School Payroll Software in India: Teacher Salary, Leave, PF and the Labour Codes

School Payroll Software in India: Teacher Salary, Leave, PF and the Labour Codes

Picture the accounts head of a school with 60 staff on the 28th of the month. Leave for three teachers has not been recorded against salary, two visiting faculty need paying for the sessions they actually took, a DA revision is due with arrears, and PF has to be right this time because last quarter's figure was queried. It all goes into an Excel sheet at 9:30 at night.

School payroll is harder than it looks, and since November 2025 the rules underneath it have changed. This guide explains what makes school payroll different, what the labour codes and a 2019 Supreme Court ruling — in a case brought against a school — mean for how you calculate PF, and what payroll software needs to handle. Nothing here replaces advice from your chartered accountant; it should make that conversation shorter.

Why School Payroll Is Harder Than Corporate Payroll

Visiting faculty paid per session. Music, dance, art, sports and language teachers are often paid per period or per hour. Their pay changes every month with the sessions they took, and those sessions are recorded in the timetable, not in HR.

Leave that changes salary. Casual leave within quota leaves salary unchanged; loss-of-pay days reduce it; half-days, medical leave and vacation rules differ between permanent and contractual staff. Every leave type has a different effect, and that is where most manual errors happen.

Two or more staff structures. Teachers and HoDs, office staff, drivers, attendants, lab assistants and security staff often have different pay scales, allowances and leave rules. Running them all in one spreadsheet invites formula errors.

Statutory deductions with different thresholds. PF, ESI, professional tax and TDS each have their own rules and limits, and many schools rely on one person who understands how they interact.

Revisions with arrears. DA or pay revisions announced with a back-dated effective date mean recalculating months already paid.

What Changed in November 2025: The Labour Codes

India's four labour codes — the Code on Wages, the Industrial Relations Code, the Code on Social Security and the Occupational Safety, Health and Working Conditions Code — came into force on 21 November 2025, replacing a large number of older labour laws.

The change that matters most for school payroll is the definition of wages. Under the codes, wages broadly means basic pay, dearness allowance and retaining allowance, and other components such as HRA and most allowances are excluded — but if the excluded components add up to more than 50% of an employee's total remuneration, the excess is added back to wages. In practice, salary structures that kept basic pay low and paid most of the salary as allowances now produce higher "wages", and so higher PF and gratuity liabilities.

Two cautions. Some PF and ESI provisions depend on rules that were still being notified after the codes took effect, so there is a transition period. And states notify their own rules under the codes. Review your salary structures with your chartered accountant, and make sure your payroll software can apply the new wage definition rather than simply calculating PF on whatever is labelled "basic".

The 2019 Supreme Court Ruling That Came From a School

Even before the codes, the Supreme Court had addressed allowances and PF in a case involving a school. In Regional Provident Fund Commissioner (II), West Bengal v. Vivekananda Vidyamandir, decided on 28 February 2019, an unaided school paid its teaching and non-teaching staff a special allowance and did not include it in the wages on which PF was calculated. The Court held that allowances paid universally and uniformly to all employees form part of basic wages for PF purposes; allowances linked to an individual's specific performance or circumstances may be treated differently.

For schools, the lesson is the same as the labour codes': splitting salary into a small basic and a large uniform allowance does not reduce PF liability, and getting it wrong can mean back-contributions with interest. Payroll software helps here only if each salary component is classified correctly when it is set up.

PF, ESI, TDS and Professional Tax: The Basics

General guidance only — thresholds and rates change, so confirm the current position with your chartered accountant.

Provident Fund. Establishments with 20 or more employees are generally covered under the EPF scheme. Contributions are a percentage of wages from both employee and employer, calculated on wages as now defined, not on basic pay alone.

ESI. The ESI scheme applies to establishments with 10 or more employees in areas where it has been notified, and many states have extended it to private educational institutions. It covers employees below a monthly wage ceiling, which in practice usually means drivers, attendants and some office staff rather than senior teachers.

TDS on salaries. Tax is deducted monthly on projected annual salary, after the deductions each employee declares, and staff need an annual TDS certificate for their returns.

Professional tax. Levied by some states, at state-set slabs, and deducted monthly.

Gratuity. Payable to teachers as well as other staff on leaving after qualifying service, and, under the new wage definition, calculated on a potentially larger wage figure than before.

Estimate What Manual Payroll Costs You

Rather than rely on anyone's average — including ours — fill this in for one month:

Repeat it a few months after moving to software. The difference is the honest measure of what payroll software is worth to your school.

What School Payroll Software Should Do

1. Separate salary structures for teaching staff, non-teaching staff, contractual staff and visiting faculty, in one system.
2. Visiting faculty pay from sessions actually taken, drawn from the timetable rather than counted by hand.
3. Leave applied to salary automatically — casual leave, loss of pay and half-days — once leave is approved.
4. Correct classification of every salary component, so wages for PF and gratuity are calculated under the current rules.
5. PF, ESI, professional tax and TDS calculated each cycle, with filing-ready reports.
6. Arrears for back-dated revisions, calculated and added to the next salary.
7. Payslips for all staff at once, sent digitally, showing every earning and deduction.
8. Reports for management — salary expense by department and month, and statutory liabilities.

Staff Attendance, Leave and Payroll in One System

Many schools now look for one system that handles staff attendance, leave approvals and payroll together, because the error in manual payroll is rarely arithmetic — it is the gap between the leave register and the salary sheet. When attendance, approved leave and payroll share one record, loss-of-pay days apply to salary without anyone re-entering them, and the month-end job becomes reviewing a figure rather than assembling it.

If staff attendance itself is your starting point, our guide to staff attendance, leave and payroll management covers that side in more detail.

Questions to Ask Any Payroll Vendor

1. Show how a salary component is classified, and how PF is calculated under the labour codes' wage definition.
2. Show visiting faculty pay calculated from timetable sessions for one month.
3. Approve a loss-of-pay day and show the salary change without any manual step.
4. Process a back-dated DA revision and show the arrears.
5. Generate payslips for all staff and show how they reach staff.
6. Show the PF, ESI and TDS reports you would hand to your accountant.
7. Is payroll included in the plan you are quoting, or priced separately?

How Campus 24x7 Handles School Payroll

Campus 24x7's payroll management system keeps one payroll profile per teacher and turns it into a monthly payslip:

• Salary structure — basic pay, HRA, conveyance, special and other allowances, with the estimated gross, deductions and net shown as you enter them.
• EPF and ESI calculated — EPF at 12% of the PF wage, optionally capped at ₹15,000, and ESI at 0.75% for staff whose gross is ₹21,000 or less, with the employer's 12% and 3.25% shown on the payslip.
• Professional tax and TDS are entered as fixed monthly amounts on each profile; there is no state PT slab table or annual TDS projection, so set them with your accountant.
• Monthly payslips are generated as drafts for every active profile, approved, marked paid after the bank transfer and downloaded as PDFs with the net pay in words. Regenerating updates drafts but never touches approved or paid slips.
• Statutory details — PAN, Aadhaar, PF number, UAN and bank account with IFSC — sit on the same profile.

Leave and loss-of-pay days are not deducted automatically from attendance: record any deduction on the profile before generating the month. Payslips are downloaded, not sent automatically over WhatsApp or email. The feature tour of Campus 24x7 payroll shows each screen.

Two things to know. Staff attendance in Campus 24x7 is marked through the app — there is no biometric device integration. And payroll is included from the Growth plan (₹4,999 a month, up to 1,000 students) and on Scale; it is not part of the Foundation plan — see the pricing page. As with any software, review your salary structures with your chartered accountant after the labour codes, and use the software to apply the result consistently.

Book a demo and run one month of your payroll →

Frequently Asked Questions

What is school payroll software?

Software that calculates staff salaries each month — applying leave, visiting faculty sessions, revisions and statutory deductions such as PF, ESI, professional tax and TDS — and produces payslips and filing-ready reports, ideally from the same records used for staff attendance and leave.

How do the new labour codes affect school payroll?

Since 21 November 2025, wages broadly mean basic pay, DA and retaining allowance, and if other allowances exceed 50% of total remuneration the excess counts as wages. Schools whose salary structures keep basic pay low will usually see higher PF and gratuity liabilities. Some rules were still being notified after the codes took effect, so check the current position with your chartered accountant.

Do allowances count for PF in schools?

Allowances paid uniformly to all staff generally do. The Supreme Court held this in 2019 in a case involving an unaided school, Vivekananda Vidyamandir, and the labour codes' wage definition points the same way.

How is visiting faculty salary calculated?

Usually by sessions or periods taught at an agreed rate. Payroll software should draw the session count from the timetable and attendance records, so pay matches what was actually delivered and disputes have a record to settle them.

Does ESI apply to schools?

In many states, yes: ESI has been extended to private educational institutions with 10 or more employees in notified areas, covering staff below the wage ceiling. Confirm the position for your state and location with your accountant.

Can one system handle staff attendance, leave and payroll together?

Yes, and that is where most of the benefit lies, because approved leave and attendance then apply to salary without anyone re-entering them. Ask any vendor to approve a loss-of-pay day during the demo and show the salary change.

Are payslips necessary for school staff?

Staff need them for loans, visa applications and tax returns, and providing them ends most "why was my salary different?" queries. Payroll software should generate them for all staff at once each month.