Understanding Global Payroll for Switzerland

This chapter discusses:

• Global Payroll for Switzerland.

• Common abbreviations.

• Global Payroll for Switzerland business processes.

• Archiving data in Global Payroll for Switzerland.

• Delivered elements.

• Element naming conventions.

• Payment frequencies

• Sarbanes-Oxley Act of 2002 requirements.

• Viewing delivered elements for Switzerland.

Global Payroll for Switzerland

Global Payroll for Switzerland is a country extension of the core Global Payroll application. It provides you payroll rules and elements needed to run a Swiss payroll.

Common Abbreviations

Within this PeopleBook abbreviations normally appear in the German language. However it is common in Switzerland to use a combination of German and French abbreviations. As such, here is an overview of both:

Internal Abbreviations (English only)

Here are a few additional abbreviations, which have an English only translation:

• EE = Employee

• ER = Employer

• MC = Multi Contract

Global Payroll for Switzerland Business Processes

Global Payroll for Switzerland supports the following business processes:

• Family allowance management.

  Global Payroll for Switzerland enables you to define and manage data for an employee's dependents and family as well as process available family allowances for each payee.

• Familienausgleichskasse (FAK) contribution calculation.

  Global Payroll for Switzerland enables you to manage FAK contribution percentages, calculate deductions, and manage the relationship with the FAK.

• Absence management.

  Global Payroll for Switzerland enables you to create the absence rules used by the core Global Payroll system. You can define work schedules and assign a schedule to each payee, define holidays, entitlements, and take elements. You can create entitlement plans and assign them to payees.

• Tariff management.

  A tariff is a contract between employees' unions and employers' associations that defines labor agreements on issues such as standard working hours, income, and vacation. Global Payroll for Switzerland delivers tariffs in the system as Translate Table values.

• Maternity leave.

  In Global Payroll for Switzerland, you enter maternity leave data on a single page. The page generates absence take elements that work with the core application's absence process to correctly process maternity leave during a payroll run.

  The system determines the amount of paid maternity leave to which an employee is entitled based on years of service and the canton of residence. After the birth of the child, it recalculates the entitlement based on the Swiss legal requirement of eight weeks' leave after the child's actual birth.

• Payslip processing.

  Global Payroll for Switzerland enables you to generate payslips. You can also print a message on the payslip of an individual payee or on payslips belonging to designated pay groups, locations, or departments.

• Overtime self-service.

  Global Payroll for Switzerland includes a self-service application for managing employee overtime requests, which enables you to carry out common tasks through a user-friendly browser page. Overtime self-service options differ for employees, managers, and Human Resources administrators.

• Social insurance management.

  Contributory membership in national social insurance funds (such as AHV, IV, and EO) is mandatory for employers. You deduct social insurance contributions for those domestic and foreign employees with mandatory insurance coverage and transfer them to compensation funds in accordance with statutory requirements.

• Source tax calculations.

  Switzerland is a confederation of 26 cantons with approximately 3,000 municipalities. Accordingly, it has an extremely complex taxation system, with taxes imposed at federal, cantonal, and communal levels. Tax rates can vary from one canton to another.

• Erwerbsersatzordnung für Diestleistende in Armee und Zivilschutz (EO) payments.

  EO payments refer to the payment of salary during military and civilian service. The EO is an ordinance on military pay supplements and governs the earnings of military and civil defense personnel. According to the EO's provisions, people on active military duty (including members of the Women's Armed Forces and the Red Cross) or in civilian service are entitled to receive earning compensation for every paid or accredited day of service.

• Pensionskasse and BVG management.

  Pensionskasse is the pension fund for Swiss employees. Global Payroll for Switzerland handles Pensionskasse with calculation and feedback from the provider. The system also enables you to make BVG calculations either internally or externally by interfacing with AGB70.

• Banking.

  Global Payroll for Switzerland enables you to set up Swiss banking, set up defaults for source banks, set up banking defaults for payees, and run local country bank processing.

• Tax Statement (Lohnauweis) generation.

  Global Payroll for Switzerland provides complete tax statement functionality, including expatriate handling and certificate on demand. You can exclude individuals from tax statements, close tax statements, create tax statement overrides, and view individual tax statements online.

Archiving Data for Global Payroll for Switzerland

PeopleSoft Global Payroll for Switzerland generates a large amount of result data which you may need to maintain for auditing or regulatory purposes, and which should periodically be archived. To facilitate this requirement, PeopleSoft PeopleTools delivers an archiving tool called the Data Archive Manager. To aid in archiving your data, PeopleSoft Global Payroll for Switzerland delivers a predefined archive object (GPCH_RSLT_ARCHIVE) and an archive template (GPCHRSLT) created using the Data Archive Manager. The archive template uses queries to select and store data by calendar group ID from the calculation, banking, general ledger, and other post processing tables.

Note. Please use extreme caution when making changes to delivered archive objects, queries, or templates. Any modifications can result in the loss of important data.

See Also

Archiving Data

Delivered Elements

Global Payroll defines each business process for Switzerland in terms of delivered elements and rules. Some of these elements and rules are specifically designed to meet legal requirements, whereas others support common or customary payroll practices.

This section discusses:

• Delivered element creation.

• Element ownership and maintenance.

Delivered Element Creation

All of the elements and rules delivered as part of your county extension were created using the core application — the same application that you will use to create additional elements or rules, and to configure some of the elements delivered as part of your Global Payroll system. Because of the tools that you need to redefine or create new payroll elements are fully documented in the core application PeopleBook, this section does not repeat this information here. Instead, this section reviews the relationship between the core application (which contains the tools that you need to define your own elements and rules) and the country extensions (which contain country-specific rules and elements that are predefined in the system).

The core application has the following characteristics:

• It consists of a payroll rules engine—a flexible tool that enables users to define the rules and elements of their payroll system and execute payroll and absence calculations.

  Global Payroll does not embed payroll-specific logic or computations in application code. Instead, it specifies all business application logic, such as earnings, deductions, absences, and accumulators, in terms of payroll rules and elements. Global Payroll enables the user to enter and maintain payroll rules through a set of pages and offers a comprehensive set of features that enable users to work in their preferred language or currency.

• It provides a payroll processing framework—a flexible way to define and execute payroll and absence processing flows, such as calendars, run types, pay periods, and process lists.

Country extensions have the following characteristics:

• They are built using the core application.

• They consist of statutory and customary objects (country-specific payroll rules, elements, payroll processes, reports, pages, and self-service applications).

Element Ownership and Maintenance

The delivered elements and rules of you Global Payroll country extension can be classified based on whether they are owned and maintained by the customer or by the PeopleSoft system. Some elements and rules are maintained exclusively by PeopleSoft and cannot be modified or reconfigured, whereas others can be configured to meet requirements that are unique to your organization.

Element Ownership in Global Payroll

Global Payroll has the following five categories of element ownership:

See Also

Defining Element Names

Element Naming Conventions

Understanding the naming convention developed for PeopleSoft-delivered elements can help you determine how an element is used , the element type, and even the functional area it serves. Depending on whether the element is a primary or supporting element, or a component of a primary element, one of the following naming conventions applies:

• Primary and supporting elements.

• Component names (suffixes).

This section also discusses:

• Functional area codes for Switzerland.

• Element type codes (PIN_TYPE).

• Suffixes for Switzerland.

• Industry and regions feature.

Primary and Supporting Elements

Global Payroll for Switzerland uses the naming convention CH FF NAME for all elements. This table explains the components of the naming convention:

For example, in the CH_TX_CANTON, CH represents the county (Switzerland), TX represents the functional area (taxation), and CANTON stands for canton.

Component Names (Suffixes)

When you create an earning or deduction element in Global Payroll, you must define the components that make up the element, such as base, rate, unit, and percentage. The system automatically generates the components and accumulators for the element based on the calculation rule or accumulator periods. The system also names the components and accumulators by appending a suffix to the element's name.

For example, you define the earning element named EARN1 with the calculation rule EARN1 = rate × unit. The system automatically creates two additional elements for the components in the calculation rule: a rate element called EARN1_RATE and a unit element called EARN1_UNIT.

In Global Payroll for Switzerland, all suffixes fall into one of the following types:

• Separator.

• Earnings/deductions component suffixes.

• Earnings/deductions accumulator suffixes.

• Deduction arrears component suffixes.

See Also

Defining General Element Information

Functional Area Codes for Switzerland

The following table contains the functional area codes used in the names of Swiss elements:

Element Type Codes (PIN_TYPE)

The following table contains codes for all the element types. Because not all element types are delivered for Switzerland, not all of these codes appear in the names of Swiss elements.

Suffixes for Switzerland

Global Payroll for Switzerland uses the default core Global Payroll suffixes.

See Also

Defining Suffixes

Industry and Regions Feature

Global Payroll for Switzerland does not use the industry and regions feature.

Payment Frequencies

This section discusses:

• Frequencies and payout periods.

• Annual, monthly, and hourly payment rules.

Frequencies and Payout Periods

The Global Payroll for Switzerland application provides calculation processes for employees that are paid annually, monthly, weekly, daily and hourly. The system, however, only supports payout periods on a monthly and weekly frequency.

The system supports hourly, daily, monthly, and annual payment rules for the monthly pay frequency and weekly payment rules for the weekly pay frequency. By default the status is taken from pay frequency on the Job record.

The statuses include:

• D = Daily

• H = Hourly

• W = Weekly.

You can override theses statuses in the customer exit CH_00_CHOURLY (called in formula CH_00_SYS_RES).

Annual, Monthly, and Hourly Payment Rules

Most common payment methods use the hourly and monthly payment rule with a monthly pay frequency. Although the proration rules for child allowances expired in 2009, there is no difference regarding the legal calculations between a monthly and an hourly paid employee.

However, for gross calculations, the automated creation of compensation for vacation and holiday is controlled by the pay frequency status and happens only for employees paid on an hourly basis. Annual payments either get assigned on the job and compensation levels and then automatically the appropriate monthly rate gets calculated and handled in the payroll the same way as a monthly payment. In addition, you can designate the employee as a person who receives yearly payments, where the payout happens only in a few dedicated months. In this case the limits for the social insurance are immediately taken as yearly limits and not accumulated month by month.

See “swissdec, Richtlinien der Lohndatenverarbeitung, chapter 2.12, Modul Unperiodische Zahlungen ”

Daily Payment Rules

There is a special treatment for employees paid on a daily basis in these domains:

• Unemployment, accident insurance (limits).

• Source tax (percent per day).

• Additional insurances (upper and lower limits).

These calculations apply for employees being paid on a daily basis based on reported working days:

• Limits for ALV-AC and UVG-LAA

  Limit = Reported Working Days * Daily Rate (this number comes from the Company table).

• Source tax lookup

  Lookup = Taxable Amount * Reported Working Days / Average Working Days (this number comes from the Company table).

• Additional insurances lower and upper limits

  Limit = Reported Working Days * Yearly Rate / 365 (you can customize, if the company reports work days) Roundup to full CHF (for example, 126,000 / 365 = 346).

To enable the daily calculation, you need to maintain these values in the company setup:

Daily Limit and Average Work Days

An example of how working days and limit per day depend from each other:

Assume working days get reported as calendar days. We expect to see as company values:

• ALV-AC: 345

  For 2 weeks of work c.p. 15 days * 345 = 5475 CHF.

• Source Tax: 30

  In the same scenario with assumed earnings of 1700 CHF there is a tax lookup of 3400 CHF in additional insurances: 15 days * 345 for 126,000 CHF and 15 days * 685 for an upper limit of 250,000 CHF.

If assumed working days get reported as real working days and the average is 21, then we expect to see these company values:

• ALV-AC: 500

  For 2 weeks of work 10 days * 500 = 5000 CHF.

• Source Tax : 21

  In the same scenario with assumed earnings of 1700 CHF there is a tax lookup of 3570 CHF in additional insurances (probably customized to 252 working days). 15 days * 500 for 126,000 CHF and 15 days * 992 for an upper limit of 250,000 CHF.

See Setting Up Social Insurance Rates.

Weekly Payment and Payout Rules

Other than employees that are paid on an hourly, daily, and monthly basis, employees paid on a weekly basis receive their paycheck each week. Nevertheless, at the end the full legal calculation and the legal reporting is based on a monthly view on the result. Therefore, the weeks need to get assigned to a dedicated month. Some months will have 4 weeks and some 5 weeks.

This mapping is managed by setting up the CH_WK_MAP_W bracket (select Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Supporting Elements, Brackets, Data).

Search Key SEGMENT END DATE	Displays the 1st day of the week.
Return Column CH_WK_MAPD2	Displays the last day of the mapped month.
Return Column CH_WK_WIM	Displays the number of the week in the month.
Return Column CH_WK_WIY	Displays the number of the week in the year.
Return Column CH_WK_WPM	Displays the number of weeks assigned to the month.

Calculations

For employees that get paid on a weekly basis, these calculations apply:

• Child allowance.

  Employee receives the portion of child allowance according to the hours worked in the week with the weekly payment. In the last week of the month the remainder is paid out.

• Source tax (% per day).

  Each week the lookup gets calculated by dividing the reported weeks by the total weeks of the month. Then the tax for that week is calculated as: Newly Calculated Taxes – Already Paid Taxes = Taxes Owed.

• Unemployment, accident insurance (limits).

  Limits get adjusted to days. Weekly limit = 10,500 CHF divided by 7 = 1,500 CHF.

• Garnishments.

  Garnishments get deducted first until the monthly amount is covered. As such, the employee might not have any payments the first week or first few weeks in the month.

Sarbanes-Oxley Act of 2002 Requirements

This section discusses:

• SOX Overview

• Security

• Audits

• Managing Processes

• Archiving

SOX Overview

To fulfill the requirements of the Sarbanes-Oxley Act of 2002 (SOX), Global Payroll for Switzerland provides features that support security and audit requirements, makes recommendations to manage your payroll information, and supports processes that archive history according to the needs of the Principles of Orderly Electronic Bookkeeping (POEB).

SOX is a United States federal law enacted on July 30, 2002. The legislation establishes new or enhanced standards for all U.S. public company boards, management, and public accounting firms. It does not apply to privately held companies.

The Act contains 11 titles, or sections, ranging from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law.

Security

Customer should define at least two roles that allow you to separate the entry and calculation of payments from the process of approving and authorizing final payments. A detailed sample of how these roles might share the activities is provided in the Manage Process section.

As such we recommend that you implement these roles:

• Payroll Administrator:

  This role allows administrators to manage all HR and payroll relevant entries (hire, termination, assign payments). To process the payroll itself you might define a third role or grant those rights to the Payroll Administrator as well.

• Finance Administrator:

  This role allows to manage the transfer of payments to GL and to the bank. Thus, payments only make it to the beneficiary after a second person had reviewed those payments.

Note. A sample of how these roles might share activities is provided in Appendix: Global Payroll for Switzerland Sarbanes-Oxley Act. Additionally, you might set up any number of different roles that share security to meet your specific needs. The methodology that we describe in this documentation explains the minimum requirements to meet SOX requirements.

Audit Reports

The PeopleSoft HCM application provides these reports to track and document additional changes:

• Employee Turnover Analysis (PER010).

• Below Minimum Analysis (CMP004).

• Above Maximum Analysis (CMP005).

Note. You can set up auditing on any field and then decide what changes can be reviewed by a second person at any time. The Database Audit (PER029) report lists the changes kept by auditing.

The Global Payroll for Switzerland application provides these reports for auditing support:

• Calculation Reconciliation (GPCHAL02).

• Banklist (GPCHBK01).

• Summary Statement for Bank File (GPCHBK02).

Additionally, you can perform queries on GL data.

See Managing Banking.

See Generating Payslips and General Payroll Reports.

Managing Processes

Appendix: Global Payroll for Switzerland Sarbanes-Oxley Act provides a sample methodology to manage a payroll that fulfills the requirements of Sarbanes-Oxley Act. In this appendix the H role stands for the Payroll Administrator and the F role stands for Finance Administrator.

See Global Payroll for Switzerland Sarbanes-Oxley Act.

Archiving

All data that determines payroll calculations is frozen in write array tables, which are created during a payroll run. The system keeps these data as well as all results in history. For example, if there is a retroactive change to any date, the original calculated results as well as the input that was valid for those original results is retained and is available for review at any time. Additionally, all year end XML data, which contains all the legal reporting that is sent to swissdec, is archived and stored each time it is generated, including all re-sends and corrections.

Global Payroll for Switzerland is Swissdec Certified

Global Payroll for Switzerland was certified in April of 2008 under certificate # 1025.08. Therefore, we highly recommend that you use the Swissdec payroll guidelines as published on the Swissdec website as additional documentation to become familiar with the payroll.

Also, all earnings and reporting described on the Swisdec website is valid for this payroll, especially for small and mid size customer that might run their payrolls out of the box with the elements described in the guidelines and provided by PeopleSoft Global Payroll for Switzerland.

See http://www.swissdec.ch/richtlinien.htm

See Additional Certified Earnings and Deductions.

Viewing Delivered Elements for Switzerland

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

See Also

Viewing Delivered Elements