Is Employer Contribution held as Cash at bank? Do I have to Spend Money for it to clear? Or is it automatically deducted from Cash at bank when payslip is created?
If you have created a payslip, the amount owing to the employee is posted to the Employee Clearing account. to clear that balance (pay the employee) you need to Spend Money.
Contribution items on payslips are self-balancing. That is, they debit a designated expense account (such as Donations for a matching charitable contribution) and credit Payroll liabilities in the employee’s subaccount. (Special accounts can also be created to separate types of contributions.) No cash account is involved to this point.
They do not add to the employee’s subaccount in Employee clearing account, because it is possible or even probable they will not be paid to the employee. To clear them from Payroll liabilities a
Spend money transaction is used to pay whoever is receiving the contribution. For the charitable matching example, that would be the charity. For retirement fund contributions, it would be the retirement fund or account.
Regardless of where the contribution ends up, it is never automatically paid or deducted.