Defining Earnings

This chapter provides overviews of earnings in Hong Kong, subsetting, and delivered earning elements, and discusses how to:

• Calculate basic salary earnings.

• Calculate basic hourly earnings.

• Calculate overtime earnings.

• Calculate shift allowance earnings.

• Calculate typhoon and black rain allowances.

• Calculate meal allowances.

• Calculate meal reimbursement.

• Calculate mobile phone and pager allowances.

• Calculate housing allowance.

• Calculate rent reimbursement.

• Calculate education allowances.

• Calculate gratuity earnings.

• Calculate the thirteenth month pay.

• Calculate cash advances.

• Calculate holiday allowances.

• Calculate annual leave pay.

• Calculate sick leave pay.

• Calculate maternity leave allowance.

• Calculate absence and termination earnings.

• Calculate amount earnings.

• Calculate wages in lieu of notice.

• Calculate Mandatory Provident Fund (MPF) earnings.

• Calculate rolling average earnings.

• Control the maximum frequency amount.

• Control earnings maximum or goal amount.

• Schedule earnings using generation control.

• Calculate relevant statutory entitlements

Understanding Earnings in Hong Kong

PeopleSoft has created several earnings to demonstrate the flexibility of the Global Payroll rules to meet common processing requirements. The following sections discuss:

• Ways that you can use earning and supporting elements to produce the desired results.

• How PeopleSoft meets specific earning processing requirements.

Note. User keys enable you to track an accumulator at levels lower than the employee record. This directs the system to maintain different accumulated numbers for each of the locations where employees work. User key 1 for all earnings on the Earnings Accumulators page is PAY ENTITY. (This is required by Inland Revenue Reporting.) User key 2 for all year-to-date accumulators is CM VR BAL GRP ID (balance group ID).

See Also

Defining Earning and Deduction Elements

Viewing Delivered Elements

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

See Also

Understanding How to View Delivered Elements

Understanding Subsetting

Subsetting enables a group of earnings to be paid for a calendar. For example, during a regular calendar run, you commonly pay basic salary and other earnings. In a 13th month off-cycle calendar run, you are required to pay only 13th month pay.

A variable is overridden at the calendar level. The variable contains the subset type. A formula determines whether the variable is for a subset type such as 13th month pay. The formula is attached to the process list condition and the section resolves if the formula is true.

The 13th month pay formula CM FM 13MTH SUBSET resolves if the variable CM VR SUBSET TYPE is 13MTH (for 13th month pay).

The variable CM VR SUBSET TYPE stores the calendar subset type. You attach the variable on the calendar override page and assign it the appropriate run. The variable is used in a section conditional formula to resolve the section based on the calendar. For example, to run a regular subset type, assign the value REGULAR to the variable. If you run an off-cycle 13th month pay run, assign the value 13 MONTH to the variable. Only the 13th month section is resolved.

See Also

Calculating the Thirteen Month Pay

Understanding Delivered Earning Elements

In the following table, the first column combines the name and description of the earning. A (GC) in the row indicates that the earnings have a generation control. The other four columns indicate the earning calculation rule of Unit × Rate, Unit × Rate × Percent, or Amount. The formulas used for some of the earnings are discussed in further detail. (SE) indicates a system element, and (N) indicates numeric.

Calculating Basic Salary Earnings

Basic salary (BASSAL) is an earning element with a flat amount that is paid at the earning level only. Basic salary is paid once per month for permanent employees, in the first month for new hires, and in the last month for terminated employees.

The calculation rule is Amount which is the system element COMPRATE—the monthly compensation rate of the payee.

The system uses pay group proration whenever there is a partial period or when a pay rate change occurs during the pay period. Following are examples of the partial basic salary earning calculation:

Example 1

An employee is hired on February 20, 2000 with a salary of 1000 HKD. The basic salary is calculated as:

10 / 29 × 1000 = 344.83

Example 2

If an employee salary increases to 1200 HKD effective March 18, 2000, then the March basic salary is calculated as:

(17 / 31 × 1000) + (14 / 31 × 1200) = 548.39 + 541.94 = 1090.33

Calculating Basic Hourly Earnings

Basic hourly earning (BASHLY) is the monthly income for hourly employees. It is paid once per pay period to the entire hourly pay group. The system uses the hourly rate to calculate monthly income for hourly employees.

The calculation rule is Unit × Rate:

• Unit is the number of hours worked.

• Rate is the system variable HOURLY RT.

Hourly rate is calculated from the compensation rate of the employee. The number of hours is entered at the positive input level. When a pay rate change occurs during the pay period, the system variable returns the correct hourly rate.

Calculating Overtime Earnings

Two earning elements exist for overtime:

• OT1.5 calculation rule is used to pay time-and-a-half.

• OT FIX calculation rule is used to pay a fixed amount of 200 HKD.

OT1.5 Calculation Rule

The overtime rate is 1.5 times the standard hourly rate.

The OT1.5 calculation rule is Unit × Rate × Percent:

• Unit is the number of overtime hours at the payee level.

• Rate is the system variable HOURLY RT.

• Percent is 150.

Example

If an employee worked 7.5 overtime hours and the standard hourly rate is 400 HKD, the overtime payment is calculated as:

7.5 × 1.5 × 400 = 4500

OT FIX Calculation Rule

Employees who work overtime and leave the office after 21:00 hours are paid a fixed amount of 200 HKD.

The OT FIX calculation rule is Unit × Rate:

• Unit is the number of days that the employee worked overtime and left after 21:00 hours, determined at the payee level.

• Rate is a fixed numeric value of 200 HKD.

Example

If an employee worked three days overtime and left the office after 21:00, the overtime payment is calculated as:

3 × 200 = 600

Enter unit amounts for overtime earnings using positive input. In Hong Kong, the overtime payment for the previous month might be paid in the current month. When the pay date is a few days before the pay period end date, the overtime hours between the pay date and pay period end date are unknown. Consequently, when overtime earnings for a previous month are paid in the current period, the system treats it as retroactive pay.

Calculating Shift Allowance Earnings

Two earnings for shift allowances are paid once per month to compensate employees who work overnight. Like overtime, there is an earning element to pay a fixed amount (SHNTFIX) and another to pay 130 percent of the hourly rate (SHNT1.3). This section discusses how to:

• Calculate SHNTFIX earnings.

• Calculate SHNT1.3 earnings.

Calculating SHNTFIX Earnings

The SHNTFIX calculation rule is Unit × Rate:

• Unit is the number of overnight shifts that the payee worked.

• Rate is a fixed numeric value of 100 HKD.

Calculating SHNT1.3 Earnings

The SHNT1.3 calculation rule is Unit × Rate × Percent:

• Unit is the number of overnight shifts that the payee worked.

• Rate is the system variable HOURLY RT.

• Percent is 130.

Calculating Typhoon and Black Rain Allowances

Typhoon (TYPHOON) and black rain (BLCKRAIN) allowances are intended to compensate employees for inconveniences caused by typhoons or black rain duty. Both typhoon and black rain compensations are paid monthly. This section discusses how to:

• Calculate TYPHOON allowances.

• Calculate BLCKRAIN allowances.

Calculating TYPHOON Allowances

The TYPHOON calculation rule is Unit × Rate × Percent:

• Unit is the number of hours that the employee worked during a typhoon advisory.

• Rate is the system variable HOURLY RT.

• Percent is 200.

Calculating BLCKRAIN Allowances

The BLCKRAIN calculation rule is Unit × Rate × Percent:

• Unit is the number of hours that the employee worked during a black rain advisory.

• Rate is the system variable HOURLY RT.

• Percent is 200.

Calculating Meal Allowances

A fixed meal allowance (MEAL) of 2000 HKD is defined at the earning assignment level as a recurring payment and paid each month to employees in the salary pay group.

The MEAL calculation rule is Amount:

Amount is fixed at 2000 HKD.

Calculating Meal Reimbursement

Meal reimbursement (MEALREIM) is a nontaxable meal expense. You can set the maximum claiming limit for every claim.

The calculation rule is Amount:

Amount is established at the payee level using positive input.

While meal reimbursement (MEALREIM) has no minimum amount limit, it does have a maximum limit of 100 HKD per claim. Therefore, for every claim, you can reimburse the lower of 100 HKD or the exact expense from the bill to the employee. Each month can have multiple instances of claims. The total amount of monthly claims is paid as part of the monthly salary.

Example

Following is a simple example with one positive input instance of 110 HKD. If an employee is paid 110 HKD, but the maximum earnings limit is 100 HKD, the system pays 100 HKD. If the 110 HKD payment is spread over multiple positive input instances, the system still compares it to the paid sum.

In this case, the system determines whether the accumulated monthly amount exceeds the monthly maximum amount of 100 HKD. The system displays a warning message and pays only 100 HKD, because 110 HKD is greater than 100 HKD.

With multiple positive input (PI) instance paid:

While the system pays PI instance 1 and 2, PI instance 3 exceeds the maximum amount by 20 HKD. In this case, the system resolves 20 HKD for PI instance 3.

Depending on the frequency, the maximum amount is converted to the calendar period maximum amount (monthly or annual frequency). For example, if you select a frequency of annual, the process deannualises the maximum amount.

The formula FM MAX AMT determines whether the earning accumulated amount exceeds the maximum. The accumulated amount is used is because the system must calculate the total amount paid through positive input.

Calculating Mobile Phone and Pager Allowance

MOBILE is a nontaxable expense for using mobile phones or pagers.

The calculation rule is Amount:

Amount is a fixed numeric value of 250 HKD.

The mobile and pager allowance is 250 HKD per month, payable at the earnings level for the salaried pay group.

The generation control CM GC RSLV ONCE stops the allowance from resolving twice if period segmentation occurs.

Calculating Housing Allowances

The housing allowance (HSING) is a monthly taxable benefit.

The calculation rule is Amount:

Amount is set by the formula ALW FM HOUSING.

Working with the ALW BR HOUSING Bracket

This section discusses how to work with ALW BR HOUSING bracket.

This HSING earning element pays the housing allowance. The amount depends on the salary grade of the payee. The ALW BR HOUSING bracket stores the salary grade and the corresponding housing allowance amount.

Example

A Grade 001 payee is paid 10000 HKD and a Grade 003 payee is paid 5000 HKD. The ALW BR HOUSING bracket stores the following information:

This customary bracket enables you to update or add additional grades and allowance amounts. The system compares the salary grade of the payee to the ALW BR HOUSING bracket and pays the corresponding allowance. If the salary grade of the payee is not found, the system pays a zero allowance. The earnings are paid at the earning assignment level because it is a recurring monthly payment.

Note. Only employees in the salaried pay group are eligible for this benefit.

Calculating Rent Reimbursement

Rent reimbursement (RENTREIM) is used to pay accommodation costs of employees when they are working far from home.

The calculation rule is Amount:

Amount is entered through positive input at the payee level.

This earning element has no maximum amount limit. When the claim of the employee is approved, the employee receives the rent reimbursement in the current pay period.

Note. Employees can have one rent reimbursement per month. Multiple instances are not allowed.

Calculating Education Allowances

Your organisation might set up scholarship programs for employees. The education allowance (EDALLOW) is paid once per year. This fixed scholarship amount is granted to employees when their dependent receives an offer from the recognized institute.

The calculation rule is Amount:

Amount is set at the payee level through positive input.

Employees can apply for the education allowance again in future academic years. No refund is made when their dependents drop out of a course, or if the employee is terminated.

Because the education allowance is paid as a flat amount and as a recurring override, you can enter the amount at the payee earning assignment level. The reason for this is that the education allowance is paid when the scholarship is granted.

The generation control CM GC RSLV ONCE ensures that the allowance is paid only once per year if period segmentation occurs.

Calculating Gratuity Earnings

Gratuity (GRA) is a single payment to contract workers at the end of a contract or when a contractor leaves.

The calculation rule is Amount:

Amount is set at the payee level.

This section discusses how to:

• Use generation control in gratuity calculation.

• Use formulas in gratuity calculation.

Using Generation Control in Gratuity Calculation

Gratuity is paid to employees working on contract by using the generation control OE GC GRA. The system automatically pays gratuity based on the contract end date and resolves the amount using the generation control. When the employee is unable to finish the contract, the amount of the gratuity is prorated. No proration rule applies because of the many ways gratuity can be paid in Hong Kong. It is up to the organisation to pay prorated gratuity when contract employees cannot finish the contract period.

While you enter gratuity at the earning assignment level, it is resolved once through generation control.

Using Formulas in Gratuity Calculation

Gratuity earnings resolve if the contract end date occurs during the current pay period. If the contract end date is outside the current pay period, the gratuity is not paid. The OE FM CNTR EXPIRE formula determines whether the contract end date occurs during the current pay period and uses segment begin and end date so that the earnings are not paid twice during period segmentation.

Calculating the Thirteen Month Pay

It is common in Hong Kong to pay employees an extra month of basic salary. The system pays the basic salary as of the last period of the last calendar year. The 13MTHPAY earning element is payable only on the Chinese New Year. For example, the Chinese New Year off-cycle run is during either January or February, but basic salary is paid as of December of the last calendar year.

The calculation rule is Base × Percent:

• Base is set by the formula OE FM 13MTH BASE (base pay).

• Percent is 100.

Understanding 13th Month Pay Proration

This section discusses the 13th month pay proration.

Proration applies to 13th month pay. The proration calculates the total days of service for the employee divided by the number of days in a calendar year.

If the hire date of the employee is before the start of the last calendar year, then no proration occurs. If the hire date of the employee is after the start of the last calendar year, proration is calculated as follows:

The following system parameters are considered in the payment calculation:

Prorated 13th month pay is paid if the permanent employee has worked fewer than twelve months. The following system parameters are considered in the payment calculation:

• Factor: 100 percent of basic salary.

• Salary day: December 31, 2000.

• Cut off day: November 1, 2000.

• Proration rule: (Service period in year) / (Calendar days in year) × basic salary.

Example 1: Receiving the Full Factor

An employee is hired on February 2, 1999. Their basic salary as of December 31, 2000 is 12000 HKD. The 13th month pay for the employee = 12000 HKD.

Example 2: Employee Joins After Cut-off Day

An employee is hired on November 1, 2000. Their basic salary as of December 31, 2000 is 20000 HKD. The 13th month pay for the employee is zero.

Example 3: Proration Rule Applied

An employee is hired on January 10, 2000. Their basic salary as of December 31, 2000 is 30000 HKD. The 13th month pay for the employee is calculated as:

(357 / 366) × 30000 = 29262.30

Note. Terminated employees are eligible for prorated 13th month pay only if they have completed their probation period.

Using Generation Control in the 13th Month Pay Calculation

Generation control OE GC 13MTH PAY is used to resolve the earnings based on the cut-off date. The cut-off date is entered at the pay group override level. The earnings are paid through earning assignment with begin and end dates so that they are paid once during the Chinese New Year.

See Also

Calculating 13th Month Payment

Calculating Cash Advances

An employee can be paid a cash advance of 50 percent of basic salary (CASHADV), which one must pay back in installments over five months.

The calculation rule is Base × Percent:

• Base is the earning element BASSAL—base salary.

• Percent is set at the payee level.

The generation control CM GC RSLV ONCE prevents the allowance from being paid more than once if period segmentation occurs. Generation control also ensures that the allowance is paid only once per year.

Note. The CASHADVR deduction with the formula DED FM CASHADVR that calculates 20 percent of the goal amount enables the employee to pay back the cash advance.

See Also

Calculating Cash Advance Recovery

Calculating Holiday Allowances

The number of holidays in a month is calculated by the formula HOLIDAY FM DYS, which picks the number of holidays from the holiday schedule defined for the employee. The first holiday in the month is used as the specified date.

This earning will be paid for the holidays after the first 3 months of employment.

Negative earning (HOL PAY NEG) is used to deduct the corresponding leave pay from basic income.

Calculating Annual Leave Pay

Annual Leave pay is paid if the employee has taken statutory annual leave (ALV STAT TKE).

The units for this earning is the number of days of annual leave. The specified date is the first day of the leave.

Negative earning (ANN PAY NEG) is used to deduct the corresponding leave pay from basic income.

Calculating Sick Leave Pay

Sick leave pay is paid if the employee has taken the statutory sick leave (SLV STAT TKE). This earning will be paid only in cases where the leave is taken for more than 4 consecutive days. If it is taken for less than 4 days, then this earning will not be calculated.

The Absence take (SLV STAT TKE) has been modified to generate this earning (SCK LVE PAY) as positive input whenever the take has been taken for more than 4 consecutive days. This earning will be 4/5th of the product of average daily wages and number of days of sickness (>=4).

The units for this earning is the number of days of sick leave (>=4). The specified date is the first day of the leave.

Negative earning (SICK PAY NEG) is used to deduct the corresponding leave pay from basic income.

Calculating Maternity Leave Allowance

Maternity Leave Pay is paid if the employee has taken statutory maternity leave (MLV STAT TKE). This earning is paid for the payees who have been employed under a continuous contract for not less than 40 weeks.

The specified date is the first day of the leave.

Negative earning (MAT PAY NEG) is used to deduct the corresponding leave pay from basic income.

Calculating Absence and Termination Earnings

This section discusses how to:

• Calculate annual leave instead of annual leave entitlement.

• Calculate eighty percent of daily wages.

• Calculate leave without pay (LWOP and LWOP2).

• Calculate severance and long service payments (LSP).

• Calculate thirteenth month payment on termination.

Calculating Annual Leave Instead of Annual Leave Entitlement

The ANN LIEU is a payment in lieu of annual leave entitlement. This earning element is used to pay terminated employees for unused annual leave or for part of their annual leave entitlement before the leave is forfeited.

The calculation rule is Unit × Rate:

• Unit is set by the formula TER FM ALV BAL.

• Rate is set by the formula CM FM DAILY RATE.

ANN LIEU is a taxable earning element, which means that it contributes to the annual taxable accumulator. ANN LIEU is also used to pay employees when they accept the payment from their employer to offset part of their annual leave. This is a positive input and the unit of ANN LIEU is overridden by the number of adjusted days from the annual leave balance.

Note. ANN LIEU can be a negative value because general employees in Hong Kong are allowed to have a negative balance.

See Also

Calculating Annual Leave

Calculating Unused Annual Leave

Calculating 80 Percent of Daily Wages

The DY WAGE 80 earning element is 80 percent of average earnings paid to statutory employees when taking maternity leave or sick leave. Employees are eligible for maternity leave payments after 40 weeks of continuous service. The entitlement is granted when the leave occurs and the paid maternity period is 70 days from the maternity commencement date. The absence period can be shorter but not longer than 70 days. Unpaid maternity is treated as LWOP.

The calculation rule is Unit × Rate × Percent:

• Unit is set at the payee level.

• Rate is set by the formula CM FM DAILY WAGE.

• Percent is 80.

Note. 80 percent of the daily wage of an employee is covered for valid maternity leave for statutory employees and 100 percent coverage for general employees.

See Also

Calculating Sick Leave

Calculating Maternity Leave

Calculating Leave Without Pay (LWOP)

The total LWOP (Units × Daily Rate) is subtracted from the basic salary of the employee if the employee takes leave without pay.

The calculation rule is Unit × Rate:

• Unit is set at the payee level.

• Rate is the system variable DAILY RT.

• Percent is 80.

Note. The LWOP earning element is used for salary based employees. The LWOP2 earning element is used by weekly employees as it uses an hourly rate.

See Also

Calculating Leave Without Pay

Calculating Leave Without Pay (LWOP2)

The LWOP2 earning element is used for leave without pay for hourly rates (for weekly employees— as it uses an hourly rate).

The calculation rule is Unit × Rate:

• Unit is set at the payee level.

• Rate is the system variable HOURLY RATE.

Note. To be able to use the LWOP2 earning and absence take correctly, you have to deselect the eligibility for positive input check box. If you do not do this, LWOP and LWOP2 will both be processed for an employee. An employee can only receive one or the other, depending on their eligibility.

See Also

Calculating Leave Without Pay

Calculating Severance and Long Service Payments

Terminated employees might have severance (SEV) or long service payments (LSP), but not both. The SEV/LSP earning element is processed in the TER SE MAIN section and is a nontaxable payment. An employer should pay severance when an employee who has been employed under a continuous contract for no fewer than 24 months is dismissed by reason of redundancy. An employer should pay long service payments when an employee has been employed no fewer than five years under a continuous contract.

The calculation rule is Amount:

Amount is set by the formula TER FM LSP PAYMT.

The variable TER VR LSP CEILING stores the maximum ceiling of average wages which is currently 15000 HKD.

The variable TER VR MAX LSP stores the maximum LSP amount used in the bracket.

The formula TER FM LSP PERIOD is used as the search key of the bracket TER BR LSP ENT.

The bracket TER BR LSP ENT stores the list of years of service and maximum claimable LSP amounts.

See Also

Calculating Severance and Long Service Leave Payments

Calculating 13th Month Payment on Termination

If an employee is eligible for 13th month pay and is terminated after three months of continuous service, prorated 13th month pay is paid when the employee is terminated. The TER 13TH PAY earning element is used to pay the 13th month payment for terminated employees.

The calculation rule is Base × Percent:

• Base is set by the formula TER FM 13TH PAY.

• Percent is 100.

The prorated 13th month payment calculation is:

(Duration between service date and termination date) / 365 × (monthly rate)

If the employee received current year 13th month pay before Chinese New Year, (terminated on June 2000) and received 13th month pay in February 2000, the prorated 13th month payment is calculated as:

(Duration between January 1, 2000 and termination date) / 365 × (monthly rate)

Factor 365 is used even in a leap year.

Note. The 13th MTH PAY is different from the TER 13TH PAY (termination) earning element. The 13th MTH PAY earning element is the calculation of the regular year end. TER 13TH PAY is used exclusively for the TER SE MAIN termination section.

See Also

Calculating 13th Month Payment

Calculating Absence Entitlements on Termination

Calculating 13th Month Payment

Calculating Absence Entitlements on Termination

Calculating Wages in Lieu of Notice

This earning is calculated for an employee when a positive input is provided. The notice period is in months; for example, 1 or 1.5. The notice date also needs to be provided as a Supporting Element Override for the variable (EO VR NOTICE DATE). This earning is calculated only if both values are provided.

The notice date is considered the specified date for this earning. Note that this earning will calculate the average monthly wage and not the average daily wage.

Calculating Amount Earnings

This section discusses:

• Flat amounts.

• Formula-based amounts.

Flat Amounts

For Hong Kong, there are eight earnings with the calculation rule Amount. Two are flat amounts:

• Meal allowance (MEAL).

• Mobile and pager (MOBILE).

See Also

Calculating Meal Allowances

Calculating Mobile Phone and Pager Allowance

Formula-Based Amounts

The housing allowance uses the ALW FM HOUSING formula to find the earning amount that stores the salary grade and the corresponding housing allowance amount.

The gratuity earnings use the formula OE FM CNTR EXPIRE to determine whether the contract dates occur during the current pay period and use segment begin and end dates so that the earnings are not paid twice in period segmentation.

The termination earnings use formula OE FM ROLL AVG to calculate the rolling average amount. The formula calls a historical rule to retrieve the amount from an accumulator. The formula then calculates the average from the amount retrieved.

The severance and long service leave earnings use formula TER FM LSP PAYMT to return the severance payment or long service payment, depending on the year of service and the action reason.

See Also

Calculating Housing Allowances

Calculating Gratuity Earnings

Calculating Absence and Termination Earnings

Calculating Severance and Long Service Payments

Calculating Mandatory Provident Fund Earnings

Not all earnings are included in Mandatory Provident Fund (MPF) calculations. Earnings that are included in the MPF calculation are considered relevant income and include wages, salaries, leave pay, fees, commissions, bonuses, and gratuities. Examples of earnings that are excluded from MPF calculations are severance payments and long service leave payments. The following earnings are included as relevant earnings in MPF calculations:

These earnings are included in the monthly accumulator MPF AC REVLNT INCM that is based on the pay period end date and the user key of EmplID (employee identification).

See Also

Administering Mandatory Provident Fund Contributions

Calculating Rolling Average Earnings

This section provides an overview of rolling average earnings and discusses how to:

• Use accumulators in the rolling average calculation.

• Use variables in the rolling average calculation.

• Use formulas in the rolling average calculation.

• Work with rolling average (example).

Understanding Rolling Average Earnings

The earning rolling average is used to calculate compensation when there is a termination or accident at work. You can set up an earning element for which the rate is determined by the average of another earning element during a rolling period, such as the preceding 12 months.

The following earnings contribute to average earnings:

• Cash wages.

• The value of any privilege or benefit that can be estimated in cash (such as food, fuel, or quarters supplied to the employee).

• Overtime or other special remuneration through bonus, allowance, or otherwise.

• Customary tips.

Using Accumulators in the Rolling Average Calculation

The rolling average calculation uses the OE AC ROLLAVG (amounts) accumulator. The accumulator accumulates the earnings listed in the following table for rolling average calculation. It is a monthly accumulator with an accumulated date of the payment date. The system uses the amount values of the members of accumulator OE AC ROLLAVG in its averaging calculation. PeopleSoft delivers this accumulator with the following earnings as its members:

See Also

Setting Up Accumulators

Using Variables in the Rolling Average Calculation

The rolling average calculation uses the OE VR ROLLAVG AMT (amounts) variable. The system adds the amounts retrieved from the OE AC ROLLAVG accumulator to variable OE VR ROLLAVG AMT. The variable OE VR ROLL UNIT holds the rolling number of months for calculating the rolling average. You can set the variable OE VR ROLL UNIT to the number of months that you want the system to use to retrieve period data for use in the calculation.

See Also

Defining Variable Elements

Using Formulas in the Rolling Average Calculation

The rolling average calculation uses the OE FM ROLLAVG AMT (amounts) formula. The rolling unit indicates how far back to calculate the rolling average. The formula OE FM ROLLAVG AMT, attached to an earning element, calls a historical rule to retrieve the accumulator value at the time of the calculated period. The period is calculated by the last period end date minus the number of months specified. The formula then calculates the average from the amount retrieved.

See Also

Defining Formula Elements

Working with Rolling Average (Example)

Following is an example of the accumulated value of the earning element for the last five periods. Assume that:

• In period 2, these earnings did not contribute to the accumulator.

• You are running the pay run in period 5.

Assume that you want to calculate the average earnings for the last four periods from period 5 (hence, you retrieve from period 1). Therefore, the accumulator holds 10000 for period 1 and the rule retrieves 1,000. The formula retrieves the current period accumulator value of 40000 in period 5.

The rolling average calculation is as follows:

((Accumulator, current period) − (Accumulator, previous period)) / (Months)

Hence, the calculation resolves to:

(40,000 − 10,000) / 4 = 7500

Controlling the Maximum Frequency Amount

There is an accumulator for each monthly and annual frequency. You can select a frequency of monthly or annual. Two accumulators are provided for each frequency.

During the calculation process, a formula determines whether the accumulated amount exceeds the maximum. Depending on the frequency, the formula selects the appropriate accumulator.

You can set the maximum amount and frequency at the payee level. The earning element MEALREIM is set up this way. The accumulator CM AC MAX MONTH determines whether the monthly maximum amount (ceiling) has been reached for meal reimbursements.

Example 1

With a maximum yearly amount of 10040 HKD, the system pays 40 HKD if the earnings of the payee are 50 HKD per month, and after payment, the accumulated yearly amount is 10050 HKD.

Example 2

With a monthly maximum amount of 60 HKD, the system pays 10 HKD if the earnings of the payee are 50 HKD per month, and after payment, the accumulated monthly amount is 100 HKD. The system determines whether the accumulated monthly amount exceeds the monthly maximum amount of 60 HKD.

In this case, because 100 HKD is greater than 60 HKD, the accumulated monthly amount does exceed the monthly maximum amount. The earning amount is updated with the difference. In this case, because the payee earns 50 HKD per month:

(50 + 60 − 100) = 10 HKD

Controlling Earnings Maximum or Goal Amount

You can set a goal amount for earnings—an upper limit on the earnings so that no more than that amount is paid in an accumulation period. CASHADVR is set up with this control. It is set up to have a quarterly limit. You can nominate a goal amount to be paid for earnings or deductions.

CASHADVR is always 20 percent of the CASHADV earning and the recovery ceases to resolve when the cash advance goal balance accumulator equals zero.

When termination occurs, the whole cash advance goal balance is recovered in the last pay period, so the deduction amount of the CASHADVR is overridden by the cash advance goal balance accumulator. A negative net balance is allowed when the net amount is not enough to recover the whole goal balance.

Example

If the total accumulated deduction amount exceeds the goal amount, then only the difference is deducted. For example, suppose that the deduction of a payee is 50 HKD. After the deduction, the accumulated amount is 10050 HKD and the goal amount is 10040 HKD. In this case, the system deducts only 40 HKD. The concept of the goal amount is similar to the maximum amount. The difference is that the accumulated amount is a life-to-date accumulator.

A formula determines whether the earning amount exceeds the goal amount. If it does, then the difference is returned and a warning message appears.

See Also

Calculating Cash Advances

Calculating Cash Advance Recovery

Scheduling Earnings Using Generation Control

Generation control elements enable you to instruct the system to process an earning element based on criteria that you define.

For Hong Kong, you control the payment of an earning by assigning one of three generation controls to the earning:

• OE GC GRA.

• GM GC 13MTH PAY.

• GM GC RSLV ONCE.

For each generation control, there is a corresponding formula. When the formula returns TRUE, the earnings are paid.

For example, to pay an education allowance, the generation control CM GC RSLV ONCE resolves the allowance if either of the following conditions is true:

• The allowance has not been paid this year.

• Period segmentation occurred and the allowance was paid (hence, segmentation status is inactive).

The generation control CM GC RSLV ONCE ensures that the allowance is paid only once per year if period segmentation occurs.

See Also

Calculating Gratuity Earnings

Calculating the Thirteen Month Pay

Defining Generation Control Elements

Calculating Relevant Statutory Entitlements

Relevant statutory entitlements:

• Holiday allowance.

• Annual leave pay.

• Sick leave pay.

• Maternity leave allowance.

• Wages in lieu of notice.

Relevant statutory entitlements are calculated on the basis of his 12-month average wage (OE VR ROLLAVG ).

If an employee is employed for less than 12 months, the calculation is based on the shorter period

Periods and Wages to be Disregarded

To avoid deflating the average wages and hence reduce the amount of statutory entitlements in calculating the 12-month average wages, you have to:

1. Identify those situations in which an employee is not paid wages or full wages.

2. Exclude the periods (EO AC DISRGRD UNIT) together with the wages paid (EO AC DISREGARD WG ) from OE VR ROLLAVG and other such periods.