How to include salary advance payments and deductions in your payroll?

Advance payment

Statutory contributions are payable when a payment is made. Therefore if you are giving an advance to an employee via payroll, that payment should be subject to PCB, EPF and SOCSO/EIS.

In Payroll Panda, you can use the preset item ‘Advance Payment’ to pay an advance to your employee. 


Advance deduction (if advance was made via payroll)

You have given an advance to your employee via payroll and now you wish to deduct the amount in the following month(s). Since the statutory contributions have already been paid, the advance deduction should now reduce the statutory deductions. 

So for example, if you gave an advance of RM500 to your employee in May and their monthly salary is RM2,000 and you are now deducting the payment from their June salary, your employee should pay statutory contributions on RM2,500 (2,000 + 500) in May and RM1,500 (2,000 - 500) in June.

In Payroll Panda, you can use the preset item ‘Advance (Payment Made via Payroll)’ to deduct the amount of advance previously paid to your employee via payroll.


Advance deduction (cash advance)

If the advance was made cash outside of payroll, whether in previous or current month, and no statutory deductions were made from the advance, and you are now making the advance deduction via payroll, then the deduction should be a net salary deduction which does not reduce the statutory contributions (as no contributions were previously deducted from the payment).

So to reuse the previous example, if you gave RM500 cash to your employee in May and are now deducting the amount in June payroll, your employee should pay statutory contributions on their normal RM2,000 salary. 

In Payroll Panda, you can use the preset item ‘Net Salary Deduction’ or 'Loan' to deduct the amount of advance previously paid in cash to your employee.

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