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What are Payroll System, and How Does It Work?

What are Payroll System, and How Does It Work?

Payroll System

Among the main challenges of the Human, Resources sector are tasks such as registering the entry and exit of employees, calculating overtime, assigning bonuses, and salary changes, among others. In order for these challenges to be overcome and become an efficient process, it is necessary to have a payroll system. 

This technology has the potential to make payroll management easier, giving you more efficiency and making your digital HR. See below how the payroll system works and what are the main advantages of having it in your company.

How Payroll System Works?

A sound payroll system operates in an intuitive and integrated way from the registration of employee information, whether at the time of hiring or importing a pre-existing database. From that moment on, the HR professional needs to maintain autonomy when making timely additions of employees or contractual changes without resorting to support or other sectors.

In the case of the beginning of a new employee’s journey, the payroll system can also create an admission kit with all the necessary resources for this stage, such as control of PPE and uniforms, experience contract, and registration form. Furthermore, The same possibility applies to a contract termination process.

With all the data included, the calculations are done automatically, according to the parameters configured according to the needs of each client. This is a crucial point to be highlighted: although there are legal frameworks valid for all companies with which the payroll system must fully comply, the reality of each organization is different, whether due to union negotiations or the range of benefits granted. For example, Therefore, the software must allow the creation of compensation rules according to the demands of those who actually operate the system. 

More Detail

When informing the calculation period, the system calculates the sheet in detail. At this point, all information must be considered: overtime, absences, night shifts, certificates, paid breaks, benefits, awards, and commissions, for example. A complete, accurate, and reliable system guarantees the release of every penny of remuneration without requiring rework. The calculations of vacation, contractual termination, and provision of the 13th salary are also generated.

The charges owed by the company are also automatically calculated, such as INSS, FGTS, RATxFAP, and contributions to third parties. In addition to issuing, the events to be transmitted to eSocial, the payroll software can also generate data from GFIP, CAGED, RAIS, CTPS, DIRF, MANAD, GPS, and GRF. All with consistency, agility, and guarantee of fulfillment of obligations.

Reasons to Implement the Payroll System

Payroll management is one of the most critical tasks in the HR department of a company and, therefore, it must be done efficiently. So, To help in this process, the business management system has advantageous features. See some of them:

Data Centralization

The first ease of relying on payroll software is to find all employee data in one place. Thus, when accounting for the payment and checking for absences or delays, it is possible to access information more quickly and easily.

This centralization facilitates the performance of the sector’s activities, generating more organization, productivity, and agility. These are essential characteristics for preparing the payroll more efficiently.

Decreased Errors

With the system, it is also possible to reduce the rate of typing errors or wrong calculations. Thus, payroll errors and rework that can lead to delays in delivery are avoided.

Automating HR processes allows for more accuracy in accounting for employee salaries, even if commissions or other benefits are added. Thus, the company gains more security and reliability in fulfilling labor obligations.


Another differential of this software is the generation of detailed reports based on the data generated by the system. With this information, it is possible to monitor, for example, the performance of employees and other indicators that the company wants.

It is a way to make the Human Resources sector more strategic, in addition to facilitating decision-making by management. This data analysis is vital for the company to develop more quickly.

Control over the Working Day

With the entry and exit records of employees, the control of the workday becomes more efficient, as well as the accounting of overtime performed by each one.

The company does not need to schedule these times manually by relying on automated technology. So, The software integrates with the time clock, which captures the txt file generated in the appointment and records this data in the management system. 

Registration of Positions and Salaries

Another process that can be automated with payroll software is recording employee positions and salaries. In this function, it is possible to register all available positions in the company, as well as their respective salaries.

When the company hires a new employee, it will not be necessary to register his salary with his position and be automatically linked to him, just payment and also the management of benefits.

internal Communication

The payroll system also has an employee portal, where employees can view information such as performance appraisals, paycheck inquiries, and training enrollment. HR can define which processes will be available on the portal and the access levels. In this way, So, it is possible to strengthen the relationship between the company and the professional, giving more autonomy to the employees.

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