Managing Salary Packages

This chapter provides an overview of managing salary packages and discusses how to:

• Confirm salary packages.

• Enrol in salary packages.

• Review salary packages.

• De-enrol from salary packages.

• Make effective-dated changes to salary packages.

• Run Salary Packaging reports.

Understanding Managing Salary Packages

After modelling a salary package for an employee, confirm and enrol the package to facilitate payments through PeopleSoft Enterprise Global Payroll.

This simple, two-step process establishes all compensation records for an employee's confirmed package. If details of an employee's package change during the package year, you can change either the components or the component details in the package by making effective-dated changes to the package.

Note. If you are not using Global Payroll, you can still enrol salary packages to track compensation. Enrolment creates compensation records for the employee on the employee's Job Data Compensation page based on the components in the employee's confirmed package. This information facilitates payments and expense tracking. If you are not using Global Payroll , you can't track expenditure against the package using the Package Expense Summary page.

See Also

Confirming Salary Packages

Enrolling in Salary Packages

Reviewing Salary Package Expenditures

Common Elements Used in This Chapter

Confirming Salary Packages

This section discusses how to:

• Confirm salary packages for employees.

• Confirm salary packages for applicants on hire.

Confirming Salary Packages for Employees

When you have completed the modelling process and the employee has selected a package, confirm the selection online to identify the package against which payments should be made. Approving or confirming a modelled package is the last phase prior to enrolling the employee into the salary package.

As each employee chooses a package, identify the selected package by selecting the Confirmed check box on the Package Model page in the Salary Package component. After the package is confirmed, run the Package Enrolment process to enrol the employee based on the components in the package—Compensation, Salary Packaging AUS, Create Salary Packaging, Enroll Salary Package.

Note. After a package has been confirmed, the package status remains as proposed. This means that the employee has made a selection but has not yet been enrolled into the package. After the enrolment process is complete, the package status is updated to current and payments are made in accordance with the package components.

See Also

Modelling Salary Packages

Enrolling in Salary Packages

De-enrolling from Salary Packages

Confirming Salary Packages for Applicants on Hire

If you have been tracking and administering job applicants using Recruiting Solutions, you don't have to re-enter all of the information you have already entered in the system when you hire an applicant. After the applicant is hired and you have created the applicants, the system can copy the applicant's information into the applicant's employee record.

Because you can't confirm applicant package models, you must confirm the employee's selected package at the time of hire and then complete the Package Enrolment process as you would for other employees.

To model salary packages for job applicants that you are tracking in the Recruitment process, use the Applicant Salary Pkg Model AUS component.

Note. You can't confirm salary packages in the Recruiting menu. You must first hire the applicant, copy the applicant's package to the Employee Salary Package component, and then confirm the package in the Salary Packaging AUS menu.

See Also

Copying Applicant Salary Packages to the Employee Salary Package Component

Modelling Salary Packages for Applicants

Enrolling in Salary Packages

This section provides an overview of salary packages and discusses how to enroll in salary packages.

Understanding Salary Packages

The Package Enrolment process creates compensation rates on the Job Data - Compensation page for all employees with a confirmed package. This process saves you the administrative overhead of updating each of the employee's records after a package has been confirmed.

You can run the package enrolment process for individual employees or for a pay group. Regardless of the selection criteria, enrolments are only completed for confirmed packages with a status of proposed.

When enrolling employees, the system identifies the relevant payroll information from the component definitions. Each component and additional component has a compensation rate code attached. The system uses this information to enrol employees.

Enrolling Employees in Salary Packages

When enrolling an employee through salary packaging for the first time, the rate codes on the employee's Job Data - Compensation page are replaced with all of the salary packaging rate codes (unless the original rate code is not flagged as Maintained by Salary Packaging).

If the employee has been packaged before, and you are enrolling a package because of review or an amendment, then the enrolment process treats the package as a new package. All salary packaged flagged compensation rate codes are deleted and new codes inserted.

Note. Regardless of the selection criteria, the package enrolment process is completed for only confirmed packages.

You can see the result of the package enrolment process by viewing the impacted employee's job data record before and after running the enrolment process.

The Job Data - Compensation page displays the employee's compensation rate. It also indicates the source of the record with the Salary Packaged check box. If the record was not created by the package enrolment process, the Salary Packaged check box clears.

After you have run the package enrolment process, both the action/reason code and the Salary Packaged check box indicate that a salary packaging process inserted this record.

Page Used to Enrol in Salary Packages

Enrolling in Salary Packages

Access the Enroll Salary Package page (Compensation, Salary Packaging AUS, Create Salary Packaging, Enroll Salary Package, Enroll Salary Package).

By Employee ID	Select to enroll an employee in a salary package. When this option is selected, the EmplID (employee identification) and Empl Record (employee record number) fields are activated.
By Pay Group	Select to enroll a pay group in a salary package. When this option is selected, the Pay Group field is activated.

Reviewing Salary Packages

In this section provides and overview of salary package reviews and discusses how to:

• Identify salary packages due for review.

• Remodel the employee's salary package.

Understanding Salary Package Reviews

Salary packages are generally effective for a year and subsequently subject to annual review. Regardless of the period of the package, it is necessary to review the package near the end of its effective period and establish a new package. Reviewing a package involves:

• Reconciling the expenditure against the package.

• Remodelling where necessary.

• Confirming and enrolling the new package for payment.

Most organizations align their employee package reviews with the calendar using the calendar year, the tax year, or the financial year to determine the review cycle. This makes it easy to remember when employee packages are due for review.

However, you might align an employee's package with the employee's service or some other anniversary. This could mean that review periods are not consistent across your employee population. To handle this situation, run the Packages Due for Review report to identify any employee whose package is due for review in a specified period.

Identifying Salary Packages Due for Review

View the review date for each employee package on the Package Model Table page in the Employee Salary Package component. The review date defaults when modelling the package. The default is for the review date to equal the package end date. Override this value if necessary. You can run the Packages Due for Review report to identify all employees who have salary packages due for review.

See Also

Administer Salary Packaging Reports

Remodelling the Employee's Salary Package

Before you can remodel an employee's package, reconcile the expenditure against the existing package. In this section, we discuss both processes:

• Reconciling expenditure.

• Remodelling the salary package.

Reconciling Expenditure

You should understand the expense calculation process and the package summary information before attempting to reconcile a package. At the package period end date, employees may have overspent or underspent their budgeted package entitlements. Before modelling a subsequent package, reconcile the differences.

When reconciling a package, you can deal with the differences in a number of ways. For a package that is overspent, you recover the difference as an overpayment or reduce the value of the subsequent package. Similarly, you can pay out underspent components or include the value in the subsequent package. The method of reconciling the differences varies from organization to organization.

Any action taken to pay or recover differences at the end of the package year should be made through the payroll system. Any adjustment to subsequent packages can be in the form of adjusted values for existing components or by defining a separate component to track the adjustment.

Remodelling the Salary Package

When you have identified the employees requiring package review, remodel their packages. This process can be as simple as inserting a new effective- dated package and confirming and enrolling the package, or it can be far more complex. The complexity depends on the changes to the employee's package.

To remodel a salary package for an employee:

1. Open the current salary package and insert a new row.

   When you insert a new package, all of the current details from the current package appear by default, including the component details. The component from and to dates populate the package start and end dates. Components with an end date in the current package, which is prior to the start date of the new package, do not default from the current package because they are already ended.

2. To remodel for the employee, ensure that the effective date of the package is outside the package start and end dates for the existing package.

   If the effective date is between the package start and end dates, it is regarded as an effective-dated change to the existing package rather than a new package model.

   A new package model resets package expenditure and re-initializes the component from and to dates (to match the package start and end dates). An effective-dated change does not reset package expenditure or re-initialize the from and to dates.

3. Change any of the package details at the package or component level.

   The package balance is recalculated based on the changes you make. If, however, you change the template ID used for the package, all package details are cleared and you must repackage all of the details for the employee.

   If you have not modified the template ID for the employee, all of the package details are retained. Because changes are likely to be minor (such as an increase in the salary component or minor adjustment to other components), using the details of the employee's current package is the most efficient method of repackaging.

   Check some package component details when repackaging on review. These details include estimated distance travelled for a motor vehicle component or other component, as well as details that can change year to year that are not evident in the package display.

4. After you enter the new package details, confirm and enrol the package.

Note. If you are tracking expenditures for packages, run the package expense calculation before remodelling the package. This ensures that the final expenses have been recorded against the package.

See Also

Monitoring Salary Packaging Expenditure

Enrolling in Salary Packages

De-enrolling from Salary Packages

Sometimes it is necessary to de-enrol employees from salary packaging. You might have areas of your organization that are administered through salary packaging and other areas that have salary- or hourly-based employees with no other packaged benefits. If this is the case, employees are likely to move from one area of the organization to another.

To remove an employee from a salary package, update the employee's salary package record with a package end date and de-enrol the package. Review the employee's job data to ensure accurate payments under the conditions of the new position.

You might need to reconcile expenditure against the package before completing the de-enrolment and adjust any components over or underspent.

Note. Always run the expense calculation process before de-enrolling the employee from the package.

De-enrolling Employees from Salary Packages

Before you can run the Package De-enrolment process, indicate that the package is to be de-enrolled and review the package end date on the Package Model page.

The package de-enrolment process updates the job record with a new effective-dated row. The new Job Data record has an effective date that is the day after the package end date. The action/reason indicates that it is a De-enrol Salary Package record.

No change is made to the compensation rate when de-enrolling an employee from salary packaging. Review the job data details, especially the compensation rate, to ensure that the details of the new job or conditions are accurate.

Note. Regardless of the selection criteria, the system de-enrols only those packages with the De-enrolment check box selected and a current package end date on the Package Model page in the Salary Package component.

See Also

Monitoring Salary Packaging Expenditure

Enrolling in Salary Packages

Defining Employee Salary Package Details

Page Used to De-enroll from Salary Packages

De-enrolling from Salary Packages

Access the Enroll Salary Package page (Compensation, Salary Packaging AUS, Create Salary Packaging, De-Enroll Salary Package, PEnroll Salary Package).

By Employee ID	Select to de-enrol an employee in a salary package. When this option is selected, the EmplID and Empl Record fields are activated.
By Pay Group	Select to de-enrol a pay group in a salary package. When this option is selected, the Pay Group field is activated.

Making Effective-Dated Changes to Confirmed Salary Packages

This section discusses how to:

• Change existing packages and model new packages.

• Work with budgets and the carry forward amounts.

Details in a package may change during the course of the package period. The employee might choose to discontinue a package component, or the details of a component might change because of legislation or company policy. You can reflect these changes as effective-dated changes to a package.

If you know of these changes at the time of modelling the package for the employee, it is possible to use the component from and to dates to reflect the changes.

If you do model the package to reflect changes in component details during the course of the package, the package enrolment process recognizes these changes and inserts multiple records for the respective benefit, deduction, or payroll data. This ensures that accurate payments can be made without further intervention.

If, however, you do not know about changes immediately, and you have to change details later in the year, you can simply enter an effective-dated change. After you confirm and enrol the change, it is administered through payroll, in accordance with the new package details.

To make an effective-dated change to an employee package:

1. Access the current salary package by using the Package Model page in the Employee Salary Package component.

2. Insert a new effective-dated row.

3. Modify the effective date to indicate the effective date of the change you are making.

   The effective date controls whether you are making a change to an existing package or model a new package.

4. If you are making an effective-dated change to an existing package, the effective date must be between the package start and end dates of the existing package.

5. If you make an effective-dated change where the effective date is equal to the effective date of a package that is already confirmed, use the model number to show that this is a later change.

   By increasing the model number to any number higher than the confirmed model, the new record is recognized as a later change for that effective date.

Changing Existing Packages and Modelling New Packages

The difference in process between remodelling for an employee and making an effective-dated change in a package is subtle. Essentially, the only difference is whether the new effective date is within or outside the package period for the existing package.

Despite the subtlety in process, the business impact is more dramatic. Modelling a new package for an employee, on review or for any other reason, means that all expenditure values are reset. This means that when you next look at the Expense Summary process, it reflects only expenditures since the new model was enrolled and payments were made against that package.

When you make an effective-dated change to a package, the expenditure details for the package to date are retained. If you are viewing details of this package through the Expense Summary pages, you can see expenditure information for all components within the package period—regardless of whether they were before or after the effective-dated change. This enables you to see a complete history of the package, including the detail changes.

All of the package and component details default from the previous package, except for components that had an end date earlier than the effective date of the current package. Now you can change any of the component details, including the component dates, or add new components to fit your needs.

See Also

Monitoring Salary Packaging Expenditure

Working with Budgets and the Carry Forward Amounts

The Base Components and Base Comp (Per) pages include a carry forward (C/F) amount C/F TPV/TEC that you use to ensure the accuracy of the package values when making effective-dated changes to the package. The adjustment amount ensures that the package total is correct, regardless of the timing and the type of effective-dated changes to the package.

The carry forward amount is important if you have used the budget capabilities to calculate the expected expenditure of components. The amount represents the difference between the prorated value of the package (up to the effective date of the change) and the budgeted value of the package for the period.

For example, you package a component that represents an employee's bonus payment. The calculated value of the component is 10,000 AUD. You know that you pay bonuses only once a year in February. When budgeting this component, you can identify that the 10,000 AUD is attributable to the February pay period. To ensure data integrity, you must ensure that the amount budgeted and the component value are equal.

When you define the budget, it has no effect on the expenditure of the component. Expenditure is controlled through the payroll enrolments (which assume a regular rate of expenditure) and any overrides done through payroll.

If you then make an effective-dated change to the package, recognize the budget you have set and adjust the package values accordingly.

For example, an employee has a package that is effective for a year, from July 7, 2000, to June 6, 2001. The package was modelled from the top down with the Total Employment Cost (TEC) set to 120,000 AUD. The Total Package Value (TPV) was calculated to be 85,000 AUD.

Without budgeting, you would have assumed a regular rate of expenditure of 10,000 AUD per month, based on the TEC of 120,000 AUD. In this situation, any effective-dated change that is made two months into the package would assume 20,000 AUD has been expended and calculate the package values accordingly. This means that for the remainder of the package, the employee has 100,000 AUD left to expend.

By using budgeting, you can ensure that the package better reflects the real world. Because of putting money aside for holidays, bonuses paid only annually, and any other possible variables, it is likely that the rate of expenditure will be irregular. In the real world, it may be that 75,000 AUD of the TEC is budgeted in the first six months of the package and 45,000 AUD in the last six months.

In this situation, it is necessary to adjust the package value to reflect any irregularities in expenditure.

Taking the example a little further, we created a package with values of 120,000 AUD TEC and 85,000 AUD TPV. We budgeted to spend 75,000 AUD evenly over the first six months and 45,000 AUD in the last six months. We make an effective-dated change to the package after two months. This change does not alter the TEC or the TPV but rather modifies various component details. Based on the budget, we want the employee to spend only 95,000 AUD over the remaining 10 months of the package. This is because the employee was budgeted to have spent 25,000 AUD in the first two months.

When calculating the package values, we need to adjust the package by 5,000 AUD. This amount is the difference between the prorated value of the package (up to the effective date of the change) and the budgeted value of the package for the period.

Here is the calculation of the prorated value of the example package:

120,000 AUD/ 12 (months in year) x 2 (months elapsed) = 20,000 AUD

The budgeted value of the package for the period is 25,000 AUD (assuming a regular rate of expenditure on the 75,000 AUD budgeted in the first six months). This value is extracted from the details stored against the package.

The difference between the two is 5,000 AUD. This value represents the amount of the package that was budgeted before it would have been entitled, or in arrears if the package was budgeted to spend less early in the year and spend more later in the year. This amount can be seen as the carry forward amount (C/F TPV/TEC) on the effective-dated change to the package.

Note. The adjustment amount doesn't consider actual expenditure. It looks at the value of the package, the period of the package that has already elapsed, and the details entered by the user for the budgeted expenditure for the package.

See Also

Entering Salary Package Component Budget Details for Employees

Modelling Salary Packages for Applicants

Setting Up Annual Base Components for Employees

Setting Up Period Base Components for Employees

Running Salary Packaging Reports

Throughout the entire Salary Packaging process there are a number of reports that you can run to help with your package modelling, package reviews, and reporting on package details. Human Resources supplies a group of four standard reports to help you manage Salary Packaging.

Pages Used to Run the Salary Packaging Reports

See Also

PeopleSoft Application Fundamentals for HRMS Reports