Applications Compensation Management Implementation Guide
11g Release 1 (11.1.4)
Part Number E20376-04
This chapter contains the following:
Define Base Pay: Overview
Salary Component Lookups: Explained
Manage Salary Basis
Configure compensation frequency values, grade rate validation data, and payroll elements for quoting and paying base pay. Also manage lookups, actions, and action reasons related to base pay management.
To define base pay, application implementors and compensation administrators start from the Setup and Maintenance Overview page. Select Navigator - Setup and Maintenance.
Salary components itemize new or adjusted salary into one or more components that reflect different reasons for the allocation. You can edit or add components to the Salary Component lookup type during initial implementation and at any later time.
The following salary components are predefined:
Cost of Living
Adjustment: General adjustment
Market: Adjustment due to salary being out of line with the market
Structured: Adjustment dictated by union or employment contract, such as an increase after three months
Equity: Adjustment to correct salary compression or inversion
Progression: Regular and automatic adjustment
To add or edit these codes in the CMP_SALARY_COMPONENTS lookup type, start in the Setup and Maintenance work area and search for lookup tasks.
Create a salary basis by choosing a set of the following characteristics associated with a worker's base pay:
Frequency of quoted base pay salary
Annualization factor of selected frequency
Payroll element and input value
(Optional) Grade rate for salary validation
(Optional) Salary components to itemize allocations
You must create a separate salary basis, with a unique name, for each unique combination of these factors. Using a descriptive name for the salary basis is a good practice if you require many salary bases in your organization.
After you associate the salary basis with any worker, you cannot delete it or modify any characteristic other than component configuration.
Frequency defines the period of time in which a worker's base pay is quoted, either hourly, monthly, annually, or the payroll period frequency. The salary basis frequency is not necessarily the same as the payroll frequency. For example, a worker paid an hourly wage can have an hourly salary basis frequency but a weekly payroll frequency.
To match the salary basis frequency to the payroll frequency, select Payroll period frequency on the salary basis. A worker who has multiple assignments or employment terms on different payroll frequencies requires a different salary basis associated with each assignment or employment term.
The annualization factor is the multiplication factor used to convert base pay at the selected frequency to an annualized amount that enables you to see how much a worker would be paid over a year at the current rate.
The following table shows the default factors supplied for the frequency options. You can override the supplied default values.
Default Annualization Factor
No default is supplied. Enter the number of hours in a work year to multiply by the hourly rate to calculate the annualized salary for this salary basis.
Leave blank. Annualization is determined by the period type on the payroll linked to a worker's assignment or employment terms.
You configure each salary basis for a specified legal employer. If your organization has multiple legal employers, you must create a uniquely named salary basis for each unique set of characteristics applicable to each legal employer.
You attach a single existing payroll element to each salary basis to hold base pay earnings. Only elements that are valid for the selected legal employer are available for selection. You must select one input value from the list of valid values for the selected element.
Recurring elements can be linked to multiple salary bases only if they are classified as earnings elements and configured to allow multiple entries in the same period.
When a manager or compensation specialist enters a base pay amount for a worker, the amount is written to the payroll element input value associated with the worker's salary basis.
You can optionally associate one existing grade rate with the salary basis for salary validation purposes. Only grade rates that are valid for the selected legal employer are available. Managers or compensation professionals receive a warning message if they enter a total salary amount outside the relevant range specified in the grade rate.
Salary components itemize new or adjusted salary into one or more components that reflect different reasons for the allocation. To configure the use of salary components during salary entry or adjustment, choose from the following options:
Do not use components.
Select specific components to display to managers and professionals during allocation.
Allow managers and professionals to select components during allocation.
Salary validation helps you verify that salary allocations fall within the appropriate range for each worker. You can choose between two methods of validating salaries:
Grade range validation produces a warning.
Payroll element validation prevents approval.
Generate a warning message when a manager or compensation professional enters a new or adjusted salary that is outside the minimum or maximum values defined for the worker's grade in the grade rate attached to the salary basis.
Prevent approval of a new or adjusted salary that does not pass validation configured on the payroll element input. When you define an input value for the salary element, you can write and attach a formula to perform validation, or you can enter minimum and maximum valid values. If you want to vary the validation for different groups of workers, you can enter validation criteria as part of the element link.
The period type on the payroll linked to a worker's assignment or employment terms determines the number of payroll periods in a year.
Yes, if it is a recurring element that is classified as an earnings element and configured to allow multiple entries in the same period.
No. If the salary basis has been assigned to any worker, you cannot delete it. You can modify only the salary component configuration.
Yes, if edit capability is enabled for the salary basis. You can hide or show the edit capability for managers using personalization on the pages where managers enter salary allocations.
A warning message informs the manager or compensation professional that the salary is out of the valid range for the worker. The message can be ignored or the salary revised to fall within the valid range.