Gross and Net Guarantee Overview
When you calculate an employee's total salary, you need to consider some adjustments to the base salary that are specified in the employee's personal agreement. These adjustments may come from an employee's contract. Typically, employee compensation in Spain is defined by a labor agreement. However, you can define compensation in different ways using PeopleSoft HR.
For employees whose personal agreement defines a net or gross amount, the system compares the employee's contract with the compensation defined for the employee (usually in the labor agreement). If these two amounts are the same, no adjustment is necessary. This salary includes both base salary and complements.
Compensation Setup - Gross to Net
A gross to net adjustment is necessary when the annual gross salary stated in an employee's personal agreement is different from the gross salary reflected in the employee's labor agreement (if compensation is defined at the labor agreement level). This agreed value is stored in the Target Compensation Rate field on the Job Data - Compensation Page.
The system calculates and displays the estimated difference between the negotiated gross and the sum of all earnings that the employee would receive by default based on his or her professional category, job code, or other default criteria. This amount is known as the absorbable complement (complemento absorbible).
Compensation Setup - Net to Gross
This type of adjustment applies when an employee's personal agreement states a net amount. This agreed net amount is stored in the Target Compensation Rate field on the Job Data - Compensation page.
The system calculates and displays an estimated absorbable complement as the difference between the targeted net compensation and the sum of all net earnings that the employee would receive by default based on his professional category, job code, or other default criteria. The targeted compensation rate is the net guarantee to the employee.
Note: In both cases, this topic refers to the estimated absorbable complement because it doesn't consider seniority. The actual amount is calculated during the payroll process and is reflected in the earning element COMP ABSRBLE.
Calculation - Gross to Net
The system calculates an absorbable complement as the difference between the negotiated gross and the sum of all basic earnings calculated for the employee during the payroll calculation (including, for example, seniority earnings) that are defined as absorbable. Absorbable means that increases in the value of the earning are absorbed by the absorbable complement.
Note: To specify that an earning is absorbable, you must include the rate component of the earning EARNING_VLR as a member of the accumulator AJB AC DEV BAS S.
Calculation - Net to Gross
The system uses an iterative process to calculate the gross amount from the net amount guarantee and an estimated gross amount. The difference between the calculated gross amount and the sum of all basic earnings defined as absorbable and calculated for the employee is assigned to the absorbable complement.
Note: To specify that an earning is absorbable, you must include the rate component of the earning EARNING_VLR as a member of the accumulator AJB AC DEV BAS S.