Payroll is a business function that significantly influences the employees of an organisation. While it is a commonly used term in any business setting, it is still a new concept for many fresh graduates or those joining a professional workplace for the first time. Here is what you need to know about your name on the payroll, types of compensation in payroll and what you can expect from each type.
Your Name On The Payroll
There is nothing fancy or complex with your payroll name in an organisation’s payroll system. It is your name under which your organisation processes your payroll data and the name that appears in all relevant payroll documents.
When you’re new to a company, as part of your payroll management, the company will require you to complete certain documentation, which includes your name. As a standard rule, organisations request employees to give their payroll name as per their national identity card in many countries. The same applies to the UAE as well.
In the event where the name of an employee is changed, they will be required to address such changes to the payroll department. In order to change a name on a company’s payroll system, the employer or payroll manager will require certain details, including a copy of an updated identity card.
If an employee’s new name is not updated on the national identity card, the old name should remain as is in the employer’s payroll system. Apart from this standard rule, there are no specific rules that your name on the payroll should abide by.
Types Of Compensation And What To Expect From Them
Employee compensations are divided into two main types: direct compensation (also known as financial compensation) and indirect remuneration (often known as employee benefits or perks of the job). Here is a breakdown of these two types of compensations and what you can expect from them.
Direct Compensation (Financial)
Direct compensations are a financial or monetary form of compensation that you can receive in one of four main ways:
Hourly – this is a type of compensation that is often provided to unskilled, semi-skilled, temporary, part-time, or contract workers in exchange for their time and labour.
Salary – This is a type of compensation that is offered to skilled and full-time employees and those who fill management positions.
Commission – This is traditionally a type of compensation provided for employees in a sales role. This compensation is mainly based on a predominant quota or target. The higher the employee reaches a quota, the higher the salary. Depending on the job role, some employees will work only on commission, whereas some will work on a salary with an additional commission component.
Bonuses – This type of pay is one that employees usually receive at year-end depending on business results or for employees who meet their set goals. The HR manager often decides on bonus payments after a performance evaluation. Bonuses can also be paid if a business had a great year with good results.
Indirect compensations are viewed as monetary and non-monetary compensations. This is because some indirect compensations still have a financial value and are relevant from a statutory declaration or reporting requirement.
Equity packages (ownership) in the company, either through shares of stock or the option to buy such shares and benefits like health insurance, life insurance, retirement plans, disability insurance, legal insurance, and pet insurance, fall under monetary indirect compensations.
Paid or non-paid time off, flexi-time, learning and development opportunities, parental leave, childcare, company cars, phones or laptops, and meals are viewed as non-monetary indirect compensations.
An organisation’s payroll system will have pre-set criteria on what non-monetary benefits an employee is eligible for. The employee’s direct and indirect compensation will be clearly outlined in the pay slip they receive from the company.