Understanding Earning and Deduction Elements

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.

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.

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.

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).

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.

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.

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.

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

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.

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.

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.