Saturday, March 23, 2013




General background

1 Employees are usually paid either weekly or monthly.

2 Two common methods of working out a person's pay are:

(a) As a salary-a fixed amount per year is divided up and the employee is paid the same amount, usually each month (although there may be extra payments for overtime, etc).

(b) Based on an hourly rate. The pay for the week (or month) is worked out by multiplying the number of hours worked by the hourly rate. The rates of payment are higher for overtime, weekends, etc.

3 People usually receive their pay:

(a) In cash, or

(b) As a cheque, or

(c) By a payment to their bank.

4 Various deductions have to be made from pay including:

(a) Income Tax, which is complicated to work out, and depends on the amount already paid in the year,

(b) National Insurance contributions.

Example of payroll

The overall system

The following example, which agrees with the system flowchart of Fig. 10.3 and the program flowchart of Fig 12 assumes that the employees have an hourly rate, are paid each week, and receive their money as cash or as a direct payment to the bank.

The work is done by batch processing on a large computer whose peripheral devices include magnetic tape drives, magnetic disc drives and line printers.

Collection and input of data

1 The employees punch a clock card on arriving at work and on leaving.

2 Using this card a clerk fills out a time sheet for the employee, adding details about overtime, special payments, sickness, etc.

3 This data is encoded on to magnetic tape and verified.


1 A master file on magnetic tape of data about the employees, including their employee number, name, department, hourly rate, tax code, tax paid to date, total pay to date, etc.

2 The magnetic tape file which has been prepared from the time sheets, giving details of the current week's work.

3 A sorted version of the file of current week's details, also on magnetic tape, with the record keys in the same order as the master file.

4 A file of tax tables from which income tax can be calculated using a person's tax code and pay to date. For speed this file has to be stored on disc for direct access.


1 The master file has to be updated before the payroll run takes place, if there have been any changes to employee details. An update file is prepared with its records in the same order as those in the master file and a program is run which uses one file to update the other . Employees' tax-to-date is updated during the main payroll run (see programs below).

2 The tax tables file is updated only when the Government changes the tax rules.

The role of the computer

The main computer programs are:

1 A program which validates the data from the time sheets and produces a new magnetic tape file sorted into order.

2 The main program which:

(a) Calculates the employees' gross pay (i.e. pay before deductions).

(b) Calculates tax and other deductions, and hence calculates the actual pay.

(c) Updates the tax-to-date and the total pay-to-date on the master file.

(d) Prints wage slips and details for the wages department and for the banks (of money to be directly credited to employees' accounts).

3 A 'coin analysis' program which works out how many of the different coins and notes are required from the bank. Employees paid in cash will then receive the correct money.

4 An update program which updates the master file to allow for new employees, or for people leaving or for changes in rates of pay.

Printed output

This is all produced on a line-printer:

L Wage slips-using preprinted stationery.

2 Coin analysis.

3 Summary for the banks of money to be transferred to employees' accounts.

4 Statistics for the wages department.