What is On Roll Off Roll Payroll?Â
An employee’s payroll begins when he or she joins a firm as a full-time employee. Employees are paid using two different types of payroll models: on a roll and off the roll.
On-roll payroll is a regular payroll procedure in which an employee is paid on a regular basis and receives a set amount of compensation in exchange for their efforts. Employee benefits such as EPF, Medicare, subsidies, and performance incentives are available to employees who are on the payroll. They are subject to company rules because they work directly for the corporation.Â
Off-roll payroll refers to someone who is not employed full-time by a corporation but instead works on contacts or as a consultant. Because he or she is not on the company’s normal payroll, the salary can be credited directly or through a third party in this payroll arrangement. EPF, insurance, allowances, and incentive pay are not available to employees on off-roll payroll. For the efforts, he or she will be compensated.
Major Difference between On Roll and Off Roll Payroll?
1. Employees are part of the organization under On roll payroll whereas employees are not a part of the organization under Off roll payroll. They are either consultants, freelancers or employees of a consultancy or a firm.
2. Salary of employees are directly credited by the organization in which they are working under On roll payroll whereas salaries are paid in cash, cheque or credited by a third party who acts as a mediator between the organization and them.
3. Under On roll payroll employees are eligible for Employee Provident Fund (EPF) whereas employees are ineligible for EPF under Off roll payroll.
4. Employees get health insurance for themselves as well as their family whereas employees are ineligible for health insurance under Off roll payroll.
5. Employees having salary accounts under on roll payroll are eligible for accidental cover under On roll payroll whereas employees do not hold salary account and therefore ineligible for accident cover.
6. As specified in the offer letter employees are eligible for a certain number of leaves during a calendar year under On roll payroll whereas the salary of employees will be deducted under Off roll payroll if they are absent.
7. Under on roll payroll the jobs of employees are more secured whereas jobs of employees are unsecured under Off roll payroll.
8. Under On roll payroll the employees are required to serve a notice period of minimum days. In addition the company will also communicate the notice period employees have to serve during layoffs whereas employees are not required to serve notice period under Off roll payroll and employers can also terminate them without any prior notice to employees.
9. Employees are provided with a fixed salary under On roll payroll whereas employees are provided with compensation on daily basis under Off roll payroll.
Why do companies hire on third-party payroll?
There are a variety of reasons for which an organization hires third-party payroll.Â
Some of the reasons for hiring third party payroll software are:
1. Cost-saving
Organizations use third party payroll software in order to save costs. In house payroll software proves to be costly for the organizations that’s why they prefer to use third party payroll software. Additionally by outsourcing payroll software the company can reduce the hiring costs.
2. Expertise
Third party payroll software providers have a great deal of expertise and experience in the payroll field. So the organizations prefers to use third party payroll software to avoid errors and ensure accuracy.
3. Time-saving
Managing pay-roll in house saves a lot of time of organization and they can utilize this time in various other productive activities. This also saves resources of the organization.
4. Flexibility
Third-party payroll software provides a wide range of services such as direct deposits and easy access to information. This provides flexibility to the organizations.
5. Data security
Third-party payroll software are experts in maintaining data security of organizations. They use a variety of tools to ensure data safety and security to protect data.
6. Scale
Third-party payroll software providers are equipped to handle payroll of all organization sizes whether small, medium or enterprise level. They have the resources and infrastructure to handle the data of a company’s changing needs.