Many Pakistani businesses still run payroll in Excel. It works with twenty employees. With two hundred workers across shifts, overtime, advances and deductions, spreadsheets become slow, error-prone and hard to audit — and payroll errors directly affect staff trust.
This checklist covers what to look for when choosing or building payroll software for a factory, school, hospital or growing SME in Pakistan.
1. Employee master data
- Employee code, CNIC, department, designation, unit/branch and cost centre
- Employment type: permanent, contract, probation, daily wage or piece-rate
- Joining date, confirmation date and exit date
- Bank account details for salary transfer, with restricted access
- History of salary changes, transfers and promotions — not just the current value
2. Flexible salary structures
Salary packages in Pakistan usually include basic pay plus allowances such as house rent, medical, conveyance or utilities. The software should let you define components, mark which are taxable or fixed, and apply different structures by grade or employee type without changing code.
3. Attendance integration
Payroll accuracy depends on attendance. Look for:
- Import or direct integration with biometric and face-recognition attendance machines
- Shift definitions, including night and rotating shifts
- Rules for late arrivals, short leave, absent days and half days
- Supervisor approval of missing punches before payroll is processed
4. Overtime, piece-rate and incentives
Factories need overtime calculated from approved hours using configurable rates, and some departments are paid per piece. Make sure the system supports the methods you actually use, and that overtime requires approval rather than being paid automatically from raw punches.
5. Leave management
Leave types, yearly entitlements, carry-forward rules, encashment and approval workflow should feed payroll directly so unpaid leave is deducted correctly.
6. Loans and advances
Salary advances and employee loans are common. The system should record the amount, installment plan and balance, deduct installments automatically, and allow approved deferrals — with a clear ledger per employee.
7. Statutory deductions and compliance
Requirements change with each Finance Act and provincial notification, so payroll software must be configurable rather than hard-coded. Typical areas include:
- Income tax withholding on salaries according to the current tax slabs
- EOBI contributions
- Provincial employees’ social security contributions, such as PESSI in Punjab or SESSI in Sindh, where applicable
- Provident fund and gratuity, if your organisation offers them
- Minimum wage checks against the latest provincial notification
Confirm the current rates and rules with your tax adviser and the relevant authorities. Software should make it easy to update them when they change.
8. Payroll processing controls
- Payroll period lock: once a month is closed, changes require an authorised reopen
- Draft run, review, approval and final posting steps
- Variance report comparing this month with last month for every employee
- Audit trail of who changed salaries, rates and deductions, and when
- Role-based access so only authorised staff can see salaries
9. Payments and payslips
- Bank transfer file in the format required by your bank
- Cash payroll sheets for staff paid in cash, with signatures
- Payslips by email, WhatsApp or employee self-service portal
- Final settlement calculation for leaving employees
10. Reports and accounting
Look for department-wise salary cost, overtime analysis, tax and contribution reports, headcount, and a journal entry that posts payroll to your accounting system or ERP automatically.
11. Questions to ask any vendor
- Can we change tax rates and allowance rules ourselves?
- Which attendance machines do you integrate with?
- Can we run a parallel payroll with our current system before switching?
- How is data backed up, and who can access salary data?
- What support do you provide at month-end?
12. A safe rollout plan
- Clean employee and salary data in Excel first.
- Configure salary components, rules and approvals.
- Run at least one or two months in parallel with the existing process.
- Reconcile every difference before going live.
- Train HR, accounts and supervisors on their parts of the workflow.
Important: This article is a software-selection checklist, not tax or legal advice. Statutory rates and obligations should be confirmed with qualified advisers and the relevant authorities.
Looking for payroll and HRMS software?
AbairTech provides HRMS and payroll software with attendance, leave, loans and reporting, and can customise rules for your organisation. Explore our HRMS live demo or contact us.
