Useful Payroll Calculation Formulas in SaaS-Based Workforce Management Software
SaaS-based Workforce Management (WFM) platforms like Tempus Central WFM streamline payroll processing by automating complex calculations. These systems rely on a set of core formulas to ensure accurate, compliant, and timely payroll. Below are the most commonly used formulas:
- Gross Pay Calculation
Formula:
Gross Pay = (Hourly Rate × Hours Worked) + Overtime Pay + Bonuses + Commissions
- Hourly Rate: Standard wage per hour.
- Overtime Pay: Typically 1.5× hourly rate for hours beyond 40/week.
- Bonuses/Commissions: Performance-based additions.
- Overtime Pay
Formula:
Overtime Pay = Overtime Hours × Overtime Rate
- Overtime Rate: Usually 1.5× or 2× the regular hourly rate depending on labor laws.
- Net Pay (Take-Home Pay)
Formula:
Net Pay = Gross Pay – (Taxes + Deductions)
- Deductions include:
- Income Tax
- Social Security/Provident Fund
- Health Insurance
- Retirement Contributions
- Tax Withholding
Formula:
Tax Withheld = Gross Pay × Applicable Tax Rate
- Tax rates vary by country, region, and employee classification.
- Leave Deductions
Formula:
Leave Deduction = (Daily Rate × Unpaid Leave Days)
- Used when employees exceed paid leave entitlements.
- Pro-Rated Salary
Formula:
Pro-Rated Salary = (Monthly Salary / Total Working Days) × Days Worked
- Applied for new joiners, resignations, or partial-month work.
- Employer Contributions
Formula:
Employer Contribution = Gross Pay × Contribution Rate
- Includes employer-paid benefits like social security, insurance, or pension.
- Cost to Company (CTC)
Formula:
CTC = Gross Salary + Employer Contributions + Perks/Benefits Reflects the total annual cost incurred by the employer.
Integration with SaaS WFM Platforms
Modern SaaS WFM solutions such Tempus Central WFM integrates these formulas with:
- Time tracking systems
- Attendance logs
- Leave management
- Tax compliance modules
This ensures real-time, error-free payroll processing and compliance with local labor laws.