Midmonth Payroll

[IBSLPUNE]

Currently, ERPNext does not support cases where an employee receives an increment mid-month, requiring payroll to be split and prorated within the same payroll cycle.

In standard payroll practice, when an increment becomes effective from a specific date (e.g. 22-Jun-2025), salary components must be computed as:

1–21 June: Based on Old CTC / Salary Structure Assignment (A)

22–30 June: Based on New CTC / Salary Structure Assignment (B)

Payslip Output: Single payslip showing component-wise total (Old + New)

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Expected Behavior

ERPNext should be able to:

1. Detect multiple Salary Structure Assignment records that overlap within a single payroll month.

2. Automatically prorate salary components based on assignment effective dates.

3. Aggregate prorated amounts into one Salary Slip, displaying the component-wise total.

4. Optionally provide a way to display period-wise breakdowns (Old vs New) in the payslip.

Example (expected output):

Component Till 21-Jun-2025 From 22-Jun-2025 Total Gross

Basic (40% of CTC) 56,000 29,500 85,500
HRA (50% of Basic) 28,000 14,750 42,750
... ... ... ...
Total Gross (A) 136,407 71,981 208,387

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Actual Behavior

The system only allows one active Salary Structure Assignment per employee for a given period.

Payroll uses the latest assignment as of the period start date, ignoring mid-month changes.

This prevents prorated calculations for increments or revisions within the same month.

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Use Case

Employee gets an increment effective 22-Jun-2025

Old assignment active till 21-Jun-2025

New assignment effective 22-Jun-2025

Payroll month: June 2025 (01-Jun-2025 → 30-Jun-2025)

Desired outcome:
A single payslip for June 2025 with total component-wise amounts (Old + New), without needing two separate payroll runs or manual arrear adjustments.

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Environment

ERPNext Version: v15.5

Frappe Framework: v15.x

Module: Payroll (Frappe HR)

Doctypes: Salary Structure Assignment, Salary Slip, Payroll Entry

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Proposed Enhancement

Option 1:
Enhance payroll processing logic to:

Identify multiple active assignments within the payroll date range.

Split computation by date ranges automatically.

Prorate and merge component values in the final Salary Slip.

Option 2:
Add an “Allow Proration within Same Month” toggle in Salary Structure Assignment that triggers date-based salary computation when overlapping assignments exist.

Option 3:
Introduce a “Mid-Month Increment Utility” that:

Detects mid-month effective assignments.

Generates differential Additional Salary entries automatically.

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Business Impact

This enhancement aligns ERPNext with standard payroll policies followed across industries, ensuring:

Accurate calculation of mid-month increments.

Elimination of manual arrear adjustments.

Transparent, component-wise reporting in the payslip.

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Relevant Code References

erpnext/hr/doctype/salary_structure_assignment/salary_structure_assignment.py

erpnext/hr/doctype/salary_slip/salary_slip.py

erpnext/hr/doctype/payroll_entry/payroll_entry.py

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Summary

Enable ERPNext’s Payroll module to prorate and aggregate salary components for mid-month increments within a single payroll period, ensuring correct CTC transition handling and accurate component-wise totals in payslips.