What is employee payroll?

The employee ledger is a central element of Norwegian payroll accounting, functioning as an individual account for each employee in the company. It records all financial transactions between employer and employee, including wages, deductions, advances and other benefits. The employee ledger is the basis for correct payroll processing and reporting to public authorities.

How employee records are kept depends on the type of employment relationship , as different forms of employment have different requirements for documentation and reporting.

What does an employee ledger contain?

An employee ledger serves as a detailed overview of all financial relationships between the company and the individual employee. It provides a complete picture of the salary relationship throughout the entire employment period.

Main components of employee accounts:

• Basic salary and allowances: Fixed monthly salary, hourly pay, overtime pay, and special allowances such as piecework pay
• Deductions: Withholding tax, pension contributions, union dues, and other statutory or voluntary deductions
• Advances and loans: Advances paid on salaries, travel expenses, and any employee loans
• Holiday pay: Earned and paid holiday pay, as well as holiday pay debt
• Sickness benefit: Employer period and reimbursements from NAV
• Other benefits: Benefits in kind, bonuses, and other taxable benefits

Employee ledger in practice

The employee ledger is updated continuously throughout the payroll period and forms the basis for monthly reporting through the A-melding .

Typical monthly cycle:

1. Registration of working hours: Hours, overtime, absences are registered
2. Salary calculation: Gross salary is calculated based on time registration and agreed salary.
3. Deduction calculation: Tax, pension and other deductions are calculated
4. Employee ledger update: All transactions are recorded in the employee's account
5. Salary payment: Net salary is paid to employee
6. Reporting: Data from employee ledger is used for the A scheme

Example of employee ledger

Here is a simplified example of what an employee ledger might look like for a month:

Transaction	Debit	Credit	Balance	Description
Basic salary	45,000		45,000	Monthly salary January
Overtime allowance	3,500		48,500	10 hours overtime
Withholding tax		12,500	36,000	Taxes and fees
Pension contributions		2,400	33,600	2% of gross salary
Trade union dues		450	33,150	Monthly dues
Net payout		33,150	0	For payment

Annual settlement and vacation pay

Employee ledger accounts play a critical role at year-end when vacation pay is calculated and paid:

• Holiday pay calculation: 12% of holiday pay-eligible income
• Holiday pay debt: Earned but not paid holiday pay
• Payment: Usually in June or upon resignation

Legal requirements for employee ledgers

Norwegian legislation imposes strict requirements for documentation of salary conditions, and employee ledger accounts are a key tool for fulfilling these requirements.

The Accounting Act and employee ledger:

• Documentation requirement: All salary payments must be documented and traceable.
• Retention obligation: Pay slips and employee accounts must be kept for a minimum of 5 years.
• Audit obligation: Employee ledgers must be available for audit and control

Working Environment Act and salary information:

• Payslip: Employees are entitled to a detailed payslip based on the employee ledger
• Access: Employees can request access to their own employee ledger.
• Correction: Error in employee ledger must be corrected immediately

Digitalization and modern payroll systems

Modern payroll systems have automated much of the work of employee accounting, but the principles remain the same.

Advantages of digital systems:

• Automatic calculation: Reduces the risk of calculation errors
• Integrated reporting: Direct link to A-melding and other reports
• Real-time update: Continuous update of balances and transactions
• Better traceability: Easy access to historical data and transactions

Integration with other systems:

• Time recording systems: Automatic import of working hours
• Accounting system: Direct posting of payroll costs
• Bank integration: Automatic payroll
• Public systems: Direct reporting to Altinn and the A scheme

Common challenges and solutions

Even with modern systems, challenges related to employee ledger accounting can arise:

Typical problem areas:

• Complex salary structures: Handling piecework , commission and variable bonuses
• Holiday pay accrual: Correct calculation of holiday pay-eligible income
• Advances and repayments: Handling employee loans and advances
• Benefits in Kind: Valuation and Taxation of Benefits in Kind

Best practices:

1. Regular reconciliation: Monthly check of all employee accounts
2. Documentation: Thorough documentation of all transactions
3. Backup and security: Secure storage of payroll data
4. Training: Continuous training of staff who handle payroll

Employee accounting and compliance

Correctly maintaining employee ledgers is essential for complying with Norwegian accounting and tax regulations.

Checkpoints:

• Monthly: Reconciliation against salary payments and A-melding
• Quarterly: Checking withholding tax and tax calculations
• Annually: Holiday pay settlement and annual statement to the Norwegian Tax Administration
• In case of audit: Documentation of all payroll-related transactions

The future of employee payroll

With increasing digitalization and automation, employee accounts are continuously evolving:

Upcoming trends:

• Artificial Intelligence: Automatic detection of deviations and errors
• Blockchain: Secure and transparent registration of payroll data
• Real-time reporting: Continuous updates to public authorities
• Self-service: Employees gain greater control over their own payroll data

Conclusion

Payroll is a fundamental tool in Norwegian payroll accounting that ensures the correct recording, calculation and reporting of all payroll-related transactions. By understanding how payroll works, companies can ensure compliance with Norwegian legislation and maintain good relations with their employees.

For companies looking to optimize their payroll administration, it is important to invest in modern payroll systems that automate employee accounting processes while maintaining full traceability and control over all transactions.