Understanding Salary Packaging Setup

There are six main steps involved in setting up and managing the Administer Salary Packaging business process for Australia:

To set up Administer Salary Packaging:

1. Set up your Global Payroll and Human Resources components.

   Administer Salary Packaging relies on information defined in Global Payroll and Human Resources to ensure accurate payroll processing and to facilitate expenditure monitoring. When setting up Administer Salary Packaging, identify the different forms of remuneration and define the components you use in your salary packages. Also set up the calendars you use to process your salary-packaged employees. When implementing Administer Salary Packaging with Global Payroll, use the following Human Resources (HR) and Global Payroll (GP) pages:

   • Pay Calendar Table - GP or Pay Calendar Table - HR.

     Create and schedule payroll cycles for your salary packaged employees in specific pay groups.

   • Earnings Element (GP).

     Define the earnings elements you use to pay your salary packaged employees through Global Payroll. Used for expense tracking.

   • Deductions Element (GP).

     Set up the way the system processes deductions, including the priority of the deduction and how the deduction affects taxes. Used for expense tracking.

   • Compensation Rate Code Table (HR).

     Select the Maintained via Package Only check box in the Australian Salary Packaging group box to define and review your compensation rate codes. Rate codes are attached to salary package components and after an employee is enrolled in a package, rate codes are stored the employee's Job Data - Compensation page.

   • Included Earnings/Deductions.

     Select the non-packaged earnings and deductions elements that appear on the Package Summary component after you run the expense calculation process.

   • Business Expenses (HR).

     Enter actuals for salary packaging components defined as an expense payroll type. You must have a unique expense code for each package component to facilitate reconciliation of package expenditure.

2. Set up your Salary Packaging tables.

   These tables enable you to set up components, additional components, package rules, and package templates. Define the components that employees can include in their remuneration packages, as well as the tax liabilities on those components. Also define the rules associated with components and then group components into templates.

3. Set up your default rules and templates.

   The Position Data - Description page and Job Code Table - Job Code Profile page enable you to attach the default package rule and template that you use when modelling your packages to a job code or a position. The defaults on the position override the defaults on the job code. Use the Company Table - Default Settings page to specify a default compensation rate code for Total Package Value (TPV) and Total Employment Costs (TEC) for a specific company to use when modelling applicant/employee packages.

4. Model and approve your applicant/employee packages.

   This process enables you to enter a package and model it to the employee/employers preference. Approval of the employee salary package occurs when you select the confirmed status. Once the package is confirmed, enrol the employee into it.

5. Enrol/de-enrol employees into salary packages.

   After you confirm the employee's selected package and run the package enrolment process, the system enrols the rate codes onto the Compensation page of the employee's job record. This step establishes the employee's entitlements for processing through payroll. Enrolment into an approved salary package triggers the creation of multiple components of pay on the employee's Job Data - Compensation page.

6. Run the expense calculation process (GP).

   This process uses the actual calculated amounts that have been processed by payroll and compares them to the budgeted amounts. The difference is shown as a percentage. You can monitor the employee's actual expenditures against the budgeted salary package. When packages end, you can monitor package expenditure on an ongoing basis during the life of the package (package period) and acquit any balances when you model against the employee's package for the package period.