Introduction to Payroll System & How it works | NewPages

Payroll systems help HRs to manage payroll-related tasks automatically. Let’s learn how the payroll system works and its benefits with this full introduction.
9 November 2022 by
Introduction to Payroll System & How it works | NewPages
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Everything You Need to Know about Payroll System

Has your HR team always been overwhelmed with workload the week before payday? If the answer is yes, then it’s time to consider leaving the tedious monthly payroll calculation to software and let your staff focus on other more important work. With a suite of automated tools, payroll systems have greatly minimized the workload of HR staff in managing payroll related matters.

What is Payroll?

Many may think payroll refers to the salary and wages paid to staff, but to HR staff, there is much more than that. 

Payroll includes the keeping track of employees’ working hours, benefits, MPF contribution, not to mention the exhausting tasks of calculating withholding taxes and meeting compliances. And the most important of all, to settle all of these on time. 

Payroll is indeed more complicated than it seems, and that is why corporations need to start outsourcing payroll workloads to smart payroll systems.

What is Payroll System?

Payroll system is a HR solution that helps to manage and calculate monthly payrolls through software. By inputting essential data, for example, the number of employees and their salary, payment methods, taxes and financial regulations, the system will do the calculation and settle payments accordingly. 

To alleviate staff’s workload and allow them to truly focus on business’s core, more corporations are shifting to this kind of automated HR technology. 

What does Payroll System do?

Generate payroll reports

Payroll systems can issue automated payroll reports quarterly, annually, or anytime upon your request. As the system records payrolls every month, reports can be generated within seconds, and greatly facilitate your financial tracking. 

Integrate payment methods

Each employee has a preference in payment method, if all are handled manually, it can be chaotic. On the other hand, payroll systems keep an integrated record of this data and make sure every one of your employees are paid correctly.

Manage and settle employee benefits

Employee benefits usually include performance bonuses, paid annual leave, medical benefits and more. Payroll systems can be customized to calculate the benefits and paid leave according to the corporate policies. 

Comply with government regulations

Regulations vary according to business sizes and industries. Payroll systems make it easier for you to comply with regulations and avoid violating them. Simply input data of taxes and employment regulations into the systems and the computer will do the rest.

5 Reasons Why Payroll System is Important


Payroll systems are a technical solution to ensure these data are safe from breaches. When handled manually, salary and taxation data are exposed to a higher risk of leakage due to human error. According to a Data Breach Report, 82% of data breaches are caused by human mistakes. Once leaked, these data may lead to disputes and dissatisfaction among employees, which is why most corporations tend to keep payrolls confidential. 


As the calculations are done by computer programmes, payroll systems manage payrolls with accuracy. It is not uncommon that HR staff lose records of employees’ attendance or leave applications, which could lead to disagreement and conflicts. Instead, payroll systems with e-Leave keep solid records and leave no room for misunderstanding. On top of that, computer systems can calculate compensations and performance bonuses to the cent, reducing any possible disputes.

Boost staff’s morale

Survey suggested that 25% of employees in America have encountered at least one paycheck error, and almost half of the interviewees state that they would start job searching after 2 paycheck errors. While the errors could be human mistakes, it is understandable that employees may doubt the company’s financial stability or trustworthiness. 

Payroll systems minimize situations in which allowances or monetary benefits are overlooked, or when payments are overdue. Accurate and punctual payment of compensation can effectively retain talents and boost their morale.


Implementing payroll systems greatly enhances the efficiency in handling payrolls. Instead of getting busy every end-of-month, payroll systems alleviate HR staff’s monthly workload, as all the complicated work is done when the system is first implemented. After inputting essential data and settings, HR staff can manage the system easily by doing occasional updates and adjustments.

Reduce Monetary and Time Cost

Payroll systems save human resources on the routine task of settling payrolls, which may reduce the overall expenses in the HR department. Training for new HR staff can also be simplified, allowing new employees to get into hands-on work sooner than before.

3 Must-have Functions of Payroll System


Pay attention to the regional regulations applied to your business. Many payroll system service providers are located in the US and may not support the rules here in Hong Kong. It is highly suggested that you choose a local service provider so that the set-up process will be easier. For example, a local payroll system should have set the MPF contribution as default, and it saves your time in inputting related formulas.

Self service portal

Payroll systems that include an employee self service portal allows employees to check their attendance, paycheck and benefit records. Some payroll systems also have a built-in leave application system for easier bookkeeping. To employees, this service makes it more convenient to check the records in detail, whereas to HR staff, their workload becomes lighter without having to answer questions about, for example, remaining days of annual leave, from all the employees. 

Security control

As mentioned, payrolls should be kept confidential, so security control should be a must-have function for payroll systems. A reliable security control allows you to customise your security setting, and to give only certain personnel permission to access the system and data. 

How to Choose the Right Payroll System?

Identify business needs

Companies of different sizes require different functions in a payroll system. Identify business needs to avoid buying extra services that are not applicable to your business.

Check statutory compliance 

Pick a payroll system that complies with your local and sectoral regulations. 

Set budget

Be precise in your budget planning to facilitate communication with the HR solution service provider.

Research of the service provider

Choose a service provider that is actively updating the payroll system according to new regulations.

Run tests to ensure that your company policies can be applied in the payroll system. 

NewPages – Your Trusted Partner in Payroll Services 

NewPages offers a comprehensive and safe HR solution which includes an advanced payroll system and more. Designed to meet the requirements in Hong Kong, our payroll service includes calculation of MPF contributions and tax return preparation, it is the ultimate solution you need for your business. 

Apart from a payroll system, we also offer other HR-related services that come in handy when there is too much on your HR staff’s to-do list. Contact us for a quotation or if you have any enquiry.

Introduction to Payroll System & How it works | NewPages
NewPages 9 November 2022
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