Proration and Segmentation
When you set up the Global Payroll system up to segment earnings, deductions, or absence entitlement elements in a pay run, you can also instruct the system to generate prorated calculation results for these elements based on such factors as the number of work hours or days in each slice/segment relative to the total number of work hours or days in the pay period. To do this, you must associate each earning, deduction, or absence entitlement element you want to prorate with a proration rule on the element definition pages. Then, when segmentation or slicing occurs, the element automatically calls the appropriate proration factor.
This topic discusses:
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Segmentation with proration.
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Segmentation without proration.
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Segmentation and proration of earning and deduction assignments.
Segmentation with Proration
To have the system prorate a segmented earning, deduction, or frequency-based entitlement element, specify proration as part of the element's definition.
You must define the proration rule to use in segmentation processing, because the rule is not hard-coded. Generally, a proration rule that you define consists of a numerator, representing the slice or segment, and a denominator, representing the entire pay period.
You can determine how to define the numerator and denominator that constitute the proration factor. The numerator and denominator can be any of these elements:
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Accumulator
-
Count
-
Duration
-
Formula
-
Variable
Note:
When you define a proration element, the Always Recalculate check box on the Proration Name page is automatically selected. This is to ensure that the system correctly calculates the proration factor when there is element segmentation.
Note:
You can also use the PRORATE system element to invoke proration for an earning or deduction element, even when there's no segmentation.
See Defining Proration Rules, Earnings - Rounding/Prorations Page.
Segmentation without Proration
To apply segmentation without proration, select the No Proration option on the Rounding/Proration page of the Earning/Deduction Definition component or the Absence Entitlement component.
This table provides an example of segmentation without proration:
| Element | Calc Rule | Base | % | On Element List for Segmentation? | Prorate |
|---|---|---|---|---|---|
|
E1 (Base Pay) |
Amount = 20,000 |
N/A |
N/A |
Yes |
No |
|
E2 |
Base × Percent |
E1 |
10% |
No |
No |
|
A1 (Accum) |
E1 + E2 |
N/A |
N/A |
No |
N/A |
|
E3 |
Base × Percent |
A1 |
10% |
No |
No |
Note:
You can slice or segment a period without applying proration, but an element cannot be prorated unless there is segmentation.
Assume that E1 represents base pay and that E1 is sliced on September 16, halfway through the pay period. None of the interrelated elements are defined to be prorated. This scenario is represented in this table:
| Element | Slice 1: September 1– September 15 | Slice 2: September 16– September 30 |
|---|---|---|
|
E1 (Base Pay) |
20,000 |
20,000 |
|
E2 |
(E1, Slice 1 + E1, Slice 2) × 10% = (20,000 + 20,000) × 10% = 4,000 |
|
|
A1 (Accumulator) |
Sum of E1 (Slice 1 + 2) and E2 = (40,000 + 4,000) = 44, 000 |
|
|
E3 |
A1 × 10% = (44,000 × 10%) = 4,400 |
Because E1 is not defined to be prorated, the system incorrectly calculates the value of E1 in each slice (slices 1 and 2) as 20,000 (the true value in each slice should be 20,000 × ½). This leads to additional errors: When E2 is calculated, the system sums up E1 in each slice, to yield a value of 40,000 × 10% (the correct amount is 20,000 × 10%). Similarly, A1 resolves to 44,000 instead of 22,000. And E3, defined as A1 × 10%, resolves to 44,000 × 10%, yielding 4,400 (the correct result is 2,200).
It's important to understand why segmentation does not automatically result in proration. For example, if E2 is a percentage of E1 and both are sliced, E1, but not E2, is prorated.
Segmentation and Proration of Earning and Deduction Assignments
In Global Payroll you can define segmentation triggers only for effective dated records, with one exception: you can define segmentation triggers for the begin and end dated earning and deduction assignment record GP_PYE_OVRD. The purpose of this exception is to enable you to assign an earning or deduction to a payee on the Element Assignment by Payee (GP_ED_PYE) or Payee Assignment by Element (GP_ED_ELEM) components and have the system segment—and prorate— the element when the assignment begin date comes after the pay period begin date, and/or the assignment end date comes before the period end date. If you want the system to prorate the calculation results, you must specify proration as part of the element's definition.
Note:
The steps for configuring the system to slice a pay period based on the begin and end dates of the overrides assigned to a payee on the Element Assignment by Payee (GP_ED_PYE) and Payee Assignment by Element components (GP_ED_ELEM) are almost identical to those used for standard segmentation setup, and are discussed in detail in the topic on setting up triggers.