What is Payroll Area and Payroll Period?

A very common confusion amongst beginners in SAP – HR is the concept behind payroll area and payroll period. Lets examine –

Payroll Area:

• Typically an organization have a variety of employee types who are paid at different pay frequencies. For example, blue collar workers are paid weekly, white collar employees are paid monthly , part time employees are typically paid bi-weekly.
• Payroll Area groups employees together on the same payroll run frequency (semi-monthly, monthly, etc.).
• When executing a payroll for a particular payroll area all employees belonging to that payroll are processed. This avoids the need for running payroll individually for employees who are paid at same frequency

  Payroll Periods:
  

• Records of payroll run for earlier months an employee are always stored for tax, audit and retro purposes. Suppose the current month is Oct 2010 and you want to refer to the payroll results for the month of Jan 2010 for an employee who is paid on monthly basis. It surely is easy to look for this data. But what if the employee is configured to be paid every 9 days and you want to know what his 16th payslip, for the current financial year ,looked like. How do you go about searching for this data ? Inconvenient isn’t it ? Well, Enter Payroll Periods.
• Payroll Periods represents the period for which regular payroll is run.
• It is identified by a period number and a payroll year.

• The payroll period includes a “start date”, an “end date”. In the above example period 01 for payroll area xx has start date 01/01 and end date 01/31
• For each payroll area, payroll periods are generated for current and future years.
• When generating payroll periods, the period number depends on the period parameter (semi-monthly, monthly, etc.) and the start of the fiscal year. For example, for countries for which the financial year starts in April, payroll period “01 2010” represents the payroll period for April 2010.

  Pay Day:
  

• Its the date the salary is credited to bank account of the employee.
• Pay Day differ from organizations to organizations. Some pay on the last working way of the month.Some companies pay last months salary on the 10th of the current month.