Example: Payroll Calculations to Adjust Negative Pay
The When to Adjust Deductions field and the Order to Adjust Deductions field enable you to determine the sequence that the system uses to deduct the DBAs.
These tables illustrate one approach for deducting DBAs:
Gross Deductions |
DBA Code |
|---|---|
Union |
#3000 |
Health |
#1000 |
Savings |
#2000 |
401(k) |
#7000 |
Advance |
#9000 |
Taxes |
Blank |
Negative Net Pay |
Blank |
Gross Deductions |
DBA Code |
|---|---|
Union |
#3000 |
Health |
#1000 |
Savings |
#2000 |
401(k) |
#7000 |
Advance |
#9000 |
Taxes |
Blank |
Negative Net Pay |
Blank |
Gross Deductions |
DBA Code |
|---|---|
Union |
#3000 |
Health |
#1000 |
Savings |
#2000 |
401(k) |
#7000 |
Advance |
#9000 |
Taxes |
Blank |
Negative Net Pay |
Blank |
Gross Deductions |
DBA Code |
|---|---|
Union |
#3000 |
Health |
#1000 |
Savings |
#2000 |
RRSP |
#7700 |
Advance |
#9000 |
Taxes |
Blank |
Negative Net Pay |
Blank |
These tables illustrate the order in which the system adjusts the DBAs if the When to Adjust Deductions field is 0 (default) and the Order to Adjust Deductions field is blank:
Gross Deductions |
DBA Code |
DBA Type |
|---|---|---|
1st |
#9000 |
Advance |
2nd |
#7000 |
401(k) |
3rd |
#3000 |
Union |
4th |
#2000 |
Savings |
5th |
#1000 |
Health |
Last |
Taxes |
Blank |
Gross Deductions |
DBA Code |
DBA Type |
|---|---|---|
1st |
#9000 |
Advance |
2nd |
#7700 |
RRSP |
3rd |
#3000 |
Union |
4th |
#2000 |
Savings |
5th |
#1000 |
Health |
Last |
Taxes |
Blank |
When net pay goes below zero or minimum pay, the system adjusts deductions in a high to low order, from DBA code 9999 to DBA code 1000. For example, DBA #8611 would be adjusted before #5322. You can override the order by using the When to Adjust Deductions and Order to Adjust Deductions fields.
These two fields enable you to control how the deductions are adjusted. You can group deductions into three groups so that one group is adjusted before the other two. You can also assign priority numbers within each group.
In this example, you want the Savings and 401(k) or RRSP adjusted (not deducted) before the Advance, Union dues, and Health. Therefore, assign Savings and 401(k) or RRSP a value of 0 in the When to Adjust Deductions field. Assign Advance,Union dues, and Health a value of 1.
This table illustrates the sequence of adjustments that the system will use to bring the payment balance to zero:
Gross Deductions |
DBA Code |
When to Adjust Deductions |
|---|---|---|
Union |
#3000 |
1 |
Health |
#1000 |
1 |
Savings |
#2000 |
0 |
401 (k) |
#7000 |
0 |
Advance |
#9000 |
1 |
Taxes |
Blank |
Blank |
Negative Net Pay |
Blank |
Blank |
1st |
#7000 (0) |
401(k) |
2nd |
#2000 (0) |
Savings |
3rd |
#9000 (1) |
Advance |
4th |
#3000 (1) |
Union |
5th |
#1000 (1) |
Health |
6th |
Blank |
Taxes |
Gross Deduction |
DBA Code |
When to Adjust Deductions |
|---|---|---|
Union |
#3000 |
1 |
Health |
#1000 |
1 |
Savings |
#2000 |
0 |
RRSP |
#7000 |
0 |
Advance |
#9000 |
1 |
Taxes |
Blank |
Blank |
Negative Net Pay |
Blank |
Blank |
1st |
#7000 (0) |
RRSP |
2nd |
#2000 (0) |
Savings |
3rd |
#9000 (1) |
Advance |
4th |
#3000 (1) |
Union |
5th |
#1000 (1) |
Health |
6th |
Blank |
Taxes |
Company policy might be to deduct the advance from the employee's pay before taxes are deducted. The government will make up any tax inequity with this employee at year-end, but the company might not be able to retrieve the advance amount if the company no longer employs the individual.
This table illustrates the sequence of adjustments when you enter 2 in the When to Adjust Deductions field for the Advance:
Gross Deduction |
DBA Code |
DBA Type |
|---|---|---|
1st |
#7000 (0) |
401(k) |
2nd |
#2000 (0) |
Savings |
3rd |
#3000 (1) |
Union |
4th |
#1000 (1) |
Health |
5th |
Blank |
Taxes |
6th |
#9000 (2) |
Advance |
Blank |
Blank |
Blank |
1st |
#7700 (0) |
RRSP |
2nd |
#2000 (0) |
Savings |
3rd |
#3000 (1) |
Union |
4th |
#1000 (1) |
Health |
5th |
Blank |
Taxes |
6th |
#9000 (2) |
Advance |
This example illustrates how the codes in the When To Adjust and Order to Adjust fields would work for one employee. When you set up the DBAs, you must consider how these codes affect all employees using these deductions.