Introduction

Arrears refer to the difference in salary that needs to be paid to an employee for a previous period due to changes made after payroll has already been processed. This commonly occurs when there is a salary revision, increment, promotion, correction in payroll data, or any change that affects employee earnings retrospectively. Since the original salary has already been paid, the system calculates the difference between the previously paid amount and the revised amount and pays the balance as arrears.

For example, if an employee receives a salary increment effective from April but the salary revision is updated in the system only in June, the difference in salary for April and May must be paid separately. This additional amount is known as arrears.

uKnowva HRMS provides multiple methods to calculate arrears depending on organizational requirements. One method is based on adjustment days, while another method is based on salary structure revisions and component-level salary recalculations. This article focuses on configuring and calculating arrears through salary revisions and payroll recalculations.

Step 1: Access the Arrears Configuration Settings

To begin, navigate to the top-right corner of the page and click on your profile icon.

From the available options, select uKnowva Configuration. This will open the system configuration panel, where various payroll and HR settings can be managed.

From the left-side menu, click on Apps Manager and locate the HRM Lite application. 

Open its configuration settings.

Within the settings, you will find two different approaches for managing arrears. One approach is based on Adjustment Days, while the second approach is based on Salary Revision Arrears Calculation.

If you wish to configure arrears using adjustment days, you can refer to the dedicated tutorial for that process.

The remaining steps in this article explain how to configure and calculate arrears based on salary revisions and payroll recalculations.

Step 2: Configure Arrears Settings

Inside the HRM Lite configuration page, scroll through the available settings until you locate the arrears-related configuration options.

Start by configuring Select Usergroup For Arrears Access. This setting allows you to specify which user groups can access and process arrears calculations within the payroll module.

Next, configure Select Users For Arrears Access if you want to grant arrears calculation permissions to specific users instead of entire user groups.

You will then find the Arrears Pay Type In Salary setting. This setting determines how arrears are displayed and processed within payroll.

The first option is Add Arrears Directly in Salary. When this option is selected, the system adds the total arrears amount directly to the employee's salary during payroll processing. Employees will see the arrears included as part of the overall salary amount.

The second option is Add Component Wise Arrears in Salary. When this option is selected, the system calculates arrears separately for each salary component such as Basic Pay, HRA, Special Allowance, Conveyance Allowance, and other salary heads. This provides greater visibility into how the arrears amount has been derived and helps organizations maintain detailed payroll records.

You can also configure Exclude Salary Heads from Arrears Calculation. This setting allows you to exclude specific salary components from arrears calculations if they should not be considered while calculating the revised amount.

Similarly, the Include Salary Heads (Show in Payslip No Heads) in Arrears Calculation setting allows you to include specific salary components in arrears calculations even if they are not displayed separately as salary heads in the payslip.

After completing all the required configurations, click on the Save button to apply the settings.

Step 3: Verify Salary Data Before Calculating Arrears

Before calculating arrears, it is important to ensure that payroll data exists for the employee during the period for which arrears need to be calculated.

The system requires salary details for the affected months in order to compare the previously paid salary with the revised salary structure and determine the difference accurately.

It is also important to ensure that paid days have been calculated correctly for the relevant payroll periods.

When paid days are entered, the system automatically considers attendance data and calculates the payable amount accordingly. If an employee has not worked the full number of days in a month, uKnowva HRMS intelligently calculates the proportional difference and adjusts arrears based on the actual payable salary.

This ensures that arrears calculations remain accurate even when attendance variations exist.

Step 4: Revise the Employee Salary Structure

To understand how arrears are generated, let us consider a salary revision example.

Navigate to the left-side navigation panel and click on the HR menu.

From the available options, select Payroll, and then open the Payroll section again to access employee payroll records.

The payroll page displays salary details for all employees.

Locate the employee whose salary structure needs to be revised and click on the Pen icon available under the Action column.

This will open the employee's salary structure configuration page.

Make the required salary changes and select an appropriate reason for the revision.

If the salary revision should be applicable from a specific date, enable the effective date option and select the required date. Otherwise, the changes can be applied immediately.

Once all modifications are completed, click on the Save button.

At this stage, the revised salary structure is stored within the system and becomes the basis for arrears calculation.

Step 5: Update Paid Days and Generate Salary

After revising the salary structure, the next step is to ensure that payroll data is available for calculation.

You can either import paid days manually or use the Calculate and Lock process if attendance-based payroll processing is enabled in your organization.

If you need assistance importing paid days, you can refer to the following tutorial.

Once the paid days are available, generate the employee's salary for the required payroll month.

This salary data will serve as the reference point for calculating the difference between previously paid amounts and revised salary values.

Step 6: Calculate Arrears

After generating salary records, return to the Payroll page.

Above the employee list, click on the More button.

From the available options, select Calculate Arrears.

This action opens the arrears calculation window.

Within this window, enter the required details, including the employee usernames, the starting month from which arrears should be calculated, the ending month up to which arrears should be calculated, and the month in which the arrears payment should be processed.

These fields help the system identify the affected payroll periods and determine where the arrears amount should be credited.

After entering all the required information, click on the Calculate button.

The system will compare historical payroll data with the revised salary structure and automatically calculate the salary difference for the selected period.

Step 7: Verify Arrears and Generate Payroll

Once the arrears calculation is completed, you can review the generated values through the Earnings and Deductions section.

The calculated arrears amount will be reflected here and will be considered during salary generation for the selected payout month.

Generate the payroll for the applicable month and review the employee's salary details.

The payslip will reflect the calculated arrears according to the configuration selected earlier. If the arrears amount is taxable, the applicable tax deductions will also be calculated automatically as part of payroll processing.

This ensures that arrears payments remain compliant with payroll and taxation requirements while providing complete transparency to both payroll administrators and employees.

Conclusion

That’s it!

You’ve now successfully configured and calculated salary arrears in uKnowva HRMS.

By following this process, you ensure that salary revisions, payroll corrections, and retrospective changes are accurately reflected in employee compensation. 

If you have any questions or need additional support, feel free to contact us at This email address is being protected from spambots. You need JavaScript enabled to view it..