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Third Party payroll and Payroll Management

Being a HR or a business person having no clear idea as well want to know what is third party payroll or payroll outsourcing. Here is I explained in a simple words about third party payroll or payroll outsourcing and what is different between payroll management and third party payroll.

Third Party Payroll or payroll outsourcing #thirdpartypayroll or #payrolloutsourcing

We can understand third party payroll by an example like a XYZ Company have a manufacturing business and have employee strength of 500 (five hundred). Out of 500 hundred 300 staff working in corporate office in a different departments like, Administration, Accounts, HR, supply chain and there is high and middle level staff. And there 100 hundred staff in manufacturing units and 100 staff in marketing units.

Now, due to avoid day to day attrition rate , compliance handling , and other grievance handling , XYZ company wants to outsource some of the staff to another company as third party payroll and approach a ABC company for this.

So that an agreement made between XYZ and ABC Company will be made and XYZ outsource their 50 marketing staff, 50 nos. blue color manufacturing staff and 50 corporate office staff (total 150 nos of employees) would be on third party payroll on the role of ABC Company with the particular date from the date of agreement.

After agreement, XYZ would be the principle employer and ABC Company would be the immediate employer for these 150 employees. These 150 employees would be on the payroll of ABC company and ABC will manage all the attendance, payroll, statutory records ( PF , ESIC, Bonus, Gratuity etc.)  for these 150 employees as well as monthly release salary of these 150 employees with compliance completion and govt. compliance payment. For all these activities XYZ will pay to ABC a decided service charges along with monthly salary and statutory payment.

In conclusion, for 150 employees all the responsibility from hire to retire would be liable on ABC Company and for Rest 350 employees on XYZ Company.

Payroll Management #payrollmanagement

Payroll management or salary processing a simple process of salary processing on a tool as well as maintain service record, pay sheet generation , pay slip generation, statutory records maintain and compliances on the party to whom this task assigned , but the main employer remain same. for example if in above case XYZ do not opted third party payroll service for their 500 employees  and opted for payroll management services only from ABC company. In this case all employees would be on the payroll of XYZ and ABC will manage the payroll processing only.

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