Payroll Outsourcing

Payroll Processing

Some time back, I was searching on the internet for a client-friendly payroll consultant to suggest to a small-scale industrialist who is a close friend of mine. Then it occurred to me that it would be a better idea to outsource payroll of my friend’s business house to one of the payroll companies near me.

While talking about payroll providers who are otherwise called payroll processing companies or simply as payroll companies, I am only wondering how the payroll accounting or payroll management would have been done in olden days!

For example, in Roman times, and throughout the Middle Ages, salt being a valuable commodity, soldiers in the Roman army were sometimes paid with salt instead of money. As a matter of fact, salt was referred to as ‘white gold’ and in high demand owing to its important use in preserving food stuff like meat, fish, etc. A worker’s monthly allowance was called "salarium" ("sal" being the Latin word for salt). This Latin root can be recognized in the French word "salaire" — and it eventually made it into the English language as the word "salary."

There is another interesting thing about salary payment. A clay tablet, dating back about 3100 BC, and inscribed with logo-syllabic script provides a record of the daily beer rations for workers in Mesopotamia.  Most infer that the first salary might have been paid in a village or city during the Neolithic Revolution sometime between 10,000 BC and 6,000 BC. The above-said cuneiform record for the disbursement of daily beer rations to workers may be the oldest record of a payroll!

In India, the mainstay of the people being agriculture, in ancient times, the majority of the people lived in villages. Most of them tilled their own lands for their living, although the king claimed ownership for the lands. Large farmlands were cultivated with the help of hired labour in return for a fixed payment. Some owners lent their lands to share-croppers for a share of one half of the produce. 

The peasants were paying land revenue to the state for making common use of the services of the craftsmen of the village. Moreover, the state claimed a certain portion of the produce of the crops as tax. The rates charged by the rulers varied at different times. From a normal 2 – 3 percentage to an exorbitant rate of 25% (during Mauryan rulers) on agricultural income, the land tax was collected mostly in kind by the tax collectors.

With the advent of industrialisation, salary packages and most importantly with the introduction of Income Tax Act in 1860 and the Minimum Wages Act in 1948, systematic documentation of payroll came into effect. With this backdrop, Payroll statutory compliance became a top priority to any business house, whether small, medium, or large, in order to avoid penalty and legal action.

Coming back to my internet search, it ended with my fixing M/s. Infinity Business Solutions Private Limited as the right payroll administrator for my businessman friend!

CR. Anandan

19-04-21