Calculated Advances
You might want to allow employees to receive their regular payroll payment before the payment is regularly created. For example, you might provide employees with vacation payments before they take a vacation leave, or you might advance pay to a newly hired employee if waiting until the next regular payroll cycle places a financial strain on the employee. You can enter an interim payment to pay an employee in advance of a regular pay period. This payment can replace the regular payment for one or more pay periods. If the payment spans more than one pay period, you must enter a vacation or taxation factor so that the system accurately calculates the taxes for the advance payment. When taxes are calculated, the employee's rate of pay is annualized to determine the percentage of tax to be withheld. For example, suppose that a weekly paid employee receives four weeks of vacation pay in one payment. Without the calculation factor, the annualized salary is four times greater than the employee's actual annual salary because four weeks of vacation pay are being taxed as if all of the earnings were attributed to one week. This method of calculation results in a higher amount of taxes being withheld for that payment. When you use the calculation factor, the payment is taxed over the entire four-week period even though the entire four-week payment is made at one time. The system also uses this factor to calculate DBA information accurately for the period that is covered by the payment. In addition, if you enter values in the Pay Cycle Bypass Count and Benefit Cycle Bypass Count fields, the system does not create payroll payments for the employee during the periods that are covered by this advance payment.
To create a calculated advance, you enter the gross amount of the employee's earnings that you are going to advance to the employee. The system then calculates the amount of taxes and deductions that would normally be withheld from the employee's gross earnings, and creates a flat-amount interim payment for the calculated net pay amount. When you create a calculated advance interim payment, you enter information into the Interim Entry form just as you would for a standard interim payment; however, you must select the Calculate Interim Details option for the system to determine the net amount of the interim payment. When the interim payment is processed, the system creates a record in the employee's DBA instructions using the advance DBA that you enter in the processing options of the Work With Interims Workbench program. The amount of the advance DBA is the same as the net amount of the interim payment. No tax or PDBA (pay types, deductions, benefits, and accruals) history other than the advance DBA is updated for this interim payment. During subsequent payrolls, the amount that is associated with the advance DBA is deducted from the employee's pay according to the rules that are set up on the advance DBA. You can choose how much to recover from the employee's future paychecks, if any, and at what rate to recover the advance payment.
To pay an employee in advance for scheduled leave, you select the Timecard Selection tab, and then select Load only pay in advance timecards to grid. This option displays timecards that were previously entered with the pay in advance field set to Y (yes).