Payroll Deductions

Deductions allow you to specify what is being deducted from an employee’s payroll and why it is being deducted. Deductions can be anything, like employee meals, health benefits, or 401k. This feature allows organizations to accurately account for what employees are to be receiving, as well as what is to be allocated elsewhere.

Deductions can be based on two separate calculations:

1. Percentage

2. Amount

If using percentage, you must specify a percentage to deduct from the salary or hourly pay. As pay is increased or decreased, the percentage amount adjusts accordingly. For example, an employee has three percent of the weekly paycheck deducted toward 401k. the employee’s current weekly paycheck is $1250.00 before taxes. Therefore, every week, $37.50 is removed from the employee’s paycheck and applied directly toward the 401k. The employee has recently received a pay increase and now makes $1375.00 weekly before taxes. When the percentage recalculates, the employee now has $41.25 deducted from the weekly paycheck and applied toward the 401k.

If using the amount method, you must specify a certain monetary amount to deduct from the salary or hourly pay with every pay cycle. As pay is increased or decreased, the deduction amount always stays the same. For example, the same employee from the aforementioned example also has health benefits through the organization. Every week, the employee has $52.93 deducted from the paycheck, which goes toward health benefits. When the employee’s salary is increased from $1250.00 weekly to $1375.00 weekly, the same amount, $52.93, is deducted. Or, perhaps an enterprise requires new hires to purchase their uniform. The uniform price can be configured as a one-time deduction from the new hire’s first pay check.

These specific scenarios can be configured as either of the two available deduction types:

1. One Time

2. Recurring

Although these deductions, whether one-time or recurring, can be created in the Payroll Deduction page, recurring deductions are assigned to employees in the Human Resources Employee Administration page. One-time configurations are set up in the Payroll Preprocessing Payroll Deduction Assignment page.