ERPNext HR & Payroll for Indian Businesses
Hiring, attendance, leave, payroll and exit in one system that shares its data with your accounts. Set up around your approval rules and Indian statutory requirements.
HR Runs Better When It Is One System
In many growing companies, attendance sits in one spreadsheet, leave is approved over WhatsApp and payroll is calculated by hand at month end. Every handover is a place for an error, and a small change such as a promotion or a transfer only reaches payroll if someone remembers to pass it on.
ERPNext handles HR and payroll through Frappe HR, on the same Employee record as your accounts, inventory and projects. An approved leave becomes an attendance entry, attendance feeds the salary slip, and the salary slip posts to the ledger. Alera configures it around how your business actually approves things, then trains your HR team to run it.
What ERPNext HR Covers
Thirteen areas, each with the ERPNext documents behind it and a step-by-step flow diagram.
Recruitment and Job Requisitions
Check every vacancy against an approved Staffing Plan, route the Job Requisition for approval, publish the Job Opening and track applicants through interview rounds to the Job Offer and Appointment Letter. Employee referrals and referral bonuses are tracked in the same flow.
ERPNext documents: Staffing Plan, Job Requisition, Job Opening, Job Applicant, Interview, Job Offer, Appointment Letter, Employee Referral
Employee Onboarding
An onboarding checklist for each new joiner: documents, asset allocation, salary structure, leave policy and system access. Templates per department mean a sales hire and a plant operator each get the right list.
ERPNext documents: Employee Onboarding, Employee Onboarding Template, Employee, Asset, Salary Structure Assignment
Attendance and Shift Management
Shift rosters, check-ins from the mobile app or a biometric device, and automatic daily attendance based on Shift Type rules such as grace periods and half-day thresholds. Exceptions go through Attendance Requests with manager approval.
ERPNext documents: Shift Type, Shift Assignment, Employee Checkin, Attendance, Attendance Request
Leave Management
Leave types, policies and allocations, applications with balance checks, manager approval, compensatory leave and leave encashment. Approved leave updates attendance, so payroll counts it correctly without HR re-keying anything.
ERPNext documents: Leave Type, Leave Policy, Leave Allocation, Leave Application, Compensatory Leave Request, Leave Encashment
Transfers and Promotions
Record department, designation, grade, branch and company changes with an effective date, get them approved, and carry the change into the salary structure so the next payslip is right. Works across companies in the same setup.
ERPNext documents: Employee Transfer, Employee Promotion, Salary Structure Assignment
Payroll Processing
Payroll Entry pulls attendance and leave, generates salary slips from each employee's salary structure, applies overtime and additional salary, and lets HR review and correct before approval. Submitting posts the payroll accrual to your accounts, and Finance makes the bank entry.
ERPNext documents: Payroll Entry, Salary Slip, Salary Structure, Salary Structure Assignment, Additional Salary, Overtime Slip, Payroll Correction
Statutory Compliance for India
PF, ESI, Professional Tax and Labour Welfare Fund deductions in the salary slip, EPF ECR and other statutory reports, TDS from income tax slabs and employee declarations, Form 16 support and gratuity accrual.
ERPNext documents: India Payroll app, Income Tax Slab, Employee Tax Exemption Declaration, Gratuity Rule, Gratuity
Expense Claims and Advances
Employees request advances, submit claims with bills, and managers approve them. The system nets claims against advances and shows what is payable or recoverable, and Finance settles it with a payment entry that posts straight to the accounts.
ERPNext documents: Employee Advance, Expense Claim, Expense Claim Type, Payment Entry
Employee Loans
Loan applications, eligibility checks, sanction and disbursal, with the EMI scheduled and deducted through payroll until the loan is closed. This runs on Frappe Lending, a separate app that works alongside HR.
ERPNext documents: Loan Type, Loan Application, Loan, Loan Repayment (Frappe Lending)
Performance Appraisals
Appraisal cycles with KRA-based templates, employee goals, manager feedback through the year, self-appraisal and final ratings. The outcome feeds increment and promotion decisions.
ERPNext documents: Appraisal Cycle, Appraisal Template, KRA, Goal, Employee Performance Feedback, Appraisal
Training and Skill Tracking
Plan training programs and events, enrol employees, record results and feedback, and keep an Employee Skill Map so you know who can do what before you open a new requisition.
ERPNext documents: Training Program, Training Event, Training Result, Training Feedback, Employee Skill Map
Employee Grievances
Grievances are raised in the system, assigned to a named handler, investigated, escalated when needed and closed with a recorded resolution, so nothing sits unowned.
ERPNext documents: Employee Grievance, Grievance Type
Separation and Full and Final Settlement
Resignation, exit interview, clearance and asset return, then a Full and Final Statement covering leave encashment, gratuity, dues and recoveries. On payment, the employee is marked as Left and access is switched off.
ERPNext documents: Employee Separation, Exit Interview, Full and Final Statement, Asset
Payroll That Follows Indian Rules
Indian payroll is mostly about getting the statutory side right. With the India payroll extension, ERPNext applies PF, ESI, Professional Tax and Labour Welfare Fund deductions in the salary slip, produces the EPF ECR and other reports, and works with Income Tax Slabs and employee tax declarations for TDS.
Rates, wage ceilings and due dates change from time to time. Before your first live payroll we check the setup against current rules, and we suggest you have your accountant or compliance consultant review it as well.
Because payroll lives in the same system as your books, salary accruals and bank entries post to the ledger without an export and import step. If you are weighing ERPNext against an accounting-only tool, our ERPNext vs Tally guide covers the difference.
Businesses That Gain the Most
- Shift-based operations such as factories and plants, where attendance, overtime and shift rules decide the pay. See ERPNext for manufacturing.
- Multi-branch businesses such as retail chains, where the same policies must apply across locations.
- Schools and institutes and clinics and hospitals, with mixed staff types, duty rosters and leave rules.
- Groups with more than one company under common management, where HR needs one view but separate payroll per company.
From Process Review to Live Payroll
Process Review
We map how you hire, track attendance, approve leave and run payroll today, and agree the flows you want in ERPNext.
Configuration
Salary structures, leave policies, shifts, approval workflows and the statutory settings, set up for your company.
Parallel Runs
We run payroll in ERPNext alongside your current process for a few cycles and reconcile every difference.
Training and Go-Live
Role-based training for HR, managers and employees, then support through the first live cycles.
See Every Flow Step by Step
Common Questions
The software has no licence fee because ERPNext and Frappe HR are open source. What you pay for is implementation, hosting and ongoing support. That is where a partner earns their fee: configuring salary structures, leave policies and statutory settings correctly before the first live payroll.
Yes. Payroll Entry is created per company, and employees can be tied to different companies, branches, departments and cost centres. Transfers between companies in the same ERPNext setup are handled through the Employee Transfer record.
Yes, with the India-specific payroll extension installed. It applies PF, ESI, Professional Tax and Labour Welfare Fund deductions, produces the EPF ECR and related reports, and works with Income Tax Slabs and employee tax declarations for TDS. Rates, wage ceilings and due dates change, so we verify the configuration against current rules before the first live run.
Often yes. ERPNext stores punches as Employee Checkin records, and many biometric devices can push data into it through an integration or the API. Compatibility depends on the device and its software, so we check your devices during the process review.
Yes. Employee master data, leave balances and salary structures can be imported from spreadsheets. We clean and check the data first, because errors in the employee master show up later as wrong payslips.
It depends on headcount, number of locations, shift patterns and how complex your salary structures are. We scope it after a process review instead of quoting a number up front. We recommend running payroll in parallel with your current process for two or three cycles before switching over.
Ready to Move HR and Payroll Into ERPNext?
Talk to our ERPNext team and get a demo built around your approval rules and payroll structure.