities.
It is important to store payroll summaries appropriately according to workplace policies
and procedures as they form part of the payroll documentation that authorities may wish
to review. Often a copy is filed with each employee record in a manual system.
Distribution of payment summaries

The payroll summary must be given to each employee according to timelines set down by
government authorities. An employee can request their summary at an earlier time in
writing only. If such a request is made, the payment summary must usually provided
within 14 days.
For some countries and regions, the employee uses the payment summary to prepare a
tax summary or tax return that they must submit to taxation authorities. The information
provided by the employee is matched to the information provided by the hospitality and
tourism organisaition to ensure that the correct amount of income tax and other
deductions have been made.
© ASEAN 2013
Trainee Manual 71
Work Projects
4.1 Obtain a copy of an income tax and a relief or rebate declaration form that is relevant
for your organisation. Complete the form and note how you could explain this
process to a new employee. Prepare the following:
 A brief list of notes to explain the form and how to complete it to a new employee
 The procedures for processing these forms in your workplace
 An overview of the procedure for disposing of declaration forms.
4.2. Provide a report that identifies the entities to which your workplace forwards
deductions to from employees‟ salaries and wages. Detail the frequency with which
amounts need to be forwarded and the documentation that needs to be completed.
4.3. Using the tax schedules or tables from your workplace, prepare written procedures
for calculating an employee‟s income tax and other relevant deductions. Use an
example of a common gross pay amount from the payroll in your workplace ensuring
that employee details remain confidential.
4.4. Review the procedures for processing employment summaries in your workplace.
Show that the checks reviewed in this unit are performed and if not, write a sample
of a procedure that you would include.
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72 Trainee Manual
Summary
Administer salary records
 Declaration forms must be completed for all employees in accordance with legislative
requirements. This document provides authority for the employer to deduct income tax at the
appropriate rate
 To claim rebates or relief in the amount of tax an employee pays, another declaration form
must be completed
 Deductions from salaries and wages are statutory or voluntary. In all cases the employee must
have given permission to the employer for amounts to be deducted and forwarded to relevant
creditors. Deductions are not kept by the employer but sent by the employer to the appropriate
creditor within designated timelines
 Payments to government authorities must be made in accordance with a schedule issued by
the authority along with appropriate documentation
 Voluntary deductions are sent to a variety of entities, subject to organisational policy and the
employee‟s wishes
 End of year checks and reconciliations of payroll are performed before employee payment
summaries are distributed to employees.
© ASEAN 2013
Trainee Manual 73
© ASEAN 2013
74 Trainee Manual
Presentation of written work

1. Introduction
It is important for students to present carefully prepared written work. Written presentation
in industry must be professional in appearance and accurate in content. If students
develop good writing skills whilst studying, they are able to easily transfer those skills to
the workplace.
2. Style
Students should write in a style that is simple and concise. Short sentences
and paragraphs are easier to read and understand. It helps to write a plan
and at least one draft of the written work so that the final product will be
well organised. The points presented will then follow a logical sequence
and be relevant. Students should frequently refer to the question asked, to
keep „on track‟. Teachers recognize and are critical of work that does not
answer the question, or is „padded‟ with irrelevant material. In summary,
remember to:
 Plan ahead
 Be clear and concise
 Answer the question
 Proofread the final draft.
3. Presenting Written Work

Types of written work
Students may be asked to write:
 Short and long reports
 Essays
 Records of interviews
 Questionnaires
 Business letters
 Resumes.
Format
All written work should be presented on A4 paper, single-sided with a left-hand margin. If
work is word-processed, one-and-a-half or double spacing should be used. Handwritten
work must be legible and should also be well spaced to allow for ease of reading. New
paragraphs should not be indented but should be separated by a space. Pages must be
numbered. If headings are also to be numbered, students should use a logical and
sequential system of numbering.
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Trainee Manual 75
Cover Sheet
All written work should be submitted with a cover sheet stapled to the front that contains:
 The student‟s name and student number
 The name of the class/unit
 The due date of the work
 The title of the work
 The teacher‟s name
 A signed declaration that the work does not involve plagiarism.
Keeping a Copy
Students must keep a copy of the written work in case it is lost. This rarely happens but it
can be disastrous if a copy has not been kept.
Inclusive language
This means language that includes every section of the population. For instance, if a
student were to write „A nurse is responsible for the patients in her care at all times‟ it
would be implying that all nurses are female and would be excluding male nurses.
Examples of appropriate language are shown on the right:
Mankind Humankind
Barman/maid Bar attendant
Host/hostess Host
Waiter/waitress Waiter or waiting staff
© ASEAN 2013
76 Trainee Manual
Recommended reading
Recommended reading
Accounting for the Hospitality Industry, Elisa Moncarz and Nestor de J. Portocarrero, 3rd
edition Prentice Hall 2004.
Hospitality Financial Accounting, Weygandt, Kieso, Kimmel, DeFranco, John Wiley &
Sons, 2005.
Deloitte International tax highlights and taxation guides – pdf documents downloaded
from the following link:
http://www.deloitte.com/view/en_GX/global/services/tax/cross-border-tax/international-
tax/taxation-and-investment-guides/index.htm
© ASEAN 2013
Trainee Manual 77
Recommended reading
© ASEAN 2013
78 Trainee Manual
Trainee evaluation sheet

The following statements are about the competency you have just completed.
Do Not Does Not

Please tick the appropriate box Agree Don’t Know
Agree Apply
There was too much in this competency to

cover without rushing.
Most of the competency seemed relevant

to me.
The competency was at the right level for

me.
I got enough help from my trainer.
The amount of activities was sufficient.
The competency allowed me to use my

own initiative.
My training was well-organised.
My trainer had time to answer my

questions.
I understood how I was going to be

assessed.
I was given enough time to practice.
My trainer feedback was useful.
Enough equipment was available and it

worked well.
The activities were too hard for me.
© ASEAN 2013
Trainee Manual 79
The best things about this unit were:
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
The worst things about this unit were:
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
The things you should change in this unit are:
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
© ASEAN 2013
80 Trainee Manual

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Manage payroll records

William Angliss Institute of TAFE

Project Director: Wayne Crosbie

File name: TM_Manage_payroll_records_Final.docx

Introduction to trainee manual........................................................................................... 1

Assessment matrix ........................................................................................................... 5

Element 1: Establish procedures for the management of payroll ...................................... 9

Element 2: Prepare payroll data ..................................................................................... 33

Element 3: Authorise payment of salaries ...................................................................... 47

Element 4: Administer salary records ............................................................................. 61

Presentation of written work ............................................................................................ 75

Trainee evaluation sheet................................................................................................. 79

Introduction to trainee manual

Element 1: Establish procedures for the management of payroll

Element 2: Prepare payroll data

Element 3: Authorise payment of salaries

Element 4: Administer salary records

Work Written Oral

Element 1: Establish procedures for the management of payroll

1.1 Establish security procedures that ensure

1.2 Ensure procedures for claims ensure

1.3 Establish control measures to safeguard

1.4 Establish systems to ensure statutory

Element 2: Prepare payroll data

2.1 Use nominated industrial awards,

2.2 Calculate statutory and voluntary amounts

2.3 Provide payroll data to payroll processor

Element 3: Authorise payment of salaries

3.1 Check payroll, salaries and wages are

3.2 Reconcile salaries, wages and deductions

3.3 Deal with salary, wage and related

Work Written Oral

Element 4: Administer salary records

4.1 Process declaration forms for new and

4.2 Forward periodic deductions to nominated

4.3 Prepare payments to government

4.4 Calculate group tax amounts and/or

4.5 Prepare and reconcile employee group

System that collects and processes data and

Period used for calculating annual financial statements

The collection of accounts that capture all the financial

System of procedures and forms established in a

Legislation is laws that have been made by governments

Organisation of workers who have come together to

 Driver‟s licence (if applicable)

1.2 Ensure procedures for claims ensure

Substantiation procedures for claims of allowances

Creating allowances in the payroll system

Application process for receiving or paying the allowance

Specific event or activity claimable allowance

When an allowance is paid to employees as part of their salary

1.3 Establish control measures to safeguard the

Confidentiality and privacy

The bank account

New employees and changes to conditions of employment

Recording and authorising hours worked

Processing and distributing payroll

1.4 Establish systems to ensure statutory