How to configure Payroll in Odoo

Payroll is an integral part of a company’s operations in every organization. It is very important for a company’s financial accounting as well as for its recipients i.e the employees. Odoo supports this feature to a great extent and it is quite easy to configure and manage Payroll in Odoo. Odoo Payroll is also well linked with Accounting Module which allows an organization to track the Payroll entries registered towards salary accounts within a financial year.

How to install this:
In order to make use of Payroll and Payroll Accounting features, user needs to install Payroll and Payroll Accounting respectively which can be located in Local Modules under Settings menu.

Following are the some of the Important Concepts:

1) Salary Rule Categories:
Salary Rule Categories are your Basic, Allowance, Deduction, Gross, Net, Company Contribution, etc which is essential to categorize your Salary Rule.

2) Salary Rule:
It is used to compute data like allowances, deductions, net, taxes, contribution registers, etc. You can define salary rules by using the expression. Salary rules are important part of the Salary Structure. User needs to provide conditions which has options as Always True, Range & Python Expression depending upon the requirement. Amount Type can be Fixed Amount, Percentage & Python Code.

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3) Salary Structure:
Salary Structure is a component that decides what should be the Salary of an employee, considering factors such as the individual’s category in an organization, the length of service and the responsibilities an individual is handling etc. It defines a set of rules usually applied to a category of employees. Salary calculation after considering all the allowances, deductions and incentives (if any) etc.

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4) Contract:
Contract includes everything required to compute the salary slip of an employee. Contract is linked with employee that contains key information like Basic(Wage), Salary Structure, Scheduled Pay(monthly/weekly), Working Schedule etc. This is important as Payslips are generated on the basis of salary structure which consists of Allowances, Deductions etc.

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5) Contribution Register:
Using contribution register you can track the contribution of the employee and company. It is a register that contains to whom the company or the employee have to pay taxes.

Generate Payslips
Now after user is done with all required configuration, he/she can generate payslip for an individual employee from Employee Payslips menu which is located in Payroll menu under Human Resources. User needs to provide certain inputs as Employee, Period etc. On selection of Employee, information from related contract is fetched automatically. Now user can confirm the Payslip which does calculation of various salary rules which are configured in Salary Structure.Odoo provides feature for generating Payslips in batches too which can be found as Payslip Batches under Payroll menu in Human Resources.

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Finally, we can print payslip report for an employee.

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Now we will configure an important feature of payroll that is linking payroll with accounting. It’s always crucial that we have to make entries in our accounting for those transactions. Once we install Payroll Accounting module,we can enable this feature and make use of it.

User need to define proper Salary Journal against Payslips as shown below.

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User needs to define proper Accounts against Salary rules as shown below.
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Once you confirm payslip, it will create journal entries as per our account setting. By this way, you can manage employee salary payment using Odoo Payroll module.

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3 responses to “How to configure Payroll in Odoo”

  1. Shaheryar Malik says:

    Thanks alot for the article and i will be really thank ful if you also include that how to handle the leave deduction in payroll. Specially rules for the unpaid leaves if the pay cycle is monthly and handling the short leaves.

    E.g.
    If a person has two unpaid leaves during a month and 7 short leaves given that “2” short leaves be considered equal to “1” unpaid leave. So now we need to deduct for 2 unpaid leaves and in addition 3 more unpaid leaves due to the effect of short leaves.

    If you can update your article with this addition with the salary rules than it will be more than a favor to all of the new bies like me.

    I will be looking forward for it.

    Thanks again

    • Sandesh Rao says:

      Hello Shaheryar. Thanks for your comments. Your scenario seems possible by Customization and not by configuration. Looks like we need to modify the current workflow to map such a requirement.

  2. Sandeep Kumar says:

    Thanks for the Post , Very Helpful 🙂

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