What is an On-Roll/Off-Roll Payroll?
On-roll payroll and off-roll payroll are terms used to differentiate the types of employment and payroll management in an organization. These distinctions impact the employment relationship, benefits, and legal obligations. Here's an overview of both:
On Roll Payroll
Employees on on-roll payroll are directly employed by the company, and the company manages all aspects of their employment, including salary, benefits, and statutory compliance.
Key Features:
Direct Employment: The employee is a part of the company's workforce.
Payroll Management: The company processes the salary directly.
Benefits: Employees are entitled to benefits such as provident fund (PF), employee state insurance (ESI), gratuity, paid leave, bonuses, and other statutory benefits.
Job Security: Typically offers more job stability and long-term opportunities.
Control and Supervision: Employees work under the direct supervision of the company.
Off-Roll Payroll
Employees on off-roll payroll are not directly employed by the company but are hired through a third-party agency or contractor.
Key Features:
Third-Party Employment: The agency or contractor is the legal employer.
Payroll Management: Salaries and benefits are managed by the third-party agency.
Limited Benefits: Employees may not receive the same benefits as on-roll employees, depending on the contract with the third-party agency.
Temporary Nature: Often used for short-term projects, seasonal work, or specific tasks.
Lower Job Security: Employment is contingent on the duration of the project or contract.
Cost-Effective for Employers: Reduces administrative burden and long-term liabilities for the company.
Comparison
Feature | On Roll Payroll | Off-Roll Payroll |
Employer | Directly employed by the company | Employed by a third-party agency |
Salary Payment | Processed by the company | Processed by the third-party agency |
Benefits | Full statutory and company benefits | Limited or no benefits |
Job Stability | More stable | Temporary or project-based |
Supervision | Direct company supervision | Managed by the third-party agency |
Examples | Permanent employees | Contract workers, consultants, interns |
Applications
On-roll payroll: Typically used for core employees who contribute directly to the organization's long-term goals.
Off-roll payroll: Often employed for non-core tasks, temporary roles, or cost-saving measures.
Both systems have their advantages and are utilized depending on the organization’s strategic and operational needs.