Payroll in manufacturing industries
13 minutes read

Payroll in manufacturing industries

In this blog, we will discuss compliance in manufacturing and the payroll process challenges in the manufacturing industry.


Nowadays, every manufacturing industry requires payroll software to manage the whole process of payroll, because managing the payroll process of any industry is not an easy process. In the manufacturing industry, there are numerous sections and departments, such as suppliers, manufacturers, packers, management, operations, operators, and others. And there are different pay scales for separate roles. So, before implementing the payroll software, you should understand the payroll challenges in the industry and the requirements which are faced by the industry. Before going through any payroll software, you just check the Saral PayPack, which will help you to handle your payroll process in the manufacturing industry.

Compliance In Manufacturing

Manufacturing compliance consists of the rules of the manufacturing industries, such as safety for employees, labourers, workers, product safety, quality standard, quality control, data protection, employment laws, taxation, legal, technical, corporate requirements, and practises. Manufacturers must comply with all these to ensure proper management of the business. This will also protect the business and consumer from any risk.

Nowadays, following compliance has become more challenging due to the frequent changes in rules and regulations brought by the government or due to the labour laws process. On the other hand, the main difficulty is to figure out areas of resource improvement and production efficiency.

So, to ensure compliance with the list of regulations, many industries started to implement the payroll software that helps to achieve compliance and productivity goals as well as help in management of the whole process of payroll processing.

Payroll Challenges In Manufacturing Industry

There is the following list of payroll challenges in the manufacturing industry

  • Compliance

The most challenging part for any manufacturing industry is ensuring the payroll system complies with local guidelines/regulations. And they also have to reckon with the requirements of employees for a long-term relationship with them.

The payroll department of the manufacturing industries and other organisations should always be aware of the changing laws and regulations. An organisation should ensure that the payroll process must have a system for the assimilation of any changes in laws.

  • Accuracy

In manufacturing sectors, there are various factors that affect the pay scale of the employees, and there are chances of mistakes in pay computation. The possibility of errors is higher in manual payroll processing than in the automated system.

  • Taxation

Before making the payments to the employees, companies’ responsibilities are to deduct the taxes. During the deduction or payment, there is a high chance of errors. Along with this, the tax department makes some regular changes to ensure economic growth or for some amendments. So, to prevent errors or such changes the payroll system needs to be integrated with a mechanism to ensure compliance and avoid the penalties.

  • Update with employment norms

For manufacturing industries or any other organisation, manually handling the payroll is tedious. And many manufacturing industries have different branches in different states or countries with the local office. So, they must integrate the local rules and regulations into the payroll system. If you transfer your employee from one state to another state or country, that employee’s salary will be affected according to that place’s law and regulations. If the employee is deputed for a temporary period then you will have to compensate for travel, lodging, and other expenses.

payroll challenges in manufacturing industry

  • Security and privacy

Any data that gets leaked from the company will deeply impact the business and also affects the value of the organisation. Hence, it is critical to choose a payroll system with robust security. This is also important as employee privacy is the biggest asset for the company.

  • Allowances

Generally, Manufacturing units provide varied types of allowances to their employees based on various criteria like unit, department, type of work, shift of work, location, designation etc. These at times, may also be influenced by the government rules and regulations. This shall make the management of payroll a tedious task.

  • Real-time reporting

To prepare a report in Real-time may be time consuming and may not be prepared in time when required by the management for the analysis of the process. Without any automation of reporting, the person in charge of payroll management may find it difficult to prepare the required reports.

  • Overtime calculation

In the manufacturing industry, Overtime calculation plays a major role as maximum of the employees will be applicable for this pay. Tracking the overtime, employee wise with calculation of pay and disbursement of the amount requires a lot of time and man resources. In such scenarios, if the payroll system is automated, the work involved in the OT calculation will drastically reduce.

  • Access to self-service

As we all know, the service of payroll consumes a lot of time for the payroll personnel. Such as in the matter of pay slips, leave of the employees and related information. If there are frequent changes in pay policy, this will also affect the pay computation in turn the related details of payroll.

If the employee needs to have a check on these details from time to time, they will have to contact the pay computing officer. This is a time-consuming process for both the employee as well as the officer. So, if the employee is given a self-service option, then the details can be viewed by them any time. This in turn will reduce the interaction time between the employee and the pay team.

  • Compliance with international norms

Any business has to comply with the local laws as well as cross country laws, if there are business relationships with other countries. This also applies for employee management and their payroll. If the employees are deputed in any other country or other location where the laws are different from the based location, then the payroll of such employees will also be impacted.

  • Time & attendance

Usually, in the manufacturing sector employees work in different shifts and are paid on an hourly basis. Manually tracking their attendance may require an installed process which is again time consuming. However, there are digital mediums to log the timings that will help to track and pay accurate time based payments. It is not only beneficial for employees, but one can also get the option to upload the time and attendance digitally into the payroll software. And it is beneficial for all large and small industries.


What is the role of HRMS in manufacturing industries?

There are various roles of HRMS in manufacturing industries –

  1. It automates the clerical task for the HR department and increases their efficiency.
  2. It helps to make data-driven decisions.
  3. It helps you in your backend work to boost your business operation.
  4. It saves time, and you can utilize time to formulate employee engagement and others.

How do I choose the right Payroll software for the manufacturing industry?

Choosing the right and ideal payroll solution is one of the doubting tasks, that will support a wide variety of tasks, such as the daily activity of HR. Therefore, You have a simplified checklist to assist you in selecting the appropriate one for your business.

  • Is the system customized as per your needs and wants?
  • Are they offering you support options,
  • Is HR software easy to use and intuitive?
  • Is the software scalable as per your requirement?
  • Does the software provide you with standard templates with a custom reporting system?
  • Is the cost negotiable, or are there any hidden charges?
  • Is it possible to integrate the software with other standard software? If so, how relevant are the existing options?

This is the end of our discussion on the Payroll process in manufacturing industry. Let’s know your other queries and opinions on this topic. Mention below the comment box.

Related Post:

How does a payroll software work

Understanding statutory compliance

A guide to Payroll Process


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