Defining Earning and Deduction Elements

This chapter provides an overview of earning and deduction elements and discusses how to:

• Define earning elements.

• Define deduction elements.

• Prepare earnings and deductions for processing.

Understanding Earning and Deduction Elements

This section discusses:

• Earnings and deductions.

• Calculation rules and components.

• Automatically generated accumulators.

• Frequency and generation control calculations.

• Retroactivity calculations.

• Pre process and post-process formulas.

• Proration and rounding processing.

• Earning and deduction assignments (by element and by payee).

• Multiple resolutions.

Earnings and Deductions

Earnings and deductions are not hard-coded in Global Payroll; instead, you create your own earning and deduction rules online. The steps for defining earnings and deductions are essentially the same; however, with deductions you must specify how to handle arrears processing and banking information.

Calculation Rules and Components

When you create an earning or deduction element, you define its calculation rule, such as Unit x Rate or Unit x Rate x Percent. When you save the element definition, the system automatically creates the following components based on the selected calculation rule and element type:

• Unit, Rate, Base, and Percent components, based on the calculation rule.

• Payback Amount, Amount Not Taken, and Add to Arrears components for deduction elements only.

• Arrears Balance accumulator for deduction elements only.

The system gives the automatically generated components the same name as the earning or deduction element plus a suffix. For example, if you create the earning element EARN1 = Unit × Rate, the system automatically generates two component elements named EARN1_UNIT and EARN1_RATE. The language of the suffix names are determined by the country that you specify for the earning or deduction element on the Element Name page.

Note. Names of earning and deduction elements are limited to 12 characters because of suffixes. Other element names can have as many as 18 characters.

Components take on the attributes of the earning or deduction element. If you change the attributes of the earning or deduction element, the component attributes also change. To continue with the previous example, if you change the name of the EARN1 earning element to REGULAR, the system changes the component names to REGULAR_UNIT and REGULAR_RATE. The only attributes of a component that you can change directly are the description, comments, customer fields, and the Via Element Overrides option. You make these changes on the Components page.

A component is also an element and can therefore be used in another element's definition. As an example, assume that you define the following elements:

• SALARY1 = Unit × Rate.

• SALARY2 = Unit × Rate.

• SALARY2 Rate = SALARY1 Rate.

When the system calculates the rate for SALARY2, it uses the rate for SALARY1. You don't have to redefine the rate for every new element. No matter how the rate for SALARY1 is defined (numeric, formula, and so on), the rate for SALARY2 always equals the rate for SALARY1.

Updating Component Element Information

Defining Suffixes

Automatically Generated Accumulators

When you define an earning or deduction element, you specify which accumulators to create. For example, you probably want to create a year-to-date accumulator for every earning element and every deduction element that you define. You can base the accumulators on calendar periods, fiscal periods, or both. You can also indicate whether you want to store amounts, units, or both and the periods that you want to store in the accumulator—period, month, quarter, or year.

Like components, automatically generated accumulators take on the attributes of the corresponding earning or deduction element and use the suffixes that you define on the Earnings and Deductions page of the Element Suffixes component (GP_SUFFIX).

Note. The only accumulators whose attributes are linked directly to an earning element or deduction element are those that are automatically generated by the Earnings component (GP_EARNING) or the Deductions component (GP_DEDUCTION). Attributes of accumulators that you create using the Accumulators component (GP_ACCUMULATOR) are not linked directly to earning or deduction elements.

Setting Up Accumulators

Frequency and Generation Control Calculations

When you set up an earning or deduction, you can specify a frequency on the Calculation page. There are two options:

• Use Calendar Period Frequency indicates that the element frequency is determined by the calendar period.

• Use Specified Frequency enables you to define the frequency.

For earning or deduction elements that use a frequency-controlled rate code, select Use Calendar Period Frequency. Otherwise, you may not get the result that you are looking for.

A rate code element that is frequency-controlled is resolved in the calendar frequency. It is annualized by the Frequency Option field that controls it and deannualized by the calendar frequency.

For example, say that you have a weekly payroll, and you create an earning element with an amount of 100 and a frequency of monthly. If no generation control conditions are defined, the system annualizes and deannualizes the amount into a processing frequency amount. Let's assume that your organization's monthly frequency is 12 and its weekly frequency is 52. First, the system annualizes the 100 (monthly amount) to 1200. Then it deannualizes that amount into the payroll processing frequency. If the payroll frequency is weekly, the amount that is paid each pay period is 1200 / 52 = 23.076923.

If your organization has multiple pay frequencies, the system converts the amount into the corresponding pay period amount for each frequency. Let's say that your organization gives an annual bonus of 1000 to all payees, and distributes the bonus in payslips throughout the year. Your hourly payees are paid weekly and your salaried payees are paid monthly. If you define a bonus earning as BON = 1000, with a frequency of Annual, that definition is applied, using annualization and deannualization, to all payees according to each group's pay frequency.

Human Resources Frequency and Global Payroll Frequency Tables

Global Payroll usually uses the PeopleSoft Enterprise Human Resources Frequency Table to determine how a frequency is calculated. However, some frequencies that are not defined in that table are defined in the Generation Control Frequency Table in Global Payroll. An example of this is First of the Month. Let's say that you have a weekly pay frequency, but you want an earning element to be paid in the first pay period of the month. In Global Payroll, you can define a generation control frequency and assign it to the earning element through Generation Control.

Frequency Conversion and Generation Control

With generation control you can control when an element is processed, based on various criteria (one of which is frequency.)

If you select a frequency other than Use Calendar Period Frequency, the system annualizes and deannualizes the earning amount based on the pay period frequency. If a generation control frequency exists, the system annualizes and deannualizes the earning amount based on that frequency. The generation control frequency overrides the pay period frequency during frequency conversion.

For example, an earning element is defined with a calculation rule of Amount = 1200, an annual frequency, and a monthly pay period. If you define the monthly frequency as 12, and you don't have a generation control frequency for the earning, the amount is deannualized to 100 per month (1200 / 12 = 100). Now, if the generation control frequency is quarterly, the earning element is deannualized to 300 (1200 / 4 = 300).

This table lists the calculation rules and components for which frequency conversion is performed:

 Calculation Rule Component Amount Amount Base × Percent Base Unit × Rate Unit Unit × Rate × Percent Unit

When you select Use Calendar Period Frequency in the Frequency Option field, the system does not perform frequency conversion.

For example, let's say that you have an earning element with a calculation rule of Amount and the amount is 100. If Frequency is set to Use Calendar Period Frequency, the amount calculated is always 100, regardless of what period frequency is used. If you have weekly and monthly pay groups, the resolved amount is 100 for payees in both groups. Even if a generation control condition uses frequency, the system doesn't perform annualization or deannualization. For frequency conversion, you specify the frequency in the earning's calculation rule. Frequency deannualization for generation control does not occur unless you specify a frequency on the earning element definition. Even though the system does not perform this routine, you can still use Generation Control - Frequency to control when the element is processed for the weekly pay group.

See Defining Generation Control Elements.

Example 1: Frequency Conversion without Generation Control

An earning element has a flat amount of 1200 and an annual frequency (factor = 1). You run a pay period with a monthly frequency (factor = 12).

The system retrieves the value of the frequency defined for the element (1) and the value of the frequency defined for the pay period (12) from the Human Resources Frequency Table. It divides the element frequency factor by the period frequency factor to determine the annualization/deannualization factor. The equation used to calculate the element is: 1200 × 1/12 = 100

Example 2: Frequency Conversion with Generation Control

You have a monthly payroll and an earning element, a Christmas bonus, that should be paid only in December. The earning element is set up with a flat amount of 50 and a frequency of Weekly (factor = 52). To pay the bonus in December, you can:

1. Create a generation control frequency called December and give it a frequency factor of 1.

2. Create a generation control definition called Christmas.

3. In the definition, add the December generation control frequency, and select Include on the Generation Control - Conditions: Frequency page.

4. Add the generation control definition to the earning element.

5. Attach the December generation control frequency to the December calendar.

When the system processes the December calendar for a payee and sees that the earning element has frequency generation control, it checks for a matching generation control frequency on the calendar. If it doesn't find a match, the system doesn't process the element. If the system finds a match, it performs the following calculation:

(Element amount (50)) × (element frequency factor (52)) / (generation control frequency factor (1)) = 2600.

The denominator changes from Period Frequency to Generation Control Frequency.

Retroactivity Calculations

During retroactive processing, if an earning or deduction element is defined as Do Not Recalculate, the system returns the old value of the element, along with all of its component elements, as long as all segments and slices match. However, if there is a segment or slice mismatch between the period being recalculated and the prior calculated period, the system ignores the Do Not Recalculate designation and recalculates the element.

A segment match occurs when a segment's Begin Date, End Date, and Payment Keys are the same. All of these parts of a segment must match for the segments to match.

A slice match occurs when the number of slices in the current calculation is equal to the number of slices in the previous calculation, regardless of whether the slice dates match. Unlike segments, differences in dates or date ranges are not considered mismatches for slices.

Examples of mismatches include:

• If an element was not previously calculated, it will always be calculated during retroactive processing.

• When segments don't match or when segments match but slices don't match, the Do Not Recalculate designation is ignored and the elements will be recalculated.

Positive input overrides the Do Not Recalculate designation. Positive input instances are always calculated.

Note. A single instance of positive input with an action type of Override will cause an element to be recalculated. Positive input instances with action types of Add are always recalculated, regardless of whether the element that is being added to is recalculated. This means that new positive input rows with action types of Add are resolved even if the element is designated as Do Not Recalculate

Defining Retroactive Processing

Pre Process and Post Process Formulas

When defining an earning or deduction element, you can assign it a pre process formula, a post-process formula, or both using the Calculation page.

• A pre process formula is executed immediately before the resolution of the earning or deduction element.

For example, you might use a pre process formula to retrieve data for use in the resolution of the earning or deduction.

• A post process formula is executed immediately after the resolution of the earning or deduction element.

For example, you can use a post-process formula to change the calculated value of an earning or deduction and its components before the resolved value is stored (in the PINV array) and becomes available for use elsewhere. You might use a post-process formula to enforce an annual limit for a deduction or to add an additional amount.

Pre process and post process formulas are executed for each instance of an element; however, you can use system elements to control when resolution occurs. PeopleSoft delivers numerous system elements for use with pre- and post-process formulas.

System Elements for Post Process Formulas

The following table lists the system elements that PeopleSoft delivers for use in post process formulas. As is true of all system elements, these elements resolve only if they are referenced in the process; for example, in a formula.

 System Element Description CURR x VAL (x = AMT, PCT, UNITS, BASE, or RT) Stores the resolved value of the most recent instance of the amount or of the percent, unit, base, or rate component. This element is populated by the value of the amount immediately after the amount is calculated or by the value of the percent, unit, base, or rate component immediately after the component is resolved. This is after frequency conversion, proration, and rounding, if applicable, are applied. This value can be used as input for the post-process formula. CURR x VAL is updated by setting SET CURR x VAL to a nonzero number. The primary use of the system element is to check its value for the current amount or for the current percent, unit, base, or rate component of the deduction or earning. OVRD CURR x VAL (x = AMT, PCT, UNIT, BASE, or RT) Stores the value to be used to override the most recently resolved instance of the amount or of the percent, unit, base, or rate component. Think of this as the output of a post-process formula. You can assign override values to this set of elements. OVRD CURR x VAL is updated by setting SET CURR x VAL to true (a nonzero number). SET CURR x VAL (x = AMT, PCT, UNIT, BASE, or RT) To override the value of the most recently resolved instance of the amount or of the percent, unit, base, or rate component, set this system element to a nonzero value. This causes the system to assign the value of OVRD CURR x VAL to the amount or to the percent, unit, base, or rate component.

Example

This example illustrates how you might use a post-process formula to enforce an annual deduction limit. After the system computes the deduction, it calls a post-process formula to determine whether the limit has been reached, and if so, what to do with the deduction.

Assumptions:

• DD represents the deduction element.

• YTD Limit Amt is a variable that represents the year-to-date limit amount.

• Amt Over is a variable that represents the amount that exceeds the limit.

Here's what the code looks like:

```If DD YTD Accum + CURR AMT VAL + DD Arrears Amt<= YTD Limit Amt
Then exit

Else

DD YTD Accum + CURR AMT VAL + DD Arrears Amt - YTD Limit Amt = Amt Over
CURR AMT VAL − Amt Over = OVRD_CURR_AMT_VAL
1 = SET CURR AMT VAL
```

To illustrate with numbers, assume that a deduction has an annual limit of 1,000. The payee's year-to-date balance for the deduction is 950. The deduction for the current period is 125, and there is no arrears balance. Processing occurs as follows:

If 950 + 125 + 0 <= 1000

then exit

else

950 + 125 + 0 - 1000 = 75

125 - 75 = 50

A value of 50 is assigned to the override element (OVRD_CURR_AMT_VAL), and the value of SET CURR AMT VAL is set to 1, so the system retrieves the value of the override element and assigns it to the deduction.

The rounding rule defined for the resolved amount is applied after the post-process formula.

Note. Post-process formulas are resolved before arrears processing. Therefore, if you use a post-process formula to limit an amount, the amount that exceeds the limit that is defined in your formula does not update the arrears balance.

System Elements that Control the Timing of Resolutions

You can use delivered system elements to control when resolution of a pre- or post-process formula occurs. The following table lists some of the system elements that could be useful when you want to execute a pre- or post-process formula on a specific instance:

 System Element Description PI INSTANCE NUMBER Positive input instance number. Resolves to the instance number if positive input exists. Otherwise, resolves to zero. PI INSTANCE FIRST First instance of positive input (Y / N). Resolves to Y for the first instance of positive input; otherwise resolves to N. PI INSTANCE LAST Last instance of positive input. (Y / N). Resolves to Y for the last instance of positive input; otherwise resolves to N.

Managing Multiple Resolutions of an Earning or Deduction

Proration and Rounding Processing

The system goes through the following steps when prorating and rounding an earning or deduction element:

1. For each segment or slice, retrieves the components of the calculation rule.

2. For each segment or slice, prorates the applicable components.

Note. Percent component and rate component are not subject to proration.

3. Rounds the components.

4. Resolves the segment or slice.

5. Rounds the segment or slice resolved amount.

The PRORATE System Element

Proration of an earning or deduction element can be triggered in one of two ways: through segmentation or through the use of the PRORATE system element.

You can use the PRORATE system element to invoke proration for an earning or deduction element, even when there's no segmentation. To do this, create a pre process formula that defines the conditions under which PRORATE is set to Y. If the conditions are satisfied, proration occurs using the proration rule associated with the earning or deduction element. In your post-process formula, be sure to include instructions to reset PRORATE to N.

Pre Process and Post Process Formulas

Earning and Deduction Assignments and Positive Input

Earnings and deductions can be defined with one or more components of their calculation rule (the unit, rate, base, percent, or amount) set to Payee Level. This means that the earning or deduction must be assigned to a specific payee before it can be processed, and that the value of the component designated as Payee Level must be entered using positive input or the element/payee assignment components. The element/payee assignment and positive input pages can be configured for specific earnings and deductions to simplify the process of entering payee level data.

Configuring Element Overrides

Working with Positive Input

Multiple Resolutions

In Global Payroll you can cause an element to resolve multiple times in a single segment by:

• Entering positive input for an element using an Action Type of Additional, Override, or Resolve to Zero.

When you enter additional positive input for an element, the element resolves once using the element's rule definition—or if there are element overrides, by using the override values. The element resolves again using the values associated with the additional- type instance of positive input.

If there is more than one additional positive input entry, the system assigns a different instance number to each entry to trigger multiple resolutions of the element.

When you enter multiple positive input overrides, the system processes them separately, using instance numbers to trigger multiple resolutions.

• Entering multiple instances of an element on the element assignment pages.

For example, you can enter the same garnishment multiple times for the same periods. The system assigns an instance number to each entry and processes each one separately.

You can also define user fields to track different resolutions of an element (for example, you can define a user field called Garnishment Number to distinguish different resolutions of a garnishment element).

• Defining an accumulator driver to trigger multiple resolutions of an earning or deduction. For each instance of the accumulator, there is a corresponding resolution of the earning or deduction.

• When an element segmentation trigger that applies to an earning or deduction exists, there is a separate resolution for each slice of the element.

Managing Multiple Resolutions of an Earning or Deduction

Defining Earning Elements

To define earning elements, use the Earnings (GP_EARNING) component.

This section provides an overview of the setup steps for earning elements and discusses how to:

• Name an earning element.

• Define user fields for an earning element.

• Define calculation rules for an earning element.

• Define rounding and proration options for an earning element.

• Define auto generated accumulators for an earning element.

• Select accumulator periods for an earning element.

• View generated elements for earnings.

• Specify the accumulators to which an earning element contributes.

• Override earning elements.

Understanding Setup Steps for Earning Elements

Earnings are any type of compensation, such as salary, fees, and bonuses, that a person receives for work or services performed. You define earning elements to represent your organization's earning rules.

To create an earning element:

1. Define the earning name, security levels, and allowable overrides on the Earnings Name page.

You can also associate the earning element with a driver accumulator or user fields.

2. Set up the calculation rule on the Earnings - Calculation page.

You select the components that make up the calculation rule: an amount or a combination of a base, percent, rate, and unit. You also define the frequency of the earning and select any generation control parameters that apply. You define pre processing and post processing formulas for the earning as well as retroactive recalculation options.

Note. If the earning has been processed (has results in the output results) or has more than one effective-dated row, you cannot change a calculation rule once you define it.

3. Specify the rounding and proration rules for the element on the Earnings - Rounding/Proration page.

You can select rounding and proration rules that are defined on the Pay Group Defaults page, specify your own rules, or use no rounding or proration.

4. Define the characteristics of the automatically generated accumulators on the Earnings - Auto Generated Accumulators page.

You define the characteristics of the accumulators that track and maintain balances for a payee's earning. You specify the type of accumulator, indicate when and how the accumulator gets updated, and select the calendar and fiscal periods for the accumulator.

5. Select the accumulators that the earning element contributes to on the Earnings - Accumulators page.

You can indicate which accumulators this earning is a member of. For each accumulator, you specify the element name, begin and end dates, whether the earning adds or subtracts from the accumulator, and the percentage of the earning to add to or subtract from the accumulator.

6. Override a supporting element, as needed.

You can override a supporting element that may or may not be used in the calculation of the earning.

Pages Used to Define Earning Elements

Pages Used to Define Deduction Elements

Defining Element Definition Overrides

Defining Element Names

Naming an Earning Element

Access the Earnings Name page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Earnings, Earnings Name).

Note. You name every element and define its basic parameters on an Element Name page. All element components within Global Payroll share the same first Element Name page (GP_PIN). However, the Earnings Name page contains the following additional fields that apply only to earnings.

 Driver Accumulator To drive multiple resolutions of an earning using an accumulator, designate the accumulator in the Driver Accumulator field. For each instance of the accumulator, the system resolves a separate instance of the earning. Note. When you link a driver accumulator to an earning, the earning inherits the user keys of the accumulator as user fields. See Managing Multiple Resolutions of an Earning or Deduction. User Fields Click to access the User Fields page, where you can: Associate an element with up to six user fields. User fields are used to define unique instances of an element. They enable the system to generate and track multiple resolutions of an earning or deduction. Note. You can specify the values of user fields by entering supporting element overrides, or populate their values by using formulas, brackets, and arrays. For example, you could define an earning to supplement regular pay that varies by location and cost of living by associating it with a user field called Location. If a payee is entitled to more than one supplement due to his/her association with multiple locations, you could then define the different locations as supporting element overrides. View user fields inherited from a driver accumulator. Define the retroactive delta user field level. See Defining User Fields for an Earnings Element, Managing Multiple Resolutions of an Earning or Deduction.

Note. All other fields on the Earnings Name page are discussed elsewhere in this PeopleBook.

Defining Element Names

Defining User Fields for an Earnings Element

Access the Earnings - User Fields for Element <name> page (click the User Fields link on the Earnings Name page).

 User Field 1– 6 Define the type of element that you want to hold the value of the user field. Valid values are Variable and System Element. If your rules design calls for the value of this field to be defined on the element assignment (recurring) pages, you must select Variable. This is because the only supporting elements you can override on these pages are variables. If you plan to override the value of this element through positive input, you can select either Variable or System Element. Note. The values of these fields can also be set by other elements such as formulas, brackets, and arrays. Note. If you enter an accumulator driver on the Earnings Name page, these fields become unavailable for data entry. The user keys of the driver accumulator automatically become the user fields of the earning element, and the User Fields display the entry type (Variable or System Element) of the inherited accumulator keys. In addition, once an earning has been processed, the user fields cannot be changed. They can only be viewed. Element 1 – 6 If you select Variable for User Field 1– 6, enter the name of the variable element that you want to hold the value of this field. Note. You must have previously defined the variable on the variable definition pages. If you select System Element for User Field 1– 6, enter the name of the system element that you want to hold the value of this field. Note. If you enter an accumulator driver on the Earnings Name page, the Element fields become unavailable for data entry. The user keys of the driver accumulator automatically become the user fields of the earning element, and Elements 1–6 display the variables or system elements that have been defined to hold the values of the accumulator keys. Retro Delta User Field Level Select a user field level to control how the system groups retroactive deltas for different instances of an earning with different user field values: None: The system sums deltas for all instances of the earning regardless of differences between user field values. Through User Field 1: The system sums deltas for different instances of the earning with the same User Field 1 value. Through User Field 2: The system sums deltas for different instances of the earning with the same User Field 1 and User Field 2values. Through User Field 3: The system sums deltas for different instances of the earning with the same User Field 1, User Field 2, and User Field 3values. Through User Field 4: The system sums deltas for different instances of the earning with the same User Field 1–4 values. Through User Field 5: The system sums deltas for different instances of the earning with the same User Field 1–5 values. All User Fields Defined: The system sums deltas for different instances of the earning with the same User Field 1–6 values. Note. The values available for selection depend on the number of user fields defined. For example three user fields give the choices None, Through User Field 1, Through User Field 2, and All User Fields Defined. If you change the user fields or alter the user keys of the driver accumulator, the system automatically updates the available values. If you reduce the number of user fields so that the current Retro Delta User Field Level value is no longer valid, the system changes the Retro Delta User Field Level value to be All User Fields Defined and issues a message to that effect. The Retro Delta User Field Level value can subsequently be changed. Important! If a deduction is defined with user fields, the system automatically transfers these fields to the deduction's auto-generated arrears accumulator as user keys. If you change the user fields, the system automatically synchronizes the accumulator keys of the arrears accumulator with the user fields. After an element has been processed, you cannot change the user fields. See Managing Multiple Resolutions of an Earning or Deduction.

Setting Up Accumulators

Defining Calculation Rules for an Earning Element

Access the Earnings - Calculation page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Earnings, Calculation).

 Calculation Rule Define the calculation rule for the element. Valid values are Amount, Base x Percent, Unit x Rate, and Unit x Rate x Percent. Your selection affects the availability of other fields. Once you define a calculation rule for an element, you cannot change the rule unless all of the following conditions are met: Element has not been processed (No output results exist for the element). There is only one effective-dated row for the element. Note. If you define a calculation rule and discover that one of these conditions exists, create a new element. This restriction primarily exists because of retroactive considerations. Let's say that you define an earning element with a calculation rule of Unit x Rate. After several payroll runs, you add a new effective-dated row and change the calculation rule to Amount. Now, a retroactive event causes the system to recalculate the element and forward the deltas to the current period. Since the calculation rule has changed, an adjustment that is made to units, for example, is not compatible with the current calculation rule of amount. Unit Type, Rate Type, Base Type, Percent Type, and Amount Type Specify how the system is to determine the amount or component values, as applicable. The fields that you can update here depend on the selected calculation rule. For example, if the calculation rule is Unit x Rate, you can select the type of elements that are to retrieve the unit value and the rate value in the Unit Type field and the Rate Type field respectively. Values vary by component type. A value of Payee Level tells the system to resolve the element only if the value of the component is found on the Element Assignment By Payee page, the Payee Assignment By Element page, or in positive input. To define a component at the payee level, select the Payee Override and/or Positive Input check boxes on the Earnings Name page. Unit Element, Rate Element, Base Element, Percent Element, Amount Element, Amount Value and Amount Currency Select the element name that corresponds to the component type in the calculation rule. Note. If you select a Numeric Amount Type, the Amount Element field will not display. Instead, the Amount Value and Amount Currency fields will be available for entry. Similarly, if you select Numeric for the rate or base components, you will see fields for Rate Value and Rate Currency, and Base Value and Base Currency, respectively. If you select Numeric for Unit Type and Percent Type, the Unit Value field and Percent Value field will be available for entry. The value of the currency code is based on the currency that is defined for the user, which is based on the User Preference definition. Regardless of what currency you enter for the earning element, the system converts it to the processing currency during the element's resolution. You define the processing currency when you're setting up your pay entity information. If you enter an element type, such as a variable, for a component in a calculation rule, the system uses the currency that was defined for that element and performs a currency conversion, if that currency is different from the processing currency. Generation Control To restrict the conditions under which the element is resolved, select the applicable generation control element. For example, you can use generation control to specify that an element be resolved for active payees only. Define generation control elements using the Generation Control component. Note. If generation control prevents the resolution of a deduction, the system still processes the arrears payback if there is an arrears balance. It also processes retroactive adjustments. See Frequency and Generation Control Calculations. Pre Process Formula and Post Process Formula Select a formula to execute immediately before or immediately after the system resolves each instance of the earning or deduction element. See Pre Process and Post Process Formulas. Frequency Option Select the frequency option with which you are stating a value. Values are: Use Calendar Period Frequency: The system assumes that the element value is in the frequency of the calendar period that you have defined. Use Specified Frequency: If you select this value, you will define the frequency in the Frequency field. See Frequency and Generation Control Calculations. Frequency If you selected a frequency option of Use Specified Frequency, you'll define the frequency type here. Examples are Annual, Biweekly, Contract, Daily, Fourweekly, Hourly, Monthly, Quarterly, Semimonthly, and Weekly. These values come from the Frequency Table in Human Resources. Retro Recalculation Option Specify whether to recalculate an element during retroactive processing. Values are: Always Recalculate Do Not Recalculate If you select Always Recalculate , the element is recalculated during retroactive processing. Note. You can override this field on the Retro Process Overrides page. See Retroactivity Calculations, Defining Retroactive Processing.

Defining Rounding and Proration Options for an Earning Element

Access the Earnings - Rounding/Proration page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Earnings, Rounding/Proration).

 Rounding Option - Unit, Rounding Option - Rate, Rounding Option - Base, and Rounding Option - Percent Select a rounding option for the component. Values are: Use Pay Group Rounding: (Default) Select to use the rounding rule that you defined on the Pay Group − Defaults page. Use Specified Rounding: Enables you to select a rounding rule element in the field to the right. Note. Before you can select a rounding option for the earning component, you must first define the rounding rule element. Rounding rules are defined on the Rounding Definition page. No Rounding: Select if you do not want the system to perform rounding. Rounding Option - Resolved Amount Indicate how to round elements that have a calculation rule of amount and how to round the resolved value of elements that have a calculation rule that uses other components. For example, the calculation rule for earning E1 is Unit × Rate. If you select No Rounding in the Rate and Unit field, and you select a rounding rule here, the system rounds the resolved value of Unit × Rate. Or, let's say you want to round the rate to four decimal points, and then round the result of Unit x Rate to two decimal points. In this case, you select a rounding rule in both the Rate field and in this field. Usually you select Use Pay Group Rounding or Use Specified Rounding, because you want the Resolved Amount to be a rounded value. It is not common to select No Rounding. Note. The system does not assume any decimal precision in the calculation process. Certain countries may have limitations on rounding because of their currency. In the Unites States, you can only make payments with two places to the right of the decimal. For example, you would probably round up a payment of 200.6778 to 200.68. However, in another country, you may be able to make payments for amounts with less than two places to the right of the decimal. It is extremely important that you consider this when defining your resolved amount rounding options. Rounding for the resolved amount happens before Net Pay Validation processing for a deduction. If you are using a Partial Formula for Net Pay Validation processing, you need to round the partial amount in that formula, according to your rounding requirements. Unit Element, Rate Element, Base Element, Percent Element, and Amount Element Enter an element for each applicable rounding option. Proration Option Select a proration option that defines if and how the system prorates the component value or amount when there is segmentation, or if the system element, PRORATE, is not equal to zero. Values are: Use Pay Group Proration Rule: (Default) Select to use the standard proration rule you defined on the Pay Group - Defaults page. Use Specified Proration Rule: Enables you to select a proration rule element in the field to the right. No Proration: Select if you don't want to apply a proration rule to the earning. Proration Element If you select Use Specified Proration Rule in the Proration Option field, select the proration element here.

Defining Proration Rules

Defining Auto Generated Accumulators for an Earning Element

Access the Earnings - Auto Generated Accumulators page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Earnings, Auto Generated Accumulators).

Note. All fields on this page, except the Copy User Fields button, the Accumulator Periods link, and the View Generated Elements link, are the same as those on the Level page of the Accumulators component and are discussed elsewhere in this PeopleBook.

See Specifying Accumulator Keys.

 Copy User Fields Click to copy the user fields associated with the earning to the auto-generated accumulators. These fields become the user keys of the accumulators. If you do this, the system generates different accumulator instances for each resolution of the earning with different user field values. Note. This button becomes available only when there are user fields defined on the User Fields page. Important! If a deduction has user fields, the system automatically transfers these fields to the deduction's auto-generated arrears accumulator as user keys (you do not need to click the Copy User Fields button to transfer the user fields to the arrears accumulator). If you change the user fields, the system automatically synchronizes the accumulator keys of the arrears accumulator with the user fields. After an element has been processed, you cannot change the user fields. See Managing Multiple Resolutions of an Earning or Deduction. Accumulator Periods Click to access the Accumulator Periods page where you define the periods for which you want the earning element to accumulate. View Generated Elements Click to access the Generated Elements page to view the automatically generated components and accumulators that have been created.

Selecting Accumulator Periods for an Earning Element

Access the Earnings - Accumulator Periods for Element <name> page (click the Accumulator Periods link on the Auto Generated Accumulators page).

Note. Automatically generated accumulators take on the name of the earning element plus a suffix. Suffixes appear next to the accumulator check boxes and are determined by the country you specify for the earning or deduction element on the Element Name page.

 Calendar Period Accumulators/Fiscal Period Accumulators Select the accumulators you want to create. You can select as many as you need, keeping in mind performance and data volume considerations.

Viewing Generated Elements for Earnings

Access the Earnings - Generated Elements for Element <name> page (click the View Generated Elements link on the Auto Generated Accumulators page).

 Components Displays the automatically generated element for each component of the earning element. Arrears Elements For deduction elements, these arrears elements are assigned: Payback Amount, Amount Not Taken, Add to Arrears, and Arrears Balance. The first three are deduction components; Arrears Balance is an accumulator. Auto Generated Accumulators Displays automatically generated accumulators.

Defining Suffixes

Specifying the Accumulators to Which an Earning Contributes

Access the Earnings - Accumulators page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Earnings, Accumulators).

Accumulators

Specify whether the earning element adds to or subtracts from other accumulators. For example, you can add the results of the earning element to the Gross Base and Taxable Gross accumulators.

For each accumulator, specify the element name, the begin and end dates, and whether the earning element adds to or subtracts from the accumulator.

 Accumulator Element Select the element name. Begin Date Specify when you want the earning element to begin adding or subtracting from the accumulator. In Add mode, the default date is the earliest effective date for that element. Otherwise, the default is today's date. End Date Specify when you want the earning element to stop adding to or subtracting from the accumulator. Note. Enter a begin date and an end date if you want the earning element to accumulate only for a specified period of time. If the begin date or end date occurs during a pay period, the system accumulates the earning element for that period. If you leave the End Date blank, the system starts accumulating on the date that you enter the data and accumulates during all pay periods until you enter an End Date. Accumulator Sign Select Add or Subtract to indicate whether you want the earning element to add to or subtract from the accumulator.

Contributions

Select the Contributions tab.

For each accumulator, specify the percentage of the earning to add to or subtract from the accumulator.

 Percent Option Specify the percentage of the earning to contribute to or subtract from the accumulator: Numeric: Select to specify a percentage. Variable or Formula: Select if you want a variable or formula element to return the value to accumulate or subtract. Percent to Accumulate If you selected a percent option of Numeric, enter a percentage of up to 100 percent here. Percent Element If you selected a percent option of Variable or Formula, select the name of the variable or formula here.

Overriding Earning Elements

You can use the Supporting Element Overrides page in the Earnings component to override the value of a bracket, date, duration, formula, or variable element that is used in the definition of the earning element. You can also use the override feature to have the system resolve a bracket, date, duration, formula or variable when it resolves an earning element—even when the supporting element is not part of the earning's definition.

Note. The Earnings - Supporting Element Overrides page is discussed in the Overrides chapter of this PeopleBook.

Defining Element Definition Overrides

Defining Deduction Elements

To define deduction elements, use the Deductions (GP_DEDUCTION) component.

This section provides overviews of setup steps for deduction elements, net pay validation and arrears processing, arrears and retroactive processing, and payback processing, and discusses how to:

• Name a deduction element.

• Define user fields for a deduction element.

• Define calculation rules for a deduction element.

• Define rounding and proration options for a deduction element.

• Define arrears information.

• Define auto generated accumulators for a deduction element.

• Select accumulator periods for a deduction element.

• View generated elements for a deduction.

• Specify the accumulators to which a deduction element contributes.

• Select a general recipient for a deduction.

• Override deduction elements.

Understanding Setup Steps for Deduction Elements

A deduction is any payroll element that subtracts from a person's pay. A deduction can be voluntary or statutory. Voluntary deductions include deductions for retirement plans, company stock purchases, union dues, and parking fees. Statutory deductions include deductions for taxes and garnishments.

To create a deduction element:

1. Define the deduction name, calculation rule, rounding and proration rules, accumulators, and supporting element overrides, as needed.

Note. The pages that you use are similar to the Earning definition pages.

2. Define the rules that apply when net pay is insufficient to cover a deduction.

Use the Deductions - Arrears page to define these rules. An arrears is a way to store deductions that the system can't take from the current pay run because of insufficient net pay. An arrears stores an amount that will be deducted at a future time.

3. Select a general recipient, if applicable for the deduction using the Deductions - Recipient page.

Note. Only pages that are unique to the Deductions component are documented here. Pages that are common to both the Earning and Deduction components are documented in the Earnings section of this chapter.

Defining Earning Elements

Understanding Net Pay Validation and Arrears Processing

When defining a deduction, you can define the action the system takes when a payee's net pay is not sufficient to cover the entire amount of a deduction. You can also establish a payback method for the amount that is not taken (the arrears).

Note. Before you define deductions for your organization, you may want to decide whether you want the system to perform the functions described on the Deduction - Arrears page or whether you want to handle these functions on your own.

Net Pay Validation

The net pay validation feature prevents a deduction from reducing net pay below zero or a minimum amount that you define. To use the system's arrears management and payback features, you must enable net pay validation. If you do not use net pay validation, the system always takes the entire amount of a deduction, even if the payee's net pay drops below zero. In addition, none of the arrears processing options are available.

When using net pay validation, you can specify the order for taking deductions when there's not enough net pay to cover all deductions. The choices are:

• Processing sequence

• Priority order

Processing sequence refers to the order in which deductions are encountered in a section during processing, as determined by the deduction's assigned sequence number in the section. When the system calculates the deduction, it immediately verifies whether the payee's net pay is sufficient to cover it. If net pay is insufficient, the system deducts a partial amount or no amount, according to what is defined on the Deduction - Arrears page.

Priority order refers to a relative priority number that you can assign to a deduction on the Deduction - Arrears page. When net pay validation occurs by priority order, the system first calculates all deductions according to their processing sequence with no net pay validation. It then checks the net pay accumulator. If net pay is greater than zero (or a defined minimum), processing is complete. Otherwise, the system adjusts the deduction with the lowest priority and then checks to see if net pay is still insufficient. It repeats this process for the deduction with the next lowest priority until net pay is above zero or the defined minimum. Because net pay validation by priority requires iterative processing, it is available for subprocess sections only.

Note. Net pay validation by priority order can be useful when a deduction's processing sequence is different from its priority. For example, a pretax deduction must be processed before tax calculations to determine the correct net pay. However, it might be more important to deduct funds for a garnishment that's processed after taxes than it is to cover a pretax deduction.

Note. Typically, only one method of Net Pay Validation is used in a given pay run.

The following examples illustrate the difference between using processing sequence and priority order for net pay validation.

Example: Net Pay Validation in Processing Sequence

This table shows the processing results when net pay validation (NPV) is based on processing sequence. Assume that each deduction is defined to allow a partial deduction when net pay drops below zero.

 Process Sequence Always Recalculate Amount (Pre-NPV) Resolved Amount Amount Not Taken Available Net Salary 9,000 Car Allow 9,000 Health N 500 500 0 8,500 Pension N 1,500 1,500 0 7,000 Tax1 Y 2,240 2,240 0 4,760 Tax2 Y 720 720 0 4,040 Union Dues N 500 500 0 3,540 Parking N 300 300 0 3,240 Garn1 Y 1,208 1,208 0 2,032 Garn2 N 3,000 2,032 968 0

In this case, net pay is sufficient to cover all deductions except Garnishment2. For Garnishment2, only a partial deduction can be taken (3,000 - 2,032 = 968).

Example: Net Pay Validation in Priority Order

This table shows the processing results after the first pass when net pay validation (NPV) is based on priority order. Net pay validation does not occur during the first pass of the subprocess.

 Process Sequence Always Recalculate Amount (Pre-NPV) Resolved Amount Amount Not Taken Available Net Salary 9,000 Car Allow 9,000 Health N 500 500 0 8,500 Pension N 1,500 1,500 0 7,000 Tax1 Y 2,240 2,240 0 4,760 Tax2 Y 720 720 0 4,040 Union Dues N 500 500 0 3,540 Parking N 300 300 0 3,240 Garn1 Y 1,208 1,208 0 2,032 Garn2 N 3,000 3,000 0 -968

Note. Car allowance is a non-cash earning. It contributes to taxable gross, but not to net pay.

Because net pay is negative, another pass is required. During the second pass, net pay validation is applied to parking, because it has the lowest priority (the highest priority number). First the system backs out the prior value of parking. The deduction's recalculation rule (as defined by the Always Recalculate check box on the Deduction Name page) is always honored, so during the second pass the system does not recalculate parking, it only applies net pay validation.

 Process Sequence Always Recalculate Net w/o Ded Amount (Pre-NPV) Resolved Amount Amount Not Taken Available Net Priority Salary -968 Car Allow -968 Health N 500 500 0 -968 450 Pension N 1,500 1,500 0 -968 500 Tax1 Y 2,240 2,240 0 -968 100 Tax2 Y 720 720 0 -968 100 Union Dues N 500 500 0 -968 700 Parking N -668 300 0 300 -668 800 Garn1 Y 1,208 1,208 0 -668 225 Garn2 N 3,000 3,000 0 -668 225

Net is still negative after the second pass. Parking can't be reduced any further so it's excluded from the priority list. In the next loop, the deduction with the lowest priority is union dues. All recalculation logic is followed except that parking is skipped and union dues are subject to net pay validation processing. After union dues, the system evaluates the pension deduction. The process repeats until available net is zero or greater.

Note. To improve system performance, you can assign the same priority number to all post-tax deductions so that they are modified during the same iteration.

Setup Steps for Net Pay Validation by Priority Order

Configuring the system to validate net pay based on a deduction's priority requires some additional setup that is not necessary when net pay validation is based on processing sequence.

Following are the high-level setup steps for using priority order for net pay validation:

1. Define a formula for net pay validation.

After the system calculates all deductions according to processing sequence, it resolves this formula for each deduction starting with the deduction with lowest priority (the highest priority number). The formula returns a value that tells the system whether to calculate the element, perform net pay validation, do both, or skip the element. Guidelines for creating the formula are provided in the chapter on Defining Processing Elements.

2. Assign the net pay validation formula to the country.

Select the formula in the Net Pay Validation Formula field on the Countries page.

3. Specify the priority order for the deduction on the Deduction - Arrears page.

4. Include deductions in a subprocess section.

The subprocess section must be enabled for net pay validation by priority.

See Setting Up Sections, Defining Country-Level Setup.

Arrears Components and Accumulators

When you create a deduction element, the system automatically generates three component elements for arrears processing and an arrears balance accumulator, regardless of whether or not you've chosen to use net pay validation. The system automatically updates these components only if you're using net pay validation:

• Amount Not Taken

This component stores the amount of the deduction that exceeds the defined limit based on the net pay accumulator for the current pay period.

Note. The net pay accumulator is defined on the Definition page on the Process Lists component (GP_PROCESS).

• Payback Amount

This component stores the portion of the arrears balance that is being paid off during the current pay period. It does not include the Amount Not Taken for the current pay period.

If you select the Deduction Arrears Allowed check box on the Deduction - Arrears page, the Add to Arrears equals the Amount Not Taken.

• Arrears Balance

This accumulator keeps track of the arrears for a payee. The Add to Arrears component adds to this balance accumulator; the Payback Amount component subtracts from it.

Arrears Processing Methods

When net pay does not cover the entire amount of a deduction, you can have the system deduct a partial amount or nothing. The options that you select in the Deduction Processing Method group box on the Deduction - Arrears page determine this behavior. The two examples that follow illustrate the outcomes of the different processing methods.

Arrears Processing: Example 1 (Partial Amount Allowed = No)

If partial deductions are not allowed, the system takes a deduction for the current pay period only if net pay covers the entire deduction. If the full deduction can't be taken, the system adds the entire deduction amount to the arrears balance. This table lists the net pay, deduction, and arrears for the example that follows:

 Current Available Net Pay Deduction Begin Arrears Balance 100 120 50

The processing sequence is:

1. Add the deduction amount of 120 to Amount Not Taken.

2. Add the deduction amount of 120 to Add to Arrears (if the Deduction Arrears Allowed check box is selected).

3. Move zero to the deduction amount.

4. Move the Beginning Arrears balance of 50 to Payback Amount.

5. Move the Beginning Arrears balance of 50 to the deduction amount (add the Payback Amount to the deduction amount).

This table lists the end values:

 Deduction Amount Not Taken Add to Arrears End Arrears Balance 50 120 120 120

The resolved value of the deduction element = Deduction Amount + Payback Amount.

Arrears Processing: Example 2

January Available Net Pay (prior to deductions) = 50

Deductions:

• D1 = 25, Partial Amount Allowed.

• D2 = 50, Entire Amount Only.

• D3 = 50, Partial Amount Allowed.

This table lists the values calculated during arrears processing for deductions D1, D2, and D3:

 Ded Re- solved Amt Amt Not Taken Add to Arrears Payback Amt End Arrears Bal Accum. YTD Val Trans- fer Amt End Net Val D1 25 0 0 0 0 25 25 25 D2 0 50 50 0 50 0 0 25 D3 25 25 25 0 25 25 25 0

Final Net Pay in January = 0

February Available Net Pay (prior to deductions) = 110

This table lists the values calculated during arrears processing for deductions D1, D2, and D3 for February:

 Ded Re- solved Amt Amt Not Taken Add to Arrears Pay- back Amt End Arrears Bal Accum. YTD Value Trans- fer Amt End Net Val D1 25 0 0 0 0 50 25 85 D2 85* 0 0 35 15 85 85 0 D3 0 50 50 0 75 25 0 0

* 50 + 35 = 85 (current deduction plus amount of arrears balance that can be paid back)

Final Net Pay in February = 0

Arrears and Segmentation

When a period is segmented and a deduction goes into arrears in the first segment, the system attempts the payback on any subsequent segment.

Net Pay Validation and Retroactive Processing

The retroactive adjustment will be added to the deduction amount prior to Net Pay Validation. If there is not enough net to cover the adjustment, any remaining amount will be added to Amount Not Taken.

Understanding Arrears and Retroactive Processing

Arrears processing must take into account two basic situations:

• An arrears was originally calculated for a pay period, but a subsequent retroactive process for that period doesn't calculate the arrears.

• An arrears was not originally calculated for a pay period, but a subsequent retroactive process for that period calculates the arrears.

Here is a list of the basic rules for arrears and forwarding retroactive processing:

• If an element is based on an element that is being forwarded, it should not be set up to also act in a forwarding manner.

• If an element that's based on another element is a deduction:

• Forward the deduction that's based on an element that is not being forwarded.

• Do not forward a deduction that's based on an element that is being forwarded.

Note. PeopleSoft recommends that you always select the Use Corrective check box on the Accumulators - Level page when you define arrears accumulators . This is because the component that contributes to the accumulator does not itself generate a delta, making double-counts very likely if the accumulator behaves in a forwarding manner.

See Setting Up Accumulators, Defining Retroactive Processing.

Example: Arrears and Forwarding Retroactive Processing

The following example illustrates how elements that are based on other elements should be set up and how they function during retroactive processing. Although the example used here deals specifically with the recalculation of arrears in a previous period, it can apply to any situation in which there is interdependency between recalculated elements.

This example assumes the use of the forwarding retroactive method. In forwarding retro, not every element is automatically forwarded—you must manually select the elements that you want forwarded. You follow certain setup rules when you have deductions that are based on other elements. The example below illustrates a typical setup.

For this example, assume the following:

• There are two pay periods: January and February.

• In February, a retroactive payment is made for January.

• The following elements are involved:

• E1 = Flat Amount (Numeric) = 100.

• D2 = Flat Amount (Numeric) = 95.

• D1 = Base × Percent (where Base = Earning (E1) and Percent = Numeric (10%), therefore, D1 = E1 × 10%.

• E1. Retro Recalculate Option = Yes.

• D2. Retro Recalculate Option = No.

• D1. Retro Recalculate Option = No.

• The retroactive adjustment to E1 in January is 100. The payee should have been paid a total of 200. There is a 100 delta that will be forwarded to February.

This table shows the original and recalculated amounts for E1, D1, D2, D1_ANT, D1_PBK, D1_ATAR, and D1_ARR over a period of two months (February is the current period, so there is no recalculated value column for February):

 Element Retro Recalc Option January - Prior Results January - Recalculated Results February E1 Always Recalculate 100 200 (with 100 delta) 300 (200 + 100 delta forwarded from January) D2 Do Not Recalculate 95 95 95 D1 Do Not Recalculate 5 5 35 (30 + 5 payback) D1_ANT Do Not Recalculate 5 5 0 D1_PBK Do Not Recalculate 0 0 5 D1_ATAR Do Not Recalculate 5 5 0 D1_ARR Use Corrective = No 5 5 0 Net Pay Not applicable 0 0 170

Here is an explanation of the example:

• D1 in January = 5.

Since D1 = 10% of E1, D1 would normally = 10 in January, but since Net Pay cannot go below zero and E1 = 100 and D2 = 95, the maximum amount that D1 can equal in January is 5. The outstanding amount of 5 is brought over to D1_ANT (Amount Not Taken), D1_ATAR (Amount to Add to Arrears), and D1_ARR (Arrears accumulator).

• E1 for February is 300.

This is calculated as 200 (E1 February original amount) + 100 (forwarded delta amount from January) = 300

• D1 in February is 35.

This is calculated as: 30 (10% of E1 in February) + 5 Payback Amount (January value of D1_ARR is carried over to February) = 35.

• The total amount that should be deducted for D1 is 40, which represents the sum of the two months: D1 = 5 (January) + 35 (February) = 40.

You can also validate that this retroactive calculation is correct in the following way: Since D1 = 10% of E1, add the total of the original amounts for E1 for both months: 100 (January) + 300 (February) = 400. Therefore, D1 = 40 (10% of 400).

Understanding Payback Processing

If there is a positive input row with Do Not Process instructions for a deduction and an arrears balance exists, the system attempts to collect it, as long as the deduction is still on the process list and net pay is sufficient.

When generation control is checked for an element and does not indicate for an element to be resolved, payback processing still occurs if there is an arrears balance and the Arrears Payback Controlled By option is set to All Pay Runs.

The arrears balance being considered for payback processing does not include the new amount that was added to the arrears balance.

Payback Processing and Eligibility

Payback processing does not look at a payee's eligibility for a deduction. If a payee has an arrears balance, the system attempts to collect it, as long as the deduction is still in the process list and net pay is sufficient. For example, if a payee who has an arrears balance changes eligibility groups, and the deduction element does not belong to the new eligibility group, the system still processes the payback.

Example: Arrears and Payback Processing

In this example, assume the following:

• Net Pay = 100.

• Deduction = 120.

• Beginning Arrears Balance = 50.

• Perform Net Pay Validation is selected, Partial Amount Allowed is not selected, Deduction Arrears Allowed is selected, and the Payback Option is set to No Limit.

The deduction and Add to Arrears would be:

• Amount Not Taken = 120.

• Add to Arrears = 120.

• Deduction = 0.

The payback processing would be:

• Beginning arrears balance to consider for payback purposes = 50.

• Net Pay = 100.

• Payback is set to 50.

• The payback is added to the deduction (0 + 50 = 50).

The arrears accumulator would be calculated as follows:

• Beginning balance = 50.

• Add to Arrears = 120.

• Payback Amount = 50.

• Formula: Beginning Balance + Add to Arrears − Payback Amount.

50 + 120 − 50 = 120.

Pages Used to Define Deduction Elements

 Page Name Definition Name Navigation Usage Deduction Name GP_PIN Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Deductions, Deduction Name Name the element and define its basic parameters. Deductions - User Fields GP_PIN_USR_FLD_SEC Click the User Fields link on the Deduction Name page. Define user fields to create unique instances of an element. Deductions - Calculation GP_ERN_DED_CALC Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Deductions, Calculation Define calculation rules for a deduction element. Deductions - Rounding/Proration GP_ERN_DED_RND Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Deductions, Rounding/Proration Specify rounding and proration options for a deduction element. Deductions - Arrears GP_ERN_DED_ARR Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Deductions, Arrears Specify what to do when available net pay is insufficient to cover the deduction, how to pay back arrears, and how the third-party recipient is to be paid, if there is an arrears balance. Deductions - Auto Generated Accumulators GP_AUTOGEN_ACUM Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Deductions, Auto Generated Accumulators Define characteristics of automatically generated accumulators for a deductions element. Deductions - Accumulator Periods GP_ERN_DED_ACM_SEC Click the Accumulator Periods link on the Deductions - Auto Generated Accumulators page. Define which accumulators the system creates. Deductions - Generated Elements GP_AUTOGEN_SEC Click the View Generated Elements link on the Deductions - Auto Generated Accumulators page. Displays the system- generated components and accumulators that have been created for a deduction element. Deductions - Accumulators GP_ERN_DED_AC_ADDL Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Deductions, Accumulators Indicate the accumulators (already defined in the system) to which the deduction element contributes. Deductions - Recipient GP_RCP_DED Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Deductions, Recipient Select a general recipient for a deduction (the entity that receives all amounts that are withheld from payees for a particular deduction, such as a government agency). Deductions - Supporting Element Overrides GP_ELM_DFN_SOVR Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Deductions, Supporting Element Overrides Override the value of certain supporting elements that are used by the definition of the deduction element or override the supporting elements when they are not part of the deduction definition.

Pages Used to Define Earning Elements

Naming a Deduction Element

You name every element and define its basic parameters on an Element Name page. All element components within Global Payroll share the same first Element Name page (GP_PIN). However, the Deduction Name pages contains some additional fields that apply only to deductions.

The Deduction Name page is similar to the Earnings Name page.

Naming an Earning Element

Defining User Fields for a Deduction Element

The Deduction - User Fields page is similar to the Earnings - User Fields page.

Important! If a deduction is defined with user fields, the system automatically transfers these fields to the deduction's auto-generated arrears accumulator as user keys. If you change the user fields, the system automatically synchronizes the accumulator keys of the arrears accumulator with the user fields. After an element has been processed, you cannot change the user fields.

Defining User Fields for an Earnings Element

Defining Calculation Rules for a Deduction Element

The Deduction - Calculation Rules page is similar to the Earnings - Calculation page.

Defining Calculation Rules for an Earning Element

Defining Rounding and Proration Options for a Deduction Element

The Deduction - Rounding/Proration page is similar to the Earnings - Rounding/Proration page.

Defining Rounding and Proration Options for an Earning Element

Defining Arrears Information

Access the Deductions - Arrears page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Deductions, Arrears).

 Perform Net Pay Validation Select to enable net pay validation for this deduction. Net pay validation prevents the system from reducing net pay below zero or a defined minimum when a payee's net pay is insufficient to cover the deduction. (You can select Partial Amount Allowed and Deduction Arrears Allowed to specify whether the deduction is to be taken and how much is to be taken.) If you do not select this check box, the system takes the full amount of the deduction, even if net pay becomes negative. You must define what to do with the negative balance. To prevent net pay from dropping below a minimum amount other than zero, define the minimum on the Process List - Definition page. Note. Other fields on this page are available for entry only if you select this check box. See Setting Up Process Lists. Priority Order Specify the priority of this deduction, relative to other deductions, when the system detects that the payee's net pay is insufficient to cover all deductions. The default value is 999, which is also the maximum value. Deductions with a low priority number have the highest relative priority. For example, the system will try to deduct funds for an element that has a priority of 1, before it tries to cover other deductions. If more than one deduction has the same priority number, net pay validation is applied to deductions in the order in which they're encountered in the section (that is, in processing sequence). If a deduction has more than one instance, priority order is the reverse of processing order. So, if there are instances 1, 2, and 3 for element D1, processing order would be 1, 2, 3. Net pay validation would follow this order: 3, 2, 1. Note. This field applies when you base net pay validation on a deduction's priority. It appears only when a net pay validation formula is associated with the country for which the deduction element is defined or when the deduction is defined for use by all countries. Use the Countries page to select a country's net pay validation formula. See Understanding Net Pay Validation and Arrears Processing.

Net Pay Validation Method

Your selections in this group box instruct the system on how much, if any, of the deduction should be processed and whether to track the amount not taken as an arrears balance.

 Partial Amount Allowed Select to have the system deduct a partial amount when the deduction exceeds available net pay (or the minimum net defined on the Process List - Definition page). Specify how much the system is to deduct by selecting one of the following options: Use Remaining Net: This option causes the system to deduct the remaining available net pay. For example, if a payee has net pay of 100 and the deduction is 120, the system deducts 100. If you defined a minimum net pay, the system does not deduct below the minimum. Set Via Formula: With this option, the system uses a formula to determine the amount to deduct. Set Via Formula is especially useful for pretax deductions when you base net pay validation on priority order. You can create a formula that sets the partial amount to an amount that's less than the remaining net, for example, to a third of the remaining net. This can reduce the number of loops the system needs to make through a net pay validation subprocess section. The formula should assign the partial amount to the system element OVRD CURR AMT VAL. Since rounding on the resolved amount happens prior to Net Pay Validation processing, you need to apply rounding to the partial amount, according to your rounding requirements, in this formula. During processing, the system checks to see if the value of this element is greater than zero and less than or equal to the remaining net (system element NET AVAILABLE) taking the minimum net into account. If OVRD CURR AMT VAL is less than zero or greater than NET AVAILABLE, the deduction and payment are put in error. The formula might look something like this:( sy/NET AVAILABLE / 2 ) >> sy/OVRD CURR AMT VAL In this case, the formula determines the partial amount by dividing the remaining net amount that was calculated during the first pass by two. If you don't select the Partial Amount Allowed check box, and the system can't deduct the entire amount, it will not deduct any of the amount from the payroll. The resolved amount is zero. Partial Formula Element If you select Set Via Formula , enter the formula here. Deduction Arrears Allowed If you select this check box, and a deduction exceeds available net pay, the system stores the deduction amount in an accumulator (an arrears balance). This is how the system keeps track of the Amount Not Taken (either a partial amount or the entire amount, depending on whether you selected the Partial Amount Allowed option) and knows that it has to take the amount from a future payroll. Indicate how much you want paid back in future payrolls in the Payback Option group box. If Perform Net Pay Validation is selected, the system always tracks the Amount Not Taken. Only if you select Deduction Arrears Allowed does the Amount Not Taken move into the Add to Arrears component and become eligible for payback. This in turn adds to the arrears balance.

Third Party Transfer

Indicate how much of the deduction to send to the deduction recipients. (You define recipient information on the Deductions - Recipients page.)

 Amount Taken Select this option if you plan to send only the amount that was resolved for the payee. This does not include any amount stored in the amount not taken component. Amount Calculated Select this option to send the amount that was calculated (the resolved amount plus amount not taken).

Example: Comparing Third Party Transfer Methods

The end result of Amount Taken and Amount Calculated is the same, once the arrears amount is paid back. Assume the following:

D1 = Amount Taken; value = 100

D2 = Amount Calculated; value = 100

In period 1, 50 is taken for D1 and zero for D2 because of insufficient net pay. For D1, 50 is sent (the amount taken). For D2 100 is sent (resolved amount plus amount not taken).

In period 2, net pay is sufficient to cover the current and payback amounts for both deductions. D1 resolves to 150 (100 current plus 50 payback). D2 resolves to 200 (100 current plus 100 payback). For D1, 150 is sent (current plus payback); for D2, 100 is sent (current only). After period 2, 200 is sent for each deduction.

Arrears Payback Option

 No Limit Select this option to have the system try to deduct the entire arrears balance. For example, assume a payee has an arrears balance of 200 after the first payroll. If you select No Limit, the next time a payroll is processed, the system tries to deduct 200, the entire amount of the arrears balance. This is known as the Payback Amount. Use Specified Amount Select this option to specify the maximum payback amount by entering a numeric value or by selecting a bracket, formula or variable element. Payback Type This field is available only when you select Use Specified Amount. Select the type of element that returns the maximum payback amount—that is, the maximum amount the system deducts from each payroll until the arrears balance is zero. Values are: Bracket, Formula, Numeric, and Variable. Payback Element Select the element to return the maximum payback amount or enter the numeric value. For variables, brackets, and formulas, only elements with a decimal or monetary field format are allowed. Note. The system uses the currency that is defined for the element on the Earnings or Deduction Calculation page. If no currency is defined on that page, it uses the currency that is defined on the User Preferences page.

Arrears Payback Controlled By

Specify when paybacks are paid.

 All Pay Runs Select this option to have the arrears payback occur every time a person is paid and for every segment that's processed for that payee, even for periods where generation control conditions exist. Deduction Schedule Select to have the system perform the payback function only when the deduction is resolved. For example, you may have a deduction that is scheduled for processing (resolved) only in the first weekly period of every month (for a weekly payroll). If during this period, an arrears is created for the payee, the system will not perform the payback function until the first weekly period of the next month (controlled by generation control). However, if positive input is entered for the nonscheduled periods, the system will perform the payback function.

Entering Positive Input

Defining Auto Generated Accumulators for a Deduction Element

The Deduction - Auto Generated Accumulators page is similar to the Earnings - Auto Generated Accumulators page.

Defining Auto Generated Accumulators for an Earning Element

Selecting Accumulator Periods for a Deduction Element

The Deduction - Accumulator Periods page is similar to the Earnings - Accumulator Periods page.

Selecting Accumulator Periods for an Earning Element

Viewing Generated Elements for a Deduction

The Deduction - Generated Elements page is similar to the Earnings - Generated Elements page.

Viewing Generated Elements for Earnings

Specifying the Accumulators to Which a Deduction Element Contributes

The Deduction - Accumulators page is similar to the Earnings - Accumulators page.

Specifying the Accumulators to Which an Earning Contributes

Selecting a General Recipient for a Deduction

Access the Deductions - Recipient page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Deductions, Recipient).

Note. Define the general recipient on the Deduction Recipient page first. If you want to use a formula to identify the recipient, define the formula first.

 Recipient Selection Select the parameter by which you select a recipient for the deduction. Values are: Recipient Name: Select to make the available values in the Recipient field prompt from the Recipient ID Table. Recipient by Formula: Select to make the available values in the Recipient field prompt from formula names. Recipient Select the recipient for this deduction. Identify the general recipient of all amounts that are withheld for this deduction, if applicable. (You designate a recipient category—general or individual—through the Deduction Recipients component that is described in the Banking section.) Leave this field blank if you want to assign the recipient at the payee level (as you might with garnishments, for example). Instead, use the Payee Deduction Recipients page to identify the individual recipient(s) of the amounts deducted for a particular payee. If more than one individual recipient is identified for a given payee/deduction (for deductions that have multiple resolutions), you may then use the Element Assignment By Payee or the Payee Assignment By Element page to identify the individual recipient for the instance. Note. When you assign a general recipient to a deduction, you can override the recipient for a particular payee. This can be done by setting up individual recipients through Payee Deduction Recipients page and then using the Element Assignment By Payee or Payee Assignment By Element as necessary.

Defining Recipients

Assigning Recipients to Deductions and Payees

Overriding Deduction Elements

The Deduction - Supporting Element Overrides page is similar to the Earnings - Supporting Element Overrides page.

Overriding Earning Elements

Preparing Earnings and Deductions for Processing

After you set up an earning or deduction element, you need to:

• Add the element to an element group.

An element group is a way to group elements for eligibility purposes.

• Add the element to a section.

Sections define which elements get resolved during processing and the order in which they are resolved.