Allowances and deductions: by designation and by employee

Choose which payroll items a designation gets and how each is worked out. Where one employee needs something different, give that employee their own list: it replaces the designation's list for that employee.

HR & payroll Payroll setup
4 min read
Updated October 20, 2026

For Payroll officer HR officer Accountant

On this page

The idea
Add a designation's items
How "Based on" works
Change an item later

The idea

A payroll item says what (Payroll items: the allowances and deductions you can use). An allowance or deduction row says who gets it and how much:

Level	Applies to	Where
Designation allowance / Designation deduction	Everyone with the designation (in a branch)	Payroll setup › Allowance and Deduction
Employee allowance / Employee deduction	One employee	The same tabs, or the employee's Payroll details

Add a designation's items

Open the tab
Who
Payroll officer
Where
Payroll setup › Allowance › Designation allowance (or Deduction › Designation deduction)
What changes
The list shows each designation's items by branch.
Add
Where
Add
What changes
Choose the Designation, the Branch and Effective from (the pay period the items start in).
Fill the rows
What changes
For each item choose the Allowance (or Deduction) and Based on, then the Value. Set Variable type where the item has a monthly rate.
Save
What changes
The items apply from that period. The screen warns "Above selected items are not saved" if you leave without saving.

How "Based on" works

Based on	Allowance	Deduction
% of salary	The value percent of basic salary	The value percent of the salary actually earned that month
% of salary and grade	The value percent of basic plus grade	The value percent of earned basic plus earned grade
Fixed amount	The value as it is (a variable item multiplies it by the month's rate; an attendance-based item by the days present)	The value as it is
Per day	Not used	The value times (basic plus grade) divided by the days in the month

Earned means after a part month: a person who joined mid-month earns part of the basic salary, so a percentage deduction is smaller too. For allowances the percentage is on the full monthly figure, and the part for absent days is kept separately for items that follow leave.

Worked example: five items on one month

The employee's basic salary is 30,000, the month has 30 days, and the employee works the whole month with no grade.

Item	Based on	Value	What Penahak works out
House rent (allowance)	% of salary	10	10% of 30,000 = 3,000
Meal allowance (allowance)	Fixed amount	2,000	2,000
Fuel (allowance with a Variable type, in litres)	Fixed amount	20	20 litres × this month's Variable allowance rate of 150 = 3,000
Staff welfare fund (deduction)	% of salary	5	5% of the earned basic 30,000 = 1,500
One day's pay (deduction)	Per day	1	1 × 30,000 ÷ 30 = 1,000

If the employee had joined with only 10 of the month's 30 days to go, the earned basic would be 30,000 ÷ 30 × 10 = 10,000, so the 5% deduction would be 500, not 1,500. The Per day deduction is the same 1,000, because it uses the full basic.

Change an item later

Add a new row with a later Effective from. The old row ends at that date. You cannot add or edit a row that starts before the latest existing row for the same designation and branch, or for the same employee.