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Pakistan country pack — this guide covers Pakistan-specific statutory rules. Octal HR is configurable for other regions too.

How it works

Loans in Octal HR follow a closed-loop cycle. When a loan is approved in the Loans module, the system generates a repayment schedule automatically. On each payroll run, the system reads the schedule, picks up the instalment due for that month, and deducts it from the employee's net pay — no manual adjustment needed.

Loan approved in Loans module → repayment schedule created
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Payroll initiated → system reads all active loan schedules
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EMI deducted from each employee's pay — appears as a "Loan Repayment" deduction line
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Loan ledger updated — outstanding balance reduced; instalment marked Paid
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Payroll finalised → when last instalment deducted, loan status moves to Closed

Loan types and how they hit payroll

Loan typePayroll deductionNotes
EMI (Equal Monthly Instalments)Fixed amount each monthSystem automatically picks the next unpaid instalment
Bullet repaymentFull principal in one monthDeducted in the selected repayment month
ManualNo auto-deductionNo payroll deduction is registered; HR records repayments manually on the loan

Interest-bearing loans are uncommon in the Pakistan HRMS context but supported (flat or reducing-balance). Where interest applies, it is built into the instalment amount when the repayment schedule is generated — the payslip still shows a single "Loan Repayment" deduction line, not a separate interest line.

Payslip display

Loan deductions appear in the Deductions section of the payslip:

  • Each loan is registered as a fixed deduction component named Loan Repayment #<loan ID>, so the employee can identify which loan the deduction relates to
  • The deducted amount is the month's full instalment (principal plus any interest built into the schedule) shown as a single line
  • The loan deduction is non-taxable — it does not affect the WHT calculation

Voiding a payroll run

If a finalised payroll run is voided, its loan deductions are reversed automatically — no manual correction to the loan is needed:

  • Each payroll loan deduction recorded in that run is removed.
  • The instalment it paid is reset to pending, and the loan's outstanding balance and paid-instalment count are restored.
  • If the loan had already been marked Settled by that deduction, it is reactivated and its payroll deduction is re-registered.

Outstanding loan list

Track all employee loans from the Loans screen, filterable by status, repayment mode, department, and employee. Each row shows:

  • Employee name and code, department, loan type, repayment mode
  • Principal, total amount, and current outstanding balance
  • Monthly EMI, total instalments, and instalments paid
  • Status and disbursement date

Tip: Use the Export to Excel button on the Loans screen to download the full loan list each month and cross-check deductions against the finalised payroll run.