It’s a fact, all the jobs in the world work on a ‘quid pro quo’ basis. That means all the services are rendered in exchange for remuneration. The service provider’s payment follows different processes and paths to reach their bank account. The two major payroll models are On Roll and Off Roll. These models are distinct from each other. The major difference is that the On Roll Job is followed for full-time employees, whereas Off Roll is for individual consultants or contractual employees. Read along to understand the two better.
What Do On Roll and Off Roll Payroll Jobs Mean?
An On-roll and Off-roll payroll are simply two branches of the same tree. They are just two different payroll types used to compensate employees for their diligent services. Now every person that works in a company is not necessarily an employee of that company. They can be a freelancer, employees of a third party, or agencies.
All of them cannot be compensated in the same way, right? As both of them receive payments that are way distinct from each other. A full-time employee of a company has to be on the payroll of their company to get all the additional employee benefits. On the other hand, individual service providers just get their service charges. Their records are maintained by the company separately. That’s where the need for two different payroll models comes to play.
Let’s dive deep into these models one by one.
On Roll Payroll
When a company hires a full-time employee, they enter all the employee details in the company’s payroll. After that, the employee starts receiving a salary plus employee benefits on a monthly basis. Apart from the basic pay, an additional set of allowances like dearness allowance and bonuses form a part of the employee’s salary. The basic pay is subject to the company’s terms and regulations as you work under that organization directly. The allowances are given over and above the salary according to the Company’s Act 2013. That’s exactly what an on-roll job means.
Off-Roll Payroll
Coming to how the payment cycle for individual consultants or contractual employees works. Well, for them, the payment is either credited directly by the company that avails their services or paid for by a third party they work for. Since individual service providers work independently, they get paid for their services or the value they add to the company. As they do not fall under the company’s payroll, they are not eligible to receive any bonuses or allowances. This kind of work gives them flexibility but has its fair share of challenges.
On-Roll Job VS Off-Roll Job
| On-Roll Job | Off-Roll Job |
| The service provider under an on-roll job is a company’s full-time employee. | The service provider under an off-roll job is a consultant, freelancer, or employee of a third party. |
| The salary is credited directly to the employee’s salary account. | The payment for the services extended is made in cash or via cheque by the company that has availed it or the consultancy that the service provider is directly related to. |
| Employee Provident Fund is applicable under on-roll payroll as full-time employees are eligible to receive it. | Employee Provident Fund is not applicable under off-roll payroll as individual service providers are not eligible to receive it. |
| Health insurance is given to full-time employees recorded in the on-roll payroll of the company. | Health insurance is not given to contractual employees under off-roll payroll as they are not a part of the company directly. |
| Employees holding a salary account are qualified to receive accidental insurance in case of any injuries due to accidents. | As individual service providers do not own a salary account, they are not qualified to receive accidental insurance in case of any injuries due to accidents. |
| Employees under on-roll payroll are paid in full even when on leaves. The leaves are limited and are mentioned in their offer letter. | Employees under off-roll payroll are not paid for the days they are not working. |
| The job security for those covered under on-roll payroll is high. | There is hardly any job security for those who work independently. |
| There is a concept of a notice period. All employees must fulfil it before they can finally leave the organization. | There’s no such concept in an off-roll job. |
FAQs on an On Roll Job and an Off Roll Job
Here are some frequently asked questions on On-roll Jobs and Off-roll Jobs:
What is the difference between an on-roll and an off-roll job?
Employees under an on-roll payroll work full-time with the company and hence come under their employee policy. In contrast, off-roll employees work for the concerned company but are employed by a third party.
Why do companies hire on third-party payroll?
Hiring a third-party payroll relieves the company from the accounting of employee compensation, ensuring that all compliances are abided by, paying payroll taxes, maintaining payroll software, and generating reports.
What is the payroll company?
A payroll company performs all necessary tasks to credit the employee’s salary account on time.
Here’s what falls under a payroll company’s scope of work:
- Curating a list of employees to be paid.
- Calculating their working hours.
- Computing the employee’s pay.
- Crediting the salary on time.
- Monitoring the payroll expense.
What does an off-roll job mean?
Off-roll payroll simply means that people falling under this category are individual consultants or contractual employees and are not attached to any company full-time. They are compensated directly by the company they work for or the organization that originally hired them.
Now that we have reached the end of this guide, we are sure you understand On-roll and Off-roll jobs better and have cleared all your doubts. So, next time when you come across a working professional, you’ll know the category they fall under and the process through which they get paid.
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