Reviewing Salary Packages
This topic provides an overview of salary package reviews and discusses the following tasks:
Salary packages are generally effective for a year and subsequently subject to annual review. Regardless of the period of the package, it is necessary to review the package near the end of its effective period and establish a new package. Reviewing a package involves:
Reconciling the expenditure against the package.
Remodelling where necessary.
Confirming and enrolling the new package for payment.
Most organizations align their employee package reviews with the calendar using the calendar year, the tax year, or the financial year to determine the review cycle. This makes it easy to remember when employee packages are due for review.
However, you might align an employee's package with the employee's service or some other anniversary. This could mean that review periods are not consistent across your employee population. To handle this situation, run the Packages Due for Review report to identify any employee whose package is due for review in a specified period.
View the review date for each employee package on the Employee Salary Package - Package Model Page. The review date defaults when modelling the package. The default is for the review date to equal the package end date. Override this value if necessary. You can run the Packages Due for Review report to identify all employees who have salary packages due for review.
Before you can remodel an employee's package, reconcile the expenditure against the existing package. In this section, we discuss both processes:
Reconciling expenditure.
Remodelling the salary package.
Reconciling Expenditure
You should understand the expense calculation process and the package summary information before attempting to reconcile a package. At the package period end date, employees may have overspent or underspent their budgeted package entitlements. Before modelling a subsequent package, reconcile the differences.
When reconciling a package, you can deal with the differences in a number of ways. For a package that is overspent, you recover the difference as an overpayment or reduce the value of the subsequent package. Similarly, you can pay out underspent components or include the value in the subsequent package. The method of reconciling the differences varies from organization to organization.
Any action taken to pay or recover differences at the end of the package year should be made through the payroll system. Any adjustment to subsequent packages can be in the form of adjusted values for existing components or by defining a separate component to track the adjustment.
Remodelling the Salary Package
When you have identified the employees requiring package review, remodel their packages. This process can be as simple as inserting a new effective- dated package and confirming and enrolling the package, or it can be far more complex. The complexity depends on the changes to the employee's package.
To remodel a salary package for an employee:
Open the current salary package and insert a new row.
When you insert a new package, all of the current details from the current package appear by default, including the component details. The component from and to dates populate the package start and end dates. Components with an end date in the current package, which is prior to the start date of the new package, do not default from the current package because they are already ended.
To remodel for the employee, ensure that the effective date of the package is outside the package start and end dates for the existing package.
If the effective date is between the package start and end dates, it is regarded as an effective-dated change to the existing package rather than a new package model.
A new package model resets package expenditure and re-initializes the component from and to dates (to match the package start and end dates). An effective-dated change does not reset package expenditure or re-initialize the from and to dates.
Change any of the package details at the package or component level.
The package balance is recalculated based on the changes you make. If, however, you change the template ID used for the package, all package details are cleared and you must repackage all of the details for the employee.
If you have not modified the template ID for the employee, all of the package details are retained. Because changes are likely to be minor (such as an increase in the salary component or minor adjustment to other components), using the details of the employee's current package is the most efficient method of repackaging.
Check some package component details when repackaging on review. These details include estimated distance travelled for a motor vehicle component or other component, as well as details that can change year to year that are not evident in the package display.
After you enter the new package details, confirm and enrol the package.
Note: If you are tracking expenditures for packages, run the package expense calculation before remodelling the package. This ensures that the final expenses have been recorded against the package.