ERPNext’s HR module handles everything from employee onboarding to payroll. This guide walks you through setting up HR for your company — departments, designations, leave policy, attendance, and payroll.

STEP 1 Enable HR Module

Setup > Module Settings > Enable "HR" and "Payroll"

STEP 2 Set Up Company Structure

# Create Departments
HR > Department > New
- Engineering
- Marketing
- Finance
- Operations

# Create Designations
HR > Designation > New
- Software Engineer
- Marketing Manager
- Accountant
- Operations Lead

STEP 3 Create Employee Records

HR > Employee > New

Employee Name: John Smith
Date of Joining: 2026-01-15
Department: Engineering
Designation: Software Engineer
Company: Your Company
Status: Active

# Personal Details
Date of Birth: 1990-05-20
Gender: Male
Emergency Contact: Jane Smith - +123456789

STEP 4 Configure Leave Policy

# Create Leave Types
HR > Leave Type > New
- Casual Leave (Max: 12 days/year)
- Sick Leave (Max: 10 days/year)
- Earned Leave (Max: 15 days/year)

# Create Leave Policy
HR > Leave Policy > New
Policy Name: Standard Leave Policy
Leave Types:
- Casual Leave: 12
- Sick Leave: 10
- Earned Leave: 15

# Allocate Leaves
HR > Leave Period > New
From: 2026-01-01
To: 2026-12-31
Click "Grant Leave" to allocate to all employees

STEP 5 Set Up Attendance

# Manual attendance
HR > Attendance > New
Employee: John Smith
Date: 2026-04-10
Status: Present

# Bulk attendance via CSV
HR > Upload Attendance

STEP 6 Configure Payroll

# Create Salary Components
Payroll > Salary Component > New
- Basic Salary (Earning)
- House Allowance (Earning)
- Transport Allowance (Earning)
- Income Tax (Deduction)
- Health Insurance (Deduction)

# Create Salary Structure
Payroll > Salary Structure > New
Name: Standard Structure
Company: Your Company
Earnings:
- Basic Salary: base * 0.5
- House Allowance: base * 0.3
- Transport: base * 0.2
Deductions:
- Income Tax: computed_on_formula
- Health Insurance: 200

# Assign to Employees
Payroll > Salary Structure Assignment > New
Employee: John Smith
Salary Structure: Standard Structure
Base: 5000

STEP 7 Process Payroll

Payroll > Payroll Entry > New
Company: Your Company
Posting Date: 2026-04-30
Payroll Frequency: Monthly

Click "Get Employees" > "Create Salary Slips" > "Submit Salary Slips"

Your HR module is now fully set up. Employees can apply for leave through the self-service portal, managers can approve, and payroll runs automatically each month.