Managing Old Age Part-Time Employment

This chapter provides an overview of old age part-time employment calculations and discusses how to:

• Set up for old age part-time processing.

• Set up old age part-time models.

• View old age part-time minimum net calculation parameters.

• Assign an old age part-time model to an employee.

Understanding Old Age Part-Time Employment

Old Age Part-Time (OAPT) is defined in the Altersteilzeitgesetz and is required when employees request it of German companies. OAPT requires the calculation of payroll increases and grosses. Global Payroll for Germany calculates the statutory and voluntary gross increases, as well as statutory and voluntary difference amounts for pension insurance.

Through old age part-time work, an employee who qualifies for OAPT can work half-time for up to five years and receive half of the normal payments during this time. In addition to this, the employer must pay the following:

• At least 20 percent of the part-time salary as a tax-free gross increase.

• At least 70 percent of the former full-time net (minimum net increase).

• Pension insurance contributions for the difference between old age part-time gross and 90 percent of full-time gross (difference amount for pension insurance).

Voluntary increases can use a different calculation base and can apply a different mode for the social insurance limit.

Gross Increase

If you are using a voluntary gross increase in your calculations, you can either add an additional percentage or specify a total gross increase.

The relevant part-time gross consists of recurring and one-time earnings depending on the following conditions:

Minimum Net Increase

If the part-time gross plus the gross increase is less than 70 percent of the fictitious full-time net, then the employer has to pay the difference as the minimum net increase.

Difference Amount for the Pension Insurance

In addition to gross increases, you must increase the gross used to calculate pension insurance and pay the contributions for this increased amount. By law, 90 percent of the full-time contributions must be paid. This means you must pay the difference between what the employee actually pays and the 90 percent of what they paid when working full time. If you want, you may pay more than this amount.

Note. The system provides no processes to evaluate whether an employee can participate in an old age part-time program. You, as the payroll administrator, must decide whether the necessary requirements have been met (for example, reducing work time by half, three years of full-time employment before old age part-time employment, at least 55 years old, and so on). Note also that the system does not verify whether the conditions for entitlement to reimbursement of these increases by the employment office (for example, hiring unemployed persons or taking on employees when they finish their vocational training, and so on) have been satisfied.

Understanding Increase Models

This section explains absolute increases and relative increases.

Absolute Increases

The absolute increase is calculated without looking at other increases.

The current implementation allows absolute increases only for the gross increases.

The statutory gross increase is always an absolute increase. The voluntary model gross increases can be set to absolute mode by deselecting the 'subtract previous increases' option.

Relative Increases

The relative increase fills a gap between a previously calculated amount and a goal amount.

For example, if an employee gets a net of EUR 1000, but he should for some reason get a minimum net of EUR 1200, then the gap is EUR 200 and the resulting (relative) increase is EUR 200.

Another example is an employee who is entitled to a statutory increase of EUR 200. In this example, the company agreement in voluntary increase model 1 could result in a total increase of EUR 240. If the company increase is a total increase, it means that the company will take into account the payment out of the statutory increase (EUR 200) and add only the difference of EUR 40.

If the increase would have been an absolute increase, then the employee would be entitled to the statutory increase of EUR 200 and the voluntary increase of EUR 240 resulting in a total of EUR 440.

Understanding Part-time and Full-time

The main issue for the old age part-time calculation is the availability of the part-time and full-time components of the relevant payments.

During the normal payroll process only the part-time pay is directly available. To calculate the full-time amount for the part-time amounts, the following methods are employed.

Part-time Accumulators

The elements in an accumulator for part-time are set up the usual way.

Full-time Accumulators

The elements in an accumulator for full-time are set up so that the percentage field is used to specify a full-time factor which is defined as the number that converts the part-time amount to a full-time amount. Typically the factor will be the reciprocal of the part-time percentage.

Since the factor has to be expressed as a percentage, the value has to be multiplied by 100.

There are predefined variables for the most common cases.

Variables to calculate the full-time amount for a fixed percentage, such as 65%, can be easily created by assigning them the value. For example, (1/65%) * 100 = 10000/65.

Relationship Between Corresponding Full-time and Part-time Accumulators

Normally, each earning in the part-time accumulator also has to be in the corresponding full-time accumulator.

There may be exceptions when the full-time amount is calculated differently than the part-time amount; for example, when a fixed statutory limit is applied that only affects the full-time amount but not the part-time amount.

An example is the tax free amount for company shares (Vermögensbeteiligung), which is half of the amount used for the shares but with a fixed maximum. If a percentage of the income is used for shares, then the limit can be exceeded in the full-time calculation, but not in the part-time calculation.

For cases similar to this you can define one earning for part-time and a different earning for full-time and place the full-time element in the full-time accumulator and the part-time element in the part-time accumulator.

Using this method allows you to easily handle elements with a complicated, non-linear relationship.

Dedicated Accumulators for the Increases

To allow a maximum of flexibility for the bases of the different increases, each increase has dedicated accumulators for recurring earnings and one-time earnings a well as part-time and full-time amounts, where applicable.

Each model (statutory, voluntary 1, and voluntary 2) has a separate set of accumulators.

This is necessary for situations such as when tariff contracts can contain clauses where one-time payments may or may not be used for one or more increases.

Also, some earnings are considered in the calculation of the difference amounts for pension insurance, but may not be used for the other increases.

If one-time payments should not be considered for the minimum net increase of voluntary increase model 1, then do not place these earnings in the following accumulators.

Accumulator Exception for Pension Insurance

For the calculation of the difference amounts for pension insurance, there is only the statutory set of accumulators available because there is no freedom of choice regarding what elements have to be used in the voluntary calculation, but only which percentage (> 90% ) will be applied.

Increase Model Calculation Sequence

The increases are always calculated in the following logical sequence:

• Statutory.

• Voluntary increase model 1 (if applicable).

• Voluntary increase model 2 (if applicable).

When calculating statutory difference amounts for pension insurance, the formulas are only looking at previous difference amounts which were a result of statutory calculation, although the year-to-date contributed gross would contain voluntary increases as well.

Therefore, the calculation results for the statutory increases should return the same values for an employee who has a statutory model only, as well as for an employee who has additional voluntary models.

If there is a corresponding increase available to the employee in all increase models (for example, the minimum increase), then the increases will be calculated so that the later calculations will fill the gaps between the previous calculation and the current calculation goal.

The calculation sequence is also reflected in the order of the sections.

Understanding the Sick-Fill Calculation

When an employee in old age part-time is unpaid sick, then the statutory increases and the statutory difference amount will be less than normal because they are based on his earnings.

However, law stipulates that the increases and difference amounts for the employee should be the same as normal during this time. The differences in the increases are paid by the employer on behalf of the unemployment office (BA). However, one-time earnings should not be considered.

Calculation of the Loss of Income

First the loss of income due to unpaid absence is determined.

There are two accumulators for this purpose. One defines the earnings that can be reduced at all. The other defines the unreduced base amounts of the same earnings. Only recurring earnings may be specified.

The difference between the two accumulators is the loss of income for old age part-time due to unpaid absence.

To find the share of unpaid sickness among the unpaid absence, another two accumulators are available where you may specify units of unpaid sickness and units of unpaid absence.

Time units can be days or hours, but must be of the same type.

The income loss due to sickness is determined by dividing unpaid sickness by unpaid absence and multiplying the result by the loss of income determined in the previous step.

The full-time loss is determined by dividing the part-time loss by the old age part-time percentage.

Hypothetical Unreduced Calculation

After the preceding steps have been accomplished, the amount of loss is added to the calculation bases, where applicable, and the calculation of the increases and difference amounts is repeated.

This is a hypothetical/fictitious calculation because no sickness is assumed for the month and the full social insurance limit is applied.

Variable naming for the hypothetical calculation is done by introducing another owner code of 'H' because all the other naming codes are potentially needed again.

This way DE_AZ_B_000_00 of the regular calculation becomes DE_AZ_B_H00_00 for the hypothetical calculation.

Similarly, for the sick-fill difference, another owner code of 'S' is introduced and the variable DE_AZ_B_000_00 of the regular calculation becomes DE_AZ_B_S00_00 for the difference.

Results

The sick-fill amounts are the differences between the hypothetical results and the actual results.

As example of the statutory gross increase would be DE_AZ_B_S01_63 = DE_AZ_B_H01_63 - DE_AZ_B_001_63.

Generally, however, the amounts for the gross increase and the minimum net increase have to be adjusted in such a way that the hypothetical (H) result for the sum of these increases is not exceeded. This could happen if the reduced minimum net increase is greater than the unreduced minimum net increase.

Customer Setup Element Naming

All customer-controlled accumulators for the old age part-time earning setup have names beginning with DE_AZ_A_K. The corresponding sample accumulators are named DE_AZ_A_P.

All available predefined factors for the accumulation percentage start with DE_AZ_P.

Viewing Delivered Elements

The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for Germany. Instructions for running the query are provided in the PeopleSoft Enterprise Global Payroll 9.0 PeopleBook.

See Also

Understanding How to View Delivered Elements

Setting Up for Old Age Part-Time Processing

This section provides procedures for setting up old age part-time processing.

To set up your system for old age part-time processing:

1. Define your old age part-time increase models on the Old Age Part-Time Increase Model page.

2. Define your old age part-time models on the Old Age Part-Time Model page.

   These are the models that you are going to assign to individual employees.

3. Set up your accumulators.

   The accumulators used for old page part-time processing follow a specific naming convention, so it is easy to determine the function of each accumulator.

4. Assign individual employees to an old age part-time model.

Old Age Part-Time Accumulator Element Naming Conventions

To make the identification of accumulators and other element functionality clear, all PeopleSoft-delivered accumulators used by old age part-time processing follow a specific naming convention.

Accumulators are categorized according to whether they are part-time values, full-time values, of fictitious values. Full-time values include part-time elements with a factor/percentage, variable percentages, and predefined factors available for full-time amounts (such as standard proration and proration by old age part-time period).

A three-digit code is included in the accumulator element name to classify the calculation. The first digit identifies the element owner. The second digit identifies the type/accumulator group. The third digit identifies the calculation purpose.

A two-digit code is included in the accumulator name to classify the amount type. The first digit identifies the timecode/type. The second digit identifies the amount specification.

PeopleSoft-delivered accumulators used for old age part-time processing abide by follow the naming convention where <class> represents the three-digit code and <amount-type> represents the two-digit code; for example, DE_AZ_A_<class>_<amount-type>.

Calculation Classification

Amount Type Classification

Examples

DE_AZ_A_101_11 = Customer setup for statutory gross-increase (101) for recurring part-time gross (11).

DE_AZ_A_103_21 = Customer setup for statutory difference amount for pension insurance (103) for recurring gross full-time (21).

DE_AZ_A_122_22 = Customer setup for voluntary model 2 minimum net increase (122) for one-time gross full-time (22).

Old Age Part-Time Accumulators for Setup

The following table lists the accumulators for old age part-time setup.

Result Elements of the Calculation

The following are the result elements of the calculation.

Gross Increases (Earnings)

Difference Amounts for Pension Insurance (Accumulators)

Employer Contributions (Deductions)

Setting Up Old Age Part-Time Models

Use the Old Age Parttime Model (GPDE_AZ_MDL) and the Old Age Parttime Increase Mod. (GPDE_AZ_IMDL) components to set up old age part-time models.

This section discusses how to:

• Define old age part-time model.

• Define old age part-time increase model.

Note. Before assigning an old age part-time model to an employee, you must define the models, increase models, and minimum net calculation parameters.

Pages Used to Set Up Old Age Part-Time Models

Defining Old Age Part-Time Model

Access the Old Age Parttime Model page.

The model defined on this page is the summary of the increase parameters. The model may include references to one or two voluntary increase models (defined on the Old Age Part-Time Increase Model page). The statutory increases are always calculated and not visible as a model. If you want to use a statutory model only, then you do not need to specify any increase models.

Defining Old Age Part-Time Increase Model

Access the Old Age Part-time Increase Mod. page.

Percent Gross Increase	Percent of additional gross increase, if any.
Subtract Previous Increases	Select to subtract previous increases. When selected the increases of the statutory model or a previous voluntary model is taken into account and only the difference is generated. If not selected, then the increase will be added on top of previous increases. No additional increase will be calculated if Percent Gross Increase is left empty.
Limit Mode for Gross Increase	Select the monthly social insurance limit mode to be used for gross increases. Values are Apply SI-Limit, Ignore SI-Limit, and Statutory Limit Method.
Percent Minimum Net	Enter the percentage for a voluntary minimum net that is higher than the statutory percentage or refers to a different base. No additional increase will be calculated if the field is left empty.
Limit Mode for Minimum Net	Select the monthly social insurance limit mode to be used for full-time or part-time gross of minimum net calculation. Values are Apply SI-Limit, Ignore SI-Limit, and Statutory Limit Method.
Percent Pension Increase	Additional increase percentage for pension insurance. No additional difference amount will be calculated if the field is left empty.
Apply 100% of BBG	Select to increase the SI limit used for calculation of Old Age Parttime to 100%.

Note. When bonus, tax-free amounts, and so forth. should be ignored for some increases, then the corrections have to be made to the respective accumulators.

Viewing Old Age Part-Time Minimum Net Calculation Parameters

This section discusses how to view old age part-time minimum net calculation parameters.

Page Used to View Old Age Part-Time Minimum Net Calculation Parameters

Viewing the Old Age Part-Time Minimum Net Calculation Parameters

Access the Minimum Net Calc Parameters page.

The data are supplied as system data. You should not change these values.

Assigning an Old Age Part-Time Model to an Employee

This section discusses how to assign an old age part-time model to an employee.

Once an old age part-time model has been defined, assign the model to an employee. Each old age part-time employee has only one model assigned.

Page Used to Assign an Old Age Part-Time Model to an Employee

Assigning an Old Age Part-Time Model to an Employee

Access the Old Age Part-Time page.

Begin Date/End Date	These dates limit the period in which the model applies.
OAPT Model	The code for the selected model.
Sick Fill Agreed	Select if the employer has agreed to make payments during an employee illness.
Agreement Signed	Select if the payment transfer agreement has been signed by the employee (Abtretungserklärung).
Blocking	Select to indicate that the employee has chosen a block mode old age part-time. For a block mode old age part-time you have to enter the work periods in the grid that becomes visible when the Blocking check box is selected.