SAP Payroll Process with Steps & Flowchart

By : Kaelyn Flynn Kaelyn Flynn
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⚡ Smart Summary

SAP Payroll Process calculates employee salaries and wages by considering attendance, bonuses, overtime, and tax rules. This resource explains the process stages controlled by the payroll control record—Released, Start, Corrections, and Exit, plus payroll areas and periods.

  • 💰 Purpose: SAP Payroll calculates salaries using attendance, bonuses, overtime, and tax rules to produce pay slips.
  • 🔄 Process Stages: The run cycles through Released, Start, Corrections, and Exit, tracked by the payroll control record.
  • 🔒 Data Locking: During a run, past and present HR master data is locked to protect the results.
  • 👥 Payroll Area: A payroll area groups employees paid at the same frequency into a single run.
  • 📅 Periods and Pay Day: Payroll periods define the run window, and pay day is when salary reaches the bank.
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SAP Payroll Process Overview

SAP Payroll Process

Payroll is a process to calculate the salary and wages of permanent and temporary employees of an organization. Payroll calculation considers an employee’s attendance, bonus, overtime, tax rules and other information to generate the pay slip of that employee. Payroll can be run daily, weekly, bi-weekly, monthly depending on the salary cycles of the organization.

The following flow chart gives depiction of the SAP HR payroll process along with the status of the control record during each phase.

SAP Payroll Process

SAP Payroll Process Overview

Released Payroll

  • At this stage, the Payroll Control Record is set to “Release for Payroll”.
  • Past and present HR Master Data is locked for those particular employees. However, future dated changes in master data are permitted in your SAP system.
  • If the payroll is released from the “Exit” stage, the system rolls into the next payroll period, increases the payroll area period number by 1 in the Payroll Control Record (for example, from period 01/2008 to 02/2008).

Start Payroll

  • You execute the payroll run for one payroll area, for the payroll period defined in the Payroll Control Record.
  • If errors occur, you will get a list of employees rejected during the payroll run. The system has stored the employees rejected during the payroll run in something called “Matchcode W”.

Corrections

  • At this stage, the Payroll Control Record is set to “Released for Correction”.
  • Past and present HR Master Data for those particular employees is now unlocked for corrections.
  • You should make appropriate corrections to fix the payroll errors.
  • Once you have made the appropriate corrections, you need to Release Payroll and Start Payroll using Matchcode W, which will only select the employees that were rejected during the previous payroll run.
  • You can cycle between the “Corrections” and “Released Payroll” stages as many times as necessary.

Exit Payroll

  • At this stage, the Payroll Control Record is set to Exit Payroll.
  • Past and present HR Master Data for those particular employees is now unlocked in your SAP system.
  • The payroll run is closed off for the particular period. You cannot go backwards in respect to payroll results.

Payroll Area

  • Typically an organization has a variety of employee types who are paid at different pay frequencies. For example, blue collar workers are paid weekly, white collar employees are paid monthly, part time employees are typically paid bi-weekly.
  • Payroll Area groups employees together on the same payroll run frequency (semi-monthly, monthly, etc.).
  • When executing a payroll for a particular payroll area all employees belonging to that payroll are processed. This avoids the need for running payroll individually for employees who are paid at the same frequency.

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Payroll Periods

  • Records of payroll runs for earlier months are always stored for tax, audit, and retro purposes. Suppose the current month is Oct 2010 and you want to refer to the payroll results for the month of Jan 2010 for an employee who is paid monthly. It is easy to look for this data. But what if the employee is configured to be paid every 9 days and you want to know what the 16th payslip for the current financial year looked like? Payroll periods make this straightforward.
  • Payroll Periods represent the period for which regular payroll is run.
  • It is identified by a period number and a payroll year.
Payroll Periods
Payroll Periods
  • The payroll period includes a “start date” and an “end date”. In the above example, period 01 for payroll area xx has start date 01/01 and end date 01/31.
  • For each payroll area, payroll periods are generated for current and future years.
  • When generating payroll periods, the period number depends on the period parameter (semi-monthly, monthly, etc.) and the start of the fiscal year. For example, for countries for which the financial year starts in April, payroll period “01 2010” represents the payroll period for April 2010.

Pay Day

  • It is the date the salary is credited to the bank account of the employee.
  • Pay Day differs from organization to organization. Some pay on the last working day of the month. Some companies pay last month’s salary on the 10th of the current month.
Pay Day

Pay Day

FAQs

Matchcode W is the SAP selection set that lists employees rejected during the last payroll run. When you restart payroll after correcting master data, choosing Matchcode W tells the driver to reprocess only those rejected personnel numbers instead of the full payroll area.

A payroll driver is the country-specific program that runs payroll, such as RPCALCU0 for the USA or RPCALCK0 for India. It reads infotypes, applies the payroll schema, and calculates gross and net pay.

A payroll schema is the sequence of functions and rules that the payroll driver executes. It reads master data, calculates gross pay, applies deductions and taxes, and writes results. Country schemas like U000 (USA) or K000 (India) can be copied and customized.

The payroll control record locks master data during a payroll run, sets the payroll area’s current period and status, and defines the earliest retroactive accounting date. It moves through the Release, Start, Correction, and Exit stages that drive the process.

Retroactive accounting recalculates payroll for a past period when master or time data changes after that period was paid. SAP compares the old and new results and carries the difference forward into the current payroll run.

SAP payroll can be executed weekly, bi-weekly, semi-monthly, or monthly, based on the period parameter assigned to each payroll area. Off-cycle runs handle one-time payments like bonuses or corrections outside the regular period.

AI can validate master data, flag unusual pay changes, forecast payroll cost, and answer employee pay queries through chatbots. It supports the process, but the actual calculation and posting still run through SAP payroll.

Yes. AI can scan master data, time results, and prior payroll runs to flag missing bank details, tax anomalies, or sudden pay swings before you start payroll. Administrators should confirm each alert before running the payroll.

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