Understanding Contribution Calculation
This topic discusses:
Social security calculation.
Funding base calculation for regular employees.
Funding base calculation for employees with multiple jobs.
Base calculation for trainees and apprentices.
Base calculation for part-time employees.
Funding base normalization.
How to retrieve calculation percentages and rates.
Contribution calculation.
PeopleSoft Global Payroll for Spain calculates social security contributions by multiplying a base by a percent (in the case of regular employees) or by retrieving a fixed rate (in the case of trainees and apprentices).
In PeopleSoft Global Payroll for Spain, the system:
Calculates the social security funding base.
Normalizes the funding base by comparing the calculated base with government-defined maximum and minimum values.
Retrieves the percentage used to calculate the contributions of regular employees (or rates in the case of trainees and apprentices).
Calculates contributions by multiplying a base by a percent (or by assigning a fixed rate in the case of trainees and apprentices).
Note: PeopleSoft Global Payroll for Spain also calculates contributions of the pending vacation balance for terminated employees. This is discussed later in this product documentation.
This topic discusses how the system calculates the four funding bases that are required to calculate employees' social security contributions: common contingencies base, professional contingencies base, and bases for structural and nonstructural overtime.
Note: This topic discusses how the system handles regular employees. The calculations are different for trainees, apprentices, and employees with multiple jobs.
See Funding Base Calculation for Employees with Multiple Jobs.
See Base Calculation for Trainees.
Calculating the Common Contingencies Base
The Common Contingencies Base is the sum of various subbases that comprise earnings for:
Nonsick days base plus extra period proration.
Days when the employee is absent with these types of absence: IT absence, AT absence, maternity or paternity absence, or absence for risk during pregnancy.
For monthly employees who contribute 30 days total regardless of how many days are in a month, the system calculates absences days as 30 nonsick days.
Absence in which the employee contributes according to his earnings (cotiza por lo que gana).
Absence in which the employee contributes according to the minimum base (cotiza por la base minima).
In addition to summing up various subbases to calculate the final amount of the common contingencies base, the system sets the value of the maximum and minimum bases to use in the normalization process when an employee has multiple jobs in different companies.
Calculating the Professional Contingencies Base
The calculation of the professional contingencies base is almost identical to that of the common contingencies base. Here are the key differences between the calculation for the common contingencies base and the professional contingencies base:
The common contingencies calculation uses the maximum and minimum bases for the employee's work group (as defined on the Work Group page), whereas the professional contingencies calculation uses the upper and lower ceilings defined on the Social Security Scheme page.
The structural and nonstructural overtime amount is added to the nonsick base for the professional contingencies base.
Just as the common contingencies calculation uses a minimum hourly rate to calculate the funding base for part-time employees, the professional contingencies calculation uses its own minimum hourly rate.
Note: You can control how the system calculates the professional contingencies base (CP BRD) using the CLI VR CP BRD CLC (CP BRD Calculation) variable.
When the variable has a value of 1 (the default value), the system calculates the CP BRD as:(Professional Contingencies for the previous month – Overtime for the previous month) / Contribution Days + Overtime average for the last 12 months.
If you assign a value to the variable other than 1, the system calculates CP BRD as: Daily Common Contingencies Base for the previous month + Overtime average for the last 12 months.
Calculating the Overtime Bases
Unlike the common and professional contingencies bases, the bases for structural and nonstructural overtime do not undergo normalization and do not require any special calculations. They are used only as a basis for determining the employer and employee contribution for overtime.
When an employee has multiple jobs in different companies, the total social security base must be distributed between jobs to prevent excess contributions being taken from the employee's paycheck.
To trigger the calculation of the base for multiple jobs:
Specify the date (the effective date) on which the distribution of bases is to begin on the Multiple Employment page.
Enter a percentage (supplied by Social Security) representing the proportion of the common contingencies base that applies to each job on the Multiple Employment page. The system applies these percentages to the common contingencies ceilings and bases used in the normalization process.
Enter a percentage (supplied by Social Security) representing the proportion of the professional contingencies base that applies to each job on the Multiple Employment page. The system applies these percentages to the professional contingencies ceilings and bases used in the normalization process.
Social security contributions for trainees aren't calculated as a percentage of a funding base, but by means of fixed rates. Therefore, the system doesn't need to define a base to resolve the contributions or deductions of this category of employees. However, it still calculates both the Common Contingencies and Professional Contingencies bases for use in processing social security benefits.
Calculating the Common Contingencies Base
To calculate the common contingencies base for trainees and apprentices, PeopleSoft Global Payroll for Spain calculates 75 percent of the base using:
The lower ceiling for full-time employees whose contribution frequency is monthly or daily.
The minimum hourly rate for part-time employees.
Note: The lower ceiling and the minimum hourly rate used in this calculation come from the Work Group page.
Calculating the Professional Contingencies Base
To calculate the professional contingencies base for trainees and apprentices, PeopleSoft Global Payroll for Spain calculates 75 percent of the base using either the lower ceiling (for full-time employees whose contribution frequency is monthly or daily) or the minimum hourly rate (in the case of part-time employees).
Note: The lower ceiling and the minimum hourly rate used in this calculation come from the Work Group page.
Triggering Calculations for Trainees and Apprentices
To trigger the correct calculation for trainees and apprentices, define the contribution rates to apply on the Contribution page and link the employee to the correct scheme and Social Security contribution ID on the Contract Status/Content page.
PeopleSoft Global Payroll for Spain includes two contribution IDs for training contracts: 005 and 009. Use contribution ID 009 for contracts signed or extended after June 18th 2010 so that the system calculates unemployment benefits for employees with these contracts.
PeopleSoft Global Payroll for Spain also includes a third contribution ID for grant holders (Becarios): 010. The grant holder customers are identified with the contract type: 000.
The calculation of the Social Security base for part-time employees (regardless of whether they are regular or irregular part-time) differs from full-time employees. The reporting of contributions for these employees is done in hours.
When performing normalization, the system calculates the minimum base by multiplying the statutory minimum hourly rate by the actual number of hours worked. The maximum base for part-time employees is the same as the maximum base for full-time employees.
When calculating the part-time employee's professional contingencies, the system calculates the lower ceiling by multiplying the statutory minimum hourly rate by the number of hours worked. The upper ceiling for part-time employees is the same as the upper ceiling for full-time employees.
The system calculates hours differently for regular and irregular part-time employees. For regular part-time employees, the system multiplies the value of the variable CLI VR RED JORNADA by the number of scheduled working days, which the system extracts from the employees' assigned work schedules. For irregular part-time employees without an overridden value for CLI VR RED JORNADA, the system uses the employee's assigned work schedule to count the exact number of worked hours.
This topic discusses how PeopleSoft Global Payroll for Spain compares an employee's funding bases with the minimum and maximum amounts defined by the government to calculate both professional and common contingencies contributions for regular employees.
Note: This topic does not apply to trainees or apprentices, whose funding base is defined as a fixed rate.
The system calculates an employee's social security contribution in the following way:
Calculates all the subbases that contribute to the main funding base accumulator.
Sums all the subbases contributing to the social security funding accumulator.
To determine the common contingencies base, the system compares the sum calculated in step 2 to the maximum and minimum bases (amounts) defined for each work group on the Work Group page.
To calculate the professional contingencies base, the system adds the amount obtained in step 2 to structural and nonstructural overtime and compares the result with the upper and lower ceilings defined on the Scheme page. If the amount is below the minimum base/lower ceiling, it sets the base used for calculating contributions equal to the minimum base/lower ceiling. If this amount is greater than the maximum base/upper ceiling, it sets the base used for calculating social security contributions equal to the maximum base/upper ceiling.
For part-time employees, the system uses a set of reference bases and ceilings derived from the statutory minimum hourly rate.
Example
This example illustrates how PeopleSoft Global Payroll for Spain compares the common contingencies base.
Assume that an employee has a calculated monthly base of 700 EUR, which is the sum of contributing earnings plus extra period proration amount. Assume also that the employee has no absences in the current month, and has social security contributions that are processed monthly.
If the maximum and minimum bases for our employee are 3166.20 EUR and 1016.40 EUR, respectively, then the amount of 700 EUR falls below the minimum base. So 799.80 EUR is defined as the funding base.
Reference Bases and Ceilings
Although social security processing is essentially the same for professional and common contingencies, the two contribution types employ a different set of reference bases or ceilings. When calculating the common contingencies base, the system uses the maximum and minimum bases defined on the Work Group page. When calculating the professional contingencies base, the system uses the upper and lower ceilings defined on the Scheme page. In addition, when processing part time employees, the system uses a set of reference bases/ceilings derived from the statutory minimum hourly rate.
This table identifies the system pages on which you view, update, or define the current bases and ceilings used to calculate contributions for full-time employees and the minimum hourly rates used to define the reference bases and ceilings for part time employees.
|
Contribution Type |
View, Update, or Define Base/Ceiling on: |
Comments |
|---|---|---|
|
Common contingencies (full-time employees) |
Work Group Page |
None |
|
Common contingencies (part-time employees) |
Work Group Page |
When processing part-time employees, the system calculates the minimum base by multiplying the statutory minimum hourly rate by the real number of hours worked. The maximum base is the same as the maximum for full time employees. |
|
Professional Contingencies (full-time employees) |
Scheme Page |
None |
|
Profession Contingencies (part-time employees) |
Scheme Page |
When processing part-time employees, the system calculates the lower ceiling by multiplying the statutory minimum hourly rate by the number of hours worked. The upper ceiling is the same as for full-time employees. |
Note: The maximum bases, minimum bases, and minimum hourly rates for common contingencies vary by scheme ID and contribution group. The upper ceiling, lower ceiling, and minimum hourly rate for professional contingencies vary by scheme ID alone.
In the case of regular employees, when the base for calculating social security contributions has been defined, the system retrieves the correct percentage to apply to the base. In the case of nonregular employees (trainees and apprentices), the system retrieves the contribution rate.
PeopleSoft Global Payroll for Spain uses arrays to retrieve the correct percentage or rate. The exact rate or percentage used to calculate each contribution is set by law and can vary according to the scheme ID, contribution ID, and effective date.
See Setting Up Statutory Rates.
Percentages for IT and IMS Contributions
The system calculates Incapacidad Temporal (IT) and Invalidez, Muerte y Supervivencia (IMS) contributions as follows:
IT contribution = professional contingencies base × IT percentage.
IMS contribution = professional contingencies base × IMS percentage.
The system determines the appropriate IT and IMS percentage in one of three ways:
If there is an occupational code assigned to a payee, the system uses the percentages defined for that occupational code.
If there is no occupational code assigned to a payee, the system uses the percentages defined for the industrial activity declared for the Social Security Number (SSN) employer to which the payee belongs.
In certain cases such as sickness, maternity, or unpaid leave, the system uses the percentages associated with occupational code C: Sickness and special relationships.
You define IMS and IT percentages for occupation codes on the Social Security Occupation Cd (social security occupation code) page. You define IMS and IT percentages for industrial activities on the Industry Activity Table page.
See Industry Activity Table Page, Social Security Occupation Cd Page.
The final step in the social security process is to determine the actual amount of the contributions either by multiplying the correct percentage by the appropriate funding base accumulator (in the case of regular employees) or by assigning a fixed amount (in the case of trainees and apprentices). The contribution includes these employee and employer contributions:
|
Entity |
Contribution Details |
|---|---|
|
Employee |
Common contingencies, professional training, unemployment, structural overtime, nonstructural overtime. |
|
Employer |
Common contingencies, professional training, unemployment, Fondo de Garantia Salarial (FOGASA), structural overtime, nonstructural overtime, Incapacidad Temporal (IT) and Invalidez, Muerte y Supervivencia (IMS). |