Defining Earnings

This chapter provides an overview of earnings for New Zealand and discusses how to calculate:

• Regular hourly and regular salary pay.

• Shift and overtime earnings.

• Service allowance.

• Meal, stress and phone allowances.

• District and on call allowances.

• Bonus, bonus net, and bonus gross up.

• Advance payments and automatic payback deduction.

• Public holiday and casual leave pay.

• Earnings associated with absences.

Note. The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for New Zealand. Instructions for running the query are provided in the PeopleSoft Enterprise Global Payroll 9.1 PeopleBook.

See Also

Understanding How to View Delivered Elements

Understanding Earnings

We have created a number of earnings to demonstrate the flexibility of the Global Payroll rules to meet common processing requirements such as the automatic creation of a payback deduction for a pay advance.

Note. The User Key 2 on the Earnings Accumulators page and Deduction Accumulators page for all earnings and deductions is CMN VR BALGRP ID (Balance Group ID). Use balance group numbers (IDs) to maintain separate employee balances. You set an employee's balance group number on the Job Data, Payroll page— JOB_DATA2. The balance group number will need to be manually incremented if you are required to record separate balances within a financial year.

Delivered Earning Elements

The following table lists the delivered earnings for New Zealand. In this table, the first column combines the earning name and description. A (gc) in the row indicates that the earning has a generation control. A (po) indicates a post processing formula and (pr) indicates a pre processing formula. The other four columns indicate the earning calculation rule of Unit × Rate, Unit × Rate × Percent, and Amount. If a component of an earning's calculation rule is a system element, this is indicated with the abbreviation (sy). The processing of some of these earnings is discussed in further detail in this chapter.

Note. Note that two earnings CASUAL LVE and AC1 MAKEUP have a calculation rule of Base × % and the base is shown in the Unit column.

Calculating Regular Hourly Pay

Use REGPAY HRLY in any case where the hours to be paid for a payee are not standard and vary from pay calendar to pay calendar. These hours are typically entered manually. The earning element's calculation rule is unit x rate where the unit is set at the payee level and the rate is the system element HOURLY RT.

Calculating Regular Salaried Pay

Use REGPAY SAL where the hours to be paid are standard for each pay calendar.

This element demonstrates the use of a preprocess formula (ERN FM REGSTD UNIT) that retrieves the units for the period and determines the work days (proration) in the period. The formula then has a value of regular units with which to begin the earning element resolution. This earning element's calculation rule is unit x rate. The number of units to be paid is derived from a formula. The formula calculates the payee's regular hours (based on an annualized and deannualized JOB standard hours value) reduced by any hours taken as either approved absence or public holiday hours which are set to reduce from regular hours. The rate is the system element HOURLY RT.

Calculating Shift Loading

Use SHIFT 10 to compensate payees for working outside of or across what your organization considers normal business hours. The element's calculation rule is unit x rate x percent. You enter or generate the units at payee level, the rate is HOURLY RT, and the percentage is set as 10.

Calculating Overtime

The calculation rule of the OVERTIME 1.5 earning is unit x rate x percent. You enter or generate the units at payee level, the rate is HOURLY RT, and the percentage is set at 150 representing time and a half.

Calculating the Service Allowance

SERVICE is a "per hour" allowance paid based on the number of years service of the payee. The calculation rule is unit x rate where the unit is accumulator REGULAR HOURS. The rate comes from the bracket ERN BR SERVICE RTS, which assigns a value based on the employees years of service (duration CMN DR YRS OF SVC). This earning is placed after REGULAR pay because its resolution depends on regular pay having already been calculated.

Calculating the Meal Allowance

The MEAL allowance calculation rule is unit x rate where you enter or generate the units at the payee level and the rate comes from the bracket ERN BR RTS that assigns a value based on the payee's union code (system element UNION CD).

Calculating the Stress Allowance

The STRESS allowance calculation rule is unit x rate x percent. The unit is accumulator REGULAR HOURS. You assign the rate at the payee level and the percent is 100. This earning is placed after REGULAR pay because its resolution depends on regular pay having already been calculated.

Paying the Phone Allowance

The PHONE allowance calculation rule is amount and the amount is set as 75. This element's generation control, ERN GC PHONE, uses formula ERN FM PHONE to ensure that the allowance is paid only in the last pay period of the month (so is particularly applicable to nonmonthly calendar frequencies) and in the first segment of the last period.

Calculating the District Allowance

This allowance uses the Location code on the payee's job record. The earning's calculation rule is amount where the amount is the formula ERN FM DISTRICT that calls bracket ERN BR DISTRCT RTS that stores the weekly rate for various locations. The formula also prorates the amount by the standard hours of the payee.

The allowance is not paid for any days in the pay period where the payee is on leave without pay. For example, if a payee was scheduled to work Monday to Friday but took leave without pay on the Friday, their DISTRICT allowance would be 4/5 of the normal weekly entitlement. This allowance is resolved after any leave earnings.

Calculating the On Call Allowance

The ONCALL allowance calculation rule is unit x rate. You enter the units at the payee level. The rate is formula ERN FM ONCLL HR RT that validates the employee's hourly rate against the maximum and minimum rates allowed for the earning. You set two supporting element override variables, ERN VR ON MIN HRRT and ERN VR ON MAX HRRT, for the minimum and maximum rates respectively. When resolving the earning the system checks the payee's hourly rate from his HR job record.

• If the payee's hourly rate is less than the minimum amount, the system pays the minimum rate.

• If the payee's hourly rate is more than the minimum but less than the maximum rate the system pays the hourly rate.

• If the payee's hourly rate is more than the maximum the system pays the maximum.

The following table shows the three scenarios based on a minimum of 50 and a maximum of 70

The earning also has a post process formula ERN FM ONCALL ADD that determines if payment of the allowance in full plus any additional flat amount (supporting element override ERN VR ADDL AMT) would take the earning over an annual limit (supporting element override ERN VR ON YTDLIMIT). If it would take it over the limit, the formula calculates by how much and subtracts that value from the current value. This ensures the earning is paid up to the limit.

The earning also has a generation control, ERN GC ONCALL, that checks that the limit hasn't already been reached.

You can set other limits for other frequencies by using a formula that compares the total paid with the frequency limits for the earning.

Paying Bonuses and Grossing Up

You can pay a bonus amount and have it taxed normally by adding an amount to the BONUS earning at the payee level. If you want to pay a specific net amount you can enter that amount as the earning BONUS NET and have the system "gross up" that amount After taxing the grossed up amount the payee will receive the intended net amount. Grossing up is described in full in the chapter entitled Net-To-Gross Processing.

See Also

Understanding Net-to-Gross Payment Calculation

Making Advance Payments and Creating Payback Deductions

Some earnings are loans or advances; therefore, when they are paid, the system must automatically create a deduction that is processed over subsequent pay runs, recovering the loan or advance.

See Also

Creating Earnings Advance and Recovery

Making Payments for Public Holidays

PUB HOL is an earning element that is entered or generated when there is a gazetted public holiday in the calendar period. The element needs to be included in an accumulator that reduces the amount of regular pay that is paid. The PUB HOL earning calculation rule is unit x rate where the unit is derived by a formula and the rate is the payees HOURLY RT system element.

When a holiday occurs in a pay period, the system populates the system element, HOLIDAY HRS, with the hours that you entered for that holiday on the Holiday Schedule.

Because a payee might not have been scheduled to work the holiday schedule hours, you can direct the system to pay different hours from those on the holiday schedule. When, during normal payroll processing, the system comes to resolving earning PUB HOL, for Public Holidays, it sets about determining the number of hours to pay each employee.

In PUB HOL's calculation rule:

Unit = formula ERN FM PUBHOL UNIT

Rate = System Element HOURLY RATE

The ERN FM PUBHOL UNIT formula uses proration element ERN PO PUB HOL HRS for which the numerator is ERN CT PUB HOL HRS and the denominator is 1.

The count formula for ERN CT PUB HOL HRS is ERN FM PUB HOL HRS. This formula checks each day in the period for a HOLIDAY HOURS value and if it finds one, finds out if you have set variable ERN VR SCHED TYPE to HOL, WRK, or ALT. The default for the variable is ALT but its single override level is Pay Group.

If you don't have alternative work schedules, you do not have to override the default at the pay group level because, in the absence of an alternative work schedule, the system uses the payee's scheduled hours. If you do have alternative work schedules but don't want to use them, override the ALT default with character values WRK or HALF at pay group level.

For HOL, the formula returns the holiday hours from the holiday schedule.

For WRK, the formula returns half the employee's scheduled hours if the Holiday Type on the holiday schedule is Half or all of the employee's scheduled hours if the Holiday Type is Standard.

For ALT it is the same except the formula returns the hours for the payee's alternate work schedule. If there is no alternate schedule, it returns either half or whole schedule hours.

Note. You can designate any defined schedule as the alternate schedule on the pay group table. And at employee level, you can assign a schedule as an alternate and it can be the pay group alternate schedule or any other of your defined schedules. Whatever the value of your variable ERN VR SCHED TYPE, the count formula returns the hours to be passed by the count to the numerator of the proration rule and the proration rule passes the count value to the formula ERN FM PUBHOL UNIT which is the unit for PUBHOL's calculation rule Unit x Rate.

Paying Casuals for Leave

Use the CASUAL LVE earning element to pay casual payees in lieu of their receiving an annual leave accrual. The element is 6% of the payee's gross taxable earnings (GTE) per calendar period. The element's calculation rule is base x percent where the base is accumulator LVE AC GTE 6PCT and the percent is 6. This earning is placed after REGULAR pay because its resolution depends on regular pay having already been calculated.

Using Absence Earnings

There are a number of earnings that various absence takes use to pay for the leave in question. They include annual leave (ANNUAL LVE), sick leave (SICK LVE) other leaves (OTHER LVE) and leave without pay (LWOP); the earnings for ARCI payments, ACC LVE and ACC MAKEUP; and the earning for annual leave reconciliation, ANNRCN.

See Also

Defining Absence and Termination Rules

Using Earnings for GLI Reporting

There are six earnings that are not paid but are used for general ledger interface reporting of annual leave liability and their reversal of liabilities on termination. They are LIAB ANN (HRS and DYS) and LIAB LSL DYS, and, LIAB TER (HRS and DYS) and LIAB TER LSL. There is also one earning, also not paid, for reporting accrued salary where the pay period end is earlier than the financial period. It is SAL ACCRUAL. You decide what percentage to accrue using GLI VR ACCRUAL PCT.

See Also

Using the General Ledger Interface

Using Earnings for Paying Retro on Leave Pay

There are seven retro earnings for paying retrospective adjustments on earnings that normally reduce regular pay. They are RTO ACC LVE, RTO ANN LVE, RTO LSL, RTO LWOP, RTO OTH LVE, RTO PUB HOL, RTO SCK LVE.

We have supplied these earnings to avoid affecting the calculation of regular pay in the current pay period. The hours on these earnings do not contribute to the reduce regular hours accumulator ERN AC REDUCE HRS. The amounts however, add to the total gross and extra emolument accumulators NZL GROSS and EXTRA EMOL GROSS

For example, an employee applied for 2 days of sick leave (16 hours) in June 2001 but then in August 2001, changed this to be 3 days annual leave (24 hours). When the August payroll runs, it calculates retrospectively from June 2001 and forwards the results to August 2001. The following happens.

Back in June 2001, the original calculations were:

16 hours for SCK LVE
157.33 hours for REGPAY SAL

After the retro calculation, the values are:
0 hours for SCK LVE (-16 will be forwarded to RTO SCK LVE)
+ 24 hours for ANN LVE (+24 will be forwarded to RTO ANN LVE
+149.33 hours for REGPAY SAL (-8 will be forwarded to REGPAY SAL).

In August 2001, the values are:
173.33 hours for REGPAY SAL (with an adjustment of - hours)
+24 hours for RTO ANN LVE
-16 hours for RTO SCK LVE