Payroll Confidentiality in India: Is it a Taboo?

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Payroll Confidentiality
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Payroll confidentiality or secrecy is one of the difficult things to maintain in Indian workplaces. As in other nations, businesses take proper care to ensure that payroll info of employees stays confidential to avoid a possible payroll fraud and to maintain workplace decorum. However, in India, a business has to go through a number of additional challenges when it comes to payroll confidentiality.

Cultural Aspects

For a business venturing into Indian markets for the first time, there are certain considerations of Indian workplace culture that render payroll confidentiality as an integral and difficult thing compared to Western countries.

Employees here in India are often more open when it comes to sharing their salary details than their counterparts in the West. In fact, it is quite common for a colleague to ask about salary of his/her colleague, which is perceived by westerners as indiscreet. In addition, Indians lay greater emphasis on the hierarchy at workplaces than Westerners. In India, this often means that employees expect the differences in salary reflect years of experience or seniority rather than technical expertise or soft skills. To counter this, businesses can have HR policies and training, employment contracts or an automated payroll software in place to curb a few of these painpoints.

Legal and Tax Obligations

Many businesses do have a dedicated payroll department, whereas many merge it with their HR department. A small business might not have the necessary resources to administer payroll operations especially for multiple geographies. This triggers the need for having a cloud based payroll solution to address the growing needs of a business.

Now payroll for an Indian company is a bit challenging, since it requires the administrators to abide by the various tax laws that keep on changing frequently. The volatile nature of the country’s regulatory embodiment requires the payroll administrators to adopt pay systems and procedures that are flexible to allow new compensation structure. Failing to comply with the tax laws or regulations can invite penalties.

Further, employers ought to comply with the laws aimed at ensuring employee data privacy and protection. The IT Act i.e., the Information Technology Act, 2000 requires the employers to ensure protection of an employee’s personal information from unlawful disclosures.

If any employer fails to maintain sound security procedures and practices for safeguarding employees’ sensitive data which if leads to wrongful gain or loss, the employer is liable to compensate the employee. This is the reason many foreign based organisations outsource their payroll functions for an India-based workforce to comply with these liabilities.

Word of Caution:

Businesses that opt to outsource their payroll or process it by an automated payroll software create a culture of confidentiality at the workplace. The effect goes beyond payroll, as it creates a professional environment where the staff values confidentiality.

Businesses that opt for a payroll solution keep pay details limited to a handful number of senior personnel only. This includes pay structure, professional tax, TDS, etc. and all the info that is critical for both tax compliance and salary payments. The solution also tracks overtime hours, allowances, receivables, bonuses, etc. for employees. In addition, the payroll software generates payslips at the click of a button.

Simply put, an automated payroll software allows a company’s HR or payroll department to focus on other core business processes by saving them time and efforts.

Having sound HR policies and robust system in place can help uproot the forbidden problem of payroll confidentiality from Indian workplaces.

To know how a cloud based payroll software can be a trusted tool for Indian workplaces, contact us now. You can also SMS SAGE to 56767 or drop us a mail at or give us a shout out at Twitter or Facebook.


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