Understanding Frequency in Payroll for North America
These topics discuss:
Compensation frequency and pay frequency.
Examples of pay rate calculations.
Proration of compensation rates.
Exceptions to Frequency table use.
In Payroll for North America you use the frequencies on the Frequency Table component to specify pay period frequency on the Pay Group component. The system uses compensation and pay frequencies for the calculation and proration of pay rates during batch and online system processes.
This topic provides examples of how the system uses compensation rates and frequencies and pay period frequency to calculate pay rates.
Example: Biweekly Pay Period Calculation of Monthly Compensation
This example illustrates how Payroll for North America calculates the pay period rate by annualizing monthly compensation using the following frequencies:
|
Description |
Frequency ID |
Frequency Type |
Frequency Annualization Factor |
|---|---|---|---|
|
Pay frequency (Pay Group table) |
B1 |
B (biweekly) |
26.1 |
|
Compensation frequency (employee's Job data setup) |
M |
M (monthly) |
12 |
Using a compensation rate of 1,000 USD, the calculations of the annual compensation rate and pay period compensation rate are:
Annual Rate = Comprate × Compensation Frequency Factor
12,000.00 = 1,000.00 × 12
Pay Period (Biweekly) Rate = (Annual Rate) / Pay Frequency Factor
459.77 = 12,000.00 / 26.1
Example: Weekly Pay Period Calculation of Hourly Compensation
Payroll for North America uses the annualization factor of the standard work period frequency in combination with the standard hours to calculate pay rates or proration of hourly compensation.
This example illustrates how Payroll for North America calculates the weekly pay period rate of hourly compensation.
The pay group's pay period frequency definition is:
|
Description |
Frequency ID |
Frequency Type |
Frequency Annualization Factor |
|---|---|---|---|
|
Pay frequency (Pay Group table) |
W (weekly) |
W (weekly) |
52 |
The employee's compensation frequency definition is:
|
Comp Rate |
Comp Frequency |
Standard Hours |
Annualization Factor of Std Work Period |
|---|---|---|---|
|
10.00 |
H (hourly) |
40.00 |
52 |
The calculations of the annual compensation rate and pay period compensation rate are:
Annual Rate = Comprate × (Standard Hours × Standard Work Period Annualization Factor)
20,800.00 = 10 x 40 × 52
Pay Period (weekly) Rate = Annual Rate / Pay Frequency Factor
400 = 20,800.00 / 52
The system calculates proration for partial periods when events such as new-hires, terminations, or pay rate changes occur in the middle of a pay period. It uses data that you specify on the Pay Group component in conjunction with compensation data to calculate proration.
Some processes, such as deduction calculations and Canadian tax calculations, use the pay periods per year from the Pay Calendar Table page (PAY_CALENDAR_TABLE). The value in the Pay Periods Per Year field on the Pay Calendar Table page is derived from the pay frequency of the pay group.