Decoding Payroll Calculation Challenges

Decoding Payroll Calculation Challenges

Table of content

  1. How is payroll calculated in Australia?
  2. Important elements of salary structure in Australia
  3. Keep up with the HR market
  4. How can Workstem help with payroll calculation?

The most crucial duty for HR is not simply tapping on the computer at random and creating several copies of Excel, but rather doing repeated computations, payroll settlement, taxation, employee data management, etc. A skilled HR officer should be knowledgeable about labour rules and regulations as well as work meticulously and keep up with market trends to stay on top of the evolving HR industry, including the newest human resources system. It must be made public as quickly as possible.

How is payroll calculated in Australia?

The stages involved in calculating payroll in Australia can vary depending on the employee payment methods and appropriate deductions. According to the working hours and pay rates, gross pay is part of the standard payroll procedure.

Every step should be taken with considerable caution, just like when dealing with an employee’s payroll. The last thing that employers and employees want to happen is for there to be issues, such as payroll processing mistakes, which will result in complaints from colleagues and possibly even labour disputes. So let’s talk about the factors that should be considered while calculating payroll.

Important elements of salary structure in Australia

Some of the more common elements of a salary structure according to the payroll policies and regulations in Australia:


Cost to Company (CTC) is not the same as the in-hand salary for an employee. The CTC includes other components like the basic salary, HRA, employee provident fund, special allowances, etc.

Gross salary

The gross salary is calculated before tax deduction or other deductions. The gross salary usually includes dividends, basic pay, or other differentials.

Basic salary

This amount, which represents 35 to 50% of the overall compensation, is referred to as the employee’s basic income. The basic pay is determined by the position held by the person and the sector to which they belong. This represents the compensation received prior to any salary reduction or increase (allowances, overtime pay, or bonuses).

This is sometimes referred to as the employee’s take-home pay after TDS and any additional deductions mandated by the employer.


This is the pay that the employees will receive for the term of their employment. Additionally, the allowances are subject to full or partial taxation. According to each company’s policies, the allowances are tied to different limits. Among the common allowances are:

  • Meal Allowance
  • Conveyance Allowance
  • Medical Allowance
  • House Rent Allowance
  • Leave Travel Allowance


To comply with Australia’s superannuation entities and retirement savings accounts, this phrase is utilised for employer-supported and self-employed contributions. The superannuation fund requires participation from every employer.

Keep up with the HR market

Technical proficiency is crucial for an HR worker. You need to be familiar with associated laws and rules such the Employment Ordinance, Minimum Wage Ordinance, and others. Since the majority of HR professionals share the same educational background, they are familiar with fundamental concepts and have no trouble handling administrative tasks.

Nowadays, however, “Efficiency” is emphasised everywhere, therefore a professional HR will place more value on deep experience and exceptional competence that result in more accurate and efficient work than they would in the past.

Take HR departments at big businesses. When resources are available, HR puts the department first rather than a select group of people. The efficiency of a division of work can be increased. One department’s employees may do a variety of tasks, including payroll, tax preparation, headhunting and staffing, and claim filing.

Senior managers, mid-level employees, and front-line people can all be targeted separately in headhunting. Mid-level and front-line workers should look for people who support the company’s operations and activities while senior managers should devote a lot of time and effort to finding higher-quality talent.

The requirement for professional knowledge and sophisticated administrative responsibilities is especially apparent in payroll, where HR staff members must always stay abreast of new changes in the market by attending regular training sessions and participating in evaluations. Companies must create a payroll system if they want to be effective; otherwise, they will waste a lot of time on these pointless and unimportant duties. Another option is to outsource the work to a reputable human resources company.

How can Workstem help with payroll calculation?

Workstem is a one-stop payroll & HR platform with an award interpretation module that ensures employers stay compliant with Fair Work. Meanwhile, the clock in/out data, timesheets, leave applications and payroll records will be automatically synchronised to the cloud. The platform simplifies HR processes, reduces administrative burdens, and offers a user-friendly interface for small businesses and large enterprises alike.

The automated payroll processing helps businesses generate payslips and reports without the need for complex Excel spreadsheets, and reduces the unnecessary administrative burdens. Our STP reporting feature also enables businesses to comply with ATO requirements, while the auto-generation of ABA files allows employees to self check and download payslips on App anytime, anywhere.


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