Statutory Contribution

1. Overview
   • Every employer and employee are responsible to pay respective statutory contributions using a portion of their wages. These include personal income tax (e.g. PAYE, PAYG or employee withholding tax), employee provident fund or others.
   • Since it is very common that an employee's salary may comprise several components (e.g. overtime claims, leave encashment), therefore it is sometimes not necessary for some salary components to be included in the Statutory Contribution calculation. As such, HR.my also offers extra flexibility so that employers may decide which statutory contributions are required in their salary components. This could be easily customized via the options provided in Earning, Deduction and Bonus. With the options provided, an employer could choose not to contribute to certain statutory contribution (e.g. provident fund) for a particular salary component.
2. Statutory Contribution Calculation
   • Go to Payroll ❯ Statutory Contribution, click at the button to create a new item.
   • There are both Employer Portion and Employee Portion in each Statutory Contribution. You may decide how each portion's amount is calculated with the options below:
     • Not Applicable. This means that this portion is irrelevant, and it will be shown as empty field on employee payslip.
       This option is not the same as having an amount of zero printed on the employee payslip.
     • Amount. This allows you to enter your own calculated value directly.
     • % Gross Income. Gross Income is the summation of Basic Salary + Earning + Bonus - Deduction. This means that HR.my will calculate the portion based on the percentage decided by you during payroll run. As explained earlier, not all salary components are necessarily involved in all statutory contribution calculation. You may exclude certain salary component by changing the options provided in Earning, Deduction and Bonus. Nonetheless, Basic Salary will always be included for the statutory contribution calculation.
3. Setting up Statutory Contribution
   • Let's say you will need to contribute to an employee provident fund named CPF. You may follow the steps below:
     • Go to Payroll ❯ Statutory Contribution, click at the button to create a "CPF" item.
     • Decide if you want to enter your own calculated amount or let HR.my calculate it based on a percentage of employee's gross income. If you would like to enter your own calculated amount, then set Amount Type to "Amount", otherwise set Amount Type to "% Gross Income".
       You may leave both Employer Portion and Employee Portion as zero or enter specific values. Either way, you may always assign different values again when setting up an employee's salary profile or when you are ready to process the payroll.
     • Update the specified employee's salary profile via Payroll ❯ Salary Adjustment. Add the created CPF item in the Statutory Contribution section. If necessary, you may assign new values to Employer Portion or Employee Portion.
     • In the next payroll run, go to Payroll ❯ Process. You will be able to check and update Statutory Contribution in Edit Salary Items step. If necessary, you may assign new values to Employer Portion or Employee Portion.
   • Repeat the same steps for other statutory contributions like Tax or others.