10Setting Up Pay Calculation Components

This chapter contains the following:

Calculation Information

When you create an element, the application generates the rules and definitions required to calculate earnings or deduction amount. For all types of elements, these rules and definitions include elements, formulas, and processing rules.

This topic explains the payroll calculation information rules and definitions generated for user-defined elements with one of the following categories:

• Absence

• Benefit

• Involuntary Deductions

• Time card

All predefined tax and social insurance elements also include payroll calculation information rules and definitions.

Note: Elements that use calculation information definitions don't capture the values required for the calculation on element input values.

The following table summarizes the purpose of each type of calculation information and the task you can use to view or edit it.

Payroll calculation information

The manage payroll calculation information task groups rates and rules used by the payroll run to calculate values for user-defined earnings, and deductions.

Predefined elements such as tax and social insurance rules also use the payroll calculation feature to provide a group of rates and rules which vary by country or territory.

Use the Payroll Calculation Information task.

Payroll components

A payroll component is a group of rates and rules that the payroll run uses to calculate values for earnings and deductions.

When you create elements in certain classifications and categories, such as involuntary deductions, the element template creates a payroll component with the same name.

You can manage payroll components using predefined component groups, which vary by country or territory but may include social insurance, taxes, retirement plans, involuntary deductions, and benefits.

Use the Payroll Calculation Information task to view payroll components and their associated rules.

Wage basis rules

Wage basis rules determine the earnings that contribute to a deductible amount or, for exemptions, the elements that reduce the amount subject to deduction.

For example, wage basis rules might define which secondary classifications of standard and supplemental earnings are subject to a particular tax.

Rules may vary based on reference criteria such as a worker's place of residence.

Use the Component Group Rules task to define the rules and references.

Use the Calculation Cards task to enter reference values for workers.

Calculation value definitions

Calculation value definitions store calculation rates and rules, which may vary based on other criteria.

For example you can use calculation value definitions to calculate regional income tax rates for employees, which vary based on their income levels.

The calculation value definition controls which calculation values are enterable on a calculation card.

Use the Calculation Value Definitions task to view predefined definitions and the definitions that element templates create.

Note: You can edit definitions that element templates create, such as adding default calculation values.

Calculation factors

Calculation factors indicate which calculation value definition to use when calculating the amount.

For example, a calculation factor might identify which set of tax rates to use based on the tax code of the employee.

If tax rates vary based on a factor such as a person's filing status, then filing status is defined as a calculation factor reference. Thus, an element may have multiple calculation factors, one for each unique set of rules and references values.

Use the Elements, Element Overview task to access calculation factors.

Use the Payroll Calculation Information task to create new calculation factors. Normally, you don't need to create new factors, but if you do, you must also edit the element's payroll formula to use the new calculation factors.

Calculation components

When an element template creates a payroll component, it also creates calculation components that you can enter on personal calculation cards to enter specific details for the person.

Use the Calculation Cards task to enter calculation components for a person.

Calculation types

A calculation type describes a way of calculating a value. For example, calculating a value as a Flat Amount or by applying a Rate to a value.

There's a predefined set of Calculation Types.

Use the Calculation Value Definitions task to view calculation types.

Calculation steps

A Calculation Step is a name or label that denotes part of a payroll calculation.

For example, a time calculation can consist of the following parts:

• Calculate hours worked

• Calculate hourly rate

A regional tax calculation can consist of the following parts:

• Calculate Exemptions

• Calculate Allowances

• Calculate Tax

Each one of these is a calculation step in a fast formula.

Use the Payroll Calculation Information task.

Calculation methods

Predefined calculation methods are a way of performing a payroll calculation.

For example, a tax could be calculated using a cumulative year-to-date payroll balance or a periodic payroll value.

Use the Payroll Calculation Information task.

Calculation factors

Calculation factors create an association between an element, calculation step, and a calculation value definition.

Calculation factors indicate which calculation value definition to use when calculating the amount.

Calculation factors can support complex calculations such as tax rates. For example, if a tax rate varies based on a factor such as a person's filing status the filing status can be defined as a calculation factor reference thus, an element may have multiple calculation factors, one for each unique set of rules and references values.

Use the Elements, Element Overview task.

To understand how the rules and definitions for calculating payroll components work together, let's examine two common examples: income tax deductions and social insurance deductions.

Each example provides sample values for the following rules and definitions:

Individual Income Tax Deduction

A particular country or territory has a statutory deduction for an individual income tax. The exemption amount for the tax varies based on the person's residential status. The earnings classifications included in the wage basis for the tax vary by geographical region. Therefore, references are defined for both the wage basis rules and the calculation factors.

The calculation is a two-step process that calculates the exemption and then calculates the tax amount based on the reduced deductible amount.

• Component group: Taxes

• Component name: Individual Income Tax Deduction

• References for wage basis rules:

Reference Name Reference Value

Geographical Region

Mainland

Geographical Region

Territory

• References for calculation factors:

Reference Name Reference Value

Residential Status

Resident

Residential Status

Nonresident

• Wage basis rules:

Geographical Region Reference Value Primary Classification Secondary Classification Use in Wage Basis?

Mainland

Standard Earnings

All secondary classifications selected

Y

Territory

Standard Earnings

All secondary classifications selected

Y

Mainland

Supplemental Earnings

Commission

Y

Territory

Supplemental Earnings

Commission

N

Mainland

Supplemental Earnings

Personal Use of Company Car

Y

Territory

Supplemental Earnings

Personal Use of Company Car

N

• Related element: Individual Income Tax Processor

The processing rule (a fast formula) associated with this element drives the income tax calculation. It accesses the appropriate calculation factor, based on the resident status reference value and the current step in the calculation process.

• Calculation factors for Individual Income Tax Processor element:

Resident Status Reference Value Calculation Step Calculation Method Calculation Value Definition Values

Nonresident

Calculate exemption amount

None

Tax Exemption Amount for Nonresident

4800

Resident

Calculate exemption amount

None

Tax Exemption for Resident

2000

(None)

Calculate individual income tax

None

Individual Income Tax Rate

0-50000: 3%

50000-100000: 4%

Over 10000: 5%

• Tax reporting units: All tax reporting units defined for this payroll statutory unit can report this calculation component. You associate calculation components with a specific tax reporting unit on the personal calculation card.

Social Insurance Deduction

The same country has a statutory deduction for a social insurance tax. Both the employer and the employee contribute to the social insurance tax, but their contribution rates are different. Calculation of the deduction includes several steps:

1. Calculate the base amount for the employee's contribution.

2. Calculate the base amount for the employer's contribution.

3. Calculate the employee's contribution amount.

4. Calculate the employer's contribution amount.

The following rules and definitions apply to this calculation at the legislative level:

• Component group: Social Insurance

• Component name: Medical Insurance Deduction

• References for wage basis rules: None

• References for calculation factors:

Reference Name Reference Value

Contribution Level

Employee

Contribution Level

Employer

• Wage basis rules:

Primary Classification Secondary Classification Use in Wage Basis?

Standard Earnings

All secondary classifications selected

Y

Supplemental Earnings

All secondary classifications selected

Y

• Related elements: Medical Insurance Calculation element

The processing rule (fast formula) associated with this element drives the social insurance calculation. It accesses the appropriate calculation factor, based on the contribution level reference value and the current step in the calculation process.

• Calculation factors for Medical Insurance Calculation element:

Contribution Level Reference Value Calculation Step Calculation Method Calculation Value Definition Values

Employee

Calculate Employee Base Amount

None

Employee Contribution Upper Limit

8000

Employee

Calculate Employer Base Amount

None

Employer Contribution Upper Limit

5000

Employer

Calculate Employee Contribution Amount

None

Employee Contribution Amount

4%

Employer

Calculate Employer Contribution Amount

None

Employer Contribution Amount

3%

• Tax reporting units: All tax reporting units defined for this payroll statutory unit can report this calculation component. You associate calculation components with a specific tax reporting unit on the personal calculation card.

Calculation Cards

You can create and manage calculation cards at several different levels, from an individual person to a payroll statutory unit. Use the cards to capture information specific to a person or organization, such as an employee's tax filing status or an employer's tax identification number. Calculation card entries override default values defined at other levels. The priority of information, from highest to lowest, is as follows:

1. Personal calculation card (payroll relationship level)

2. Tax reporting unit calculation card

3. Payroll statutory unit calculation card

4. Calculation value definitions (legislative data group level)

Note: Not all countries or territories support creating calculation cards for payroll statutory units and tax reporting units. The enterable values at each level also vary by country or territory. The basic steps to create and manage calculation cards are the same at all levels.

Use these examples to understand when you might define calculation cards at each level.

Personal Calculation Card

Scenario: An employee qualifies for a special reduced tax rate.

Tax Reporting Unit Card

Scenario: The income tax exemption amount is 2000 at the legislative data group level, but a tax reporting unit in a particular state or province uses an exemption amount of 2500. Enter this default value for the tax reporting unit, which can be overridden on personal calculation cards.

Task: Legal Reporting Unit Calculation Cards task in the Setup and Maintenance work area.

Payroll Statutory Unit Card

Scenario: During application setup, the implementation team defines default contribution rates for the payroll statutory unit.

Task: Legal Entity Calculation Cards task in the Setup and Maintenance work area.

Calculation Value Definition

Scenario: You can view the predefined income tax rates for your country, but you can't edit them.

If an employer qualifies for a special tax rate, enter these values on a calculation card at the appropriate level.

Personal payroll calculation cards capture information specific to a particular payroll relationship. Payroll runs use this information to calculate earnings and deductions. Actions such as hiring a person or loading data may create some cards automatically. Otherwise, you can create the card manually. You can also add components to cards and enter calculation values, which may override default values. Additionally, you can associate the card with a tax reporting unit.

To view and manage calculation cards use the Calculation Cards task in the Payroll Administration or Payroll Calculation work area.

Card Types

The types of calculation cards you can create and the type of information captured on a card vary by country or territory. Examples include cards for:

• Statutory deductions

• Involuntary deductions

• Time card entries

• Absences

• Benefits and pensions

Additional cards may be available to capture information for reporting purposes.

Card Creation

In countries where all employees are subject to the same set of statutory deductions, the application automatically creates one or more statutory deduction calculation cards. These cards are created when you hire a new employee. In other countries, you must create calculation cards manually.

For other card types, you create calculation cards as needed for each employee. If you load absence, time card, or pension data from another application, the application automatically creates the calculation cards.

Calculation Components and Component Groups

The Calculation Card Overview pane shows a hierarchy of calculation components within component groups. For example, child support, education loan, and alimony are calculation components in the US involuntary deduction component group.

Each component relates to an element, such as an income tax deduction. Adding a calculation component to the card creates an entry for the related element.

A calculation component may have one or more references that define its context, such as the employee's place of residence or tax filing status.

Click a row in the Calculation Components table to see component details. Use the Component Details section to enter additional values used to calculate the component.

Note: For some countries, the Calculation Cards page doesn't include the Calculation Components and Component Details sections. Instead, the layout of the page is specific to the data items required for the country.

Enterable Calculation Values

When you select a calculation component, you may see the Enterable Calculation Values on the Calculation Card tab. Here you can enter specific rates or other values for the person, which may override default values held on a calculation value definition. For example, if an employee qualifies for a special reduced tax rate, you enter the rate as an enterable value on their personal calculation card.

You can't override values loaded from another application, but you may be able to add values, such as adding additional contributions to a pension deduction.

Tax Reporting Unit Associations

Click the Associations node in the Calculation Card Overview pane to associate a tax reporting unit with the card. Associations determine:

• Which rates and rules held at tax reporting unit level apply to the calculation of the components

• How the calculations are aggregated for tax reporting

Rules about what you can enter here vary by country:

• Typically, all components on a calculation card are associated with the same tax reporting unit by default.

• You may be able to associate individual components with different tax reporting units.

• If a person has multiple assignments, you may be able to associate specific assignments with calculation components.

Options for Employer Calculation Cards

Kuwait localization provides two predefined calculation cards at the payroll statutory unit (PSU) level.

• Employer social insurance details calculation card

• Employer gratuity details calculation card

You can access these cards using the Manage Legal Entity Calculation Records task from the Payroll Administration work area.

Employer Social Insurance Calculation Card

Here's the information this card uses for social insurance calculation at the legal entity level:

• Employer sector: You can select either government or private sector. The application applies the calculation rules based on the sector type you select.

• Proration rules:

• If the employee works till the last day of the month, then the social insurance contributions start from the date of joining to the last date of the month.

• If the employee leaves before the last day of the month, then the contributions for that month aren't considered.

• Contributory salary reference formula: You can define the formula that calculates the contributory salary at the legal entity level. This is used as the reference value for social insurance calculation.

• The contributory salary is divided into two types of calculations: the basic social insurance and the supplementary social insurance. These are the earnings for calculation of basic insurance and supplementary insurance:

Insurance Type Minimum Earnings (Kuwaiti Dinar) Maximum Earnings (Kuwaiti Dinar)

Basic Insurance

230

1500

Supplementary Insurance

1500.001

2750

• If the contributory salary is less than the minimum earnings, then the minimum earnings is used to calculate social insurance contributions. If the contributory salary is more than the maximum earnings, then the maximum earnings is used to calculate social insurance contributions. Otherwise, you must use the contributory salary to calculate social insurance contributions.

• Age limit: Social insurance processing is done for an employee whose minimum age is 18 years and the maximum is 65.

Employer Gratuity Details Card

This card contains the PSU details and uses this information for gratuity calculation at the legal entity level:

• Calculation basis: To calculate gratuity, the application uses the employee's monthly salary as the basis and converts the monthly salary to annual salary, while considering the employee's length of service.

• Salary formula: You must define your own salary formula for gratuity calculation. Once defined, you can select it here.

• Reference formula: You can define your own reference formula to calculate the paid gratuity amount. Once defined, you can select it here. This overrides the amount calculated by the default reference formula in the gratuity details calculation component.

• Length of service: The length of service is calculated from the initial hire date to the date of termination, deducting any unpaid leave taken during the service. According to the Kuwaiti labor law, a month is equal to 26 days, and a week has six working days, Friday being a holiday, while calculating the employee's length of service.

• An employee who resigns during probation isn't entitled for gratuity payments.

• A married female employee resigns, and the date of her marital status change is within six months before her resignation date, she's eligible for full gratuity regardless of her length of service.

• Gratuity calculation differs depending on the employment sector of the employee.

• The rules for gratuity calculation differ for fixed and unlimited contract types.

• The rules for gratuity calculation also differ depending on whether the termination is initiated by the employer or the employee.

Employer Social Insurance Calculation Card

Here's the information this card uses for social insurance calculation at the legal entity level:

• Employer sector: The employer can be in any of these sectors:

• Government

• Private

• Military

Note: Deduction rules are based on the employer sector, and are same for government and military. Oil is categorized under the private sector.
• Contributory salary reference formula: You can define the formula that calculates the contributory salary at the legal entity level. The contributory salary value is derived from this formula and is used as the reference value for social insurance calculation. This formula must have the value returned using the variable CONTRIBUTORY_BASE. For more details on this calculation, you can refer to the section on social insurance calculation.

Create an Employer Social Insurance Calculation Card

Here’s how you can create this card:

1. Sign in as a superuser with privileges to create all organizational structures.

2. Select Setup and Maintenance .

3. Go to the Define Legal Entities for Human Capital Management task.

4. Select the legal entity for which data needs to be added, and then select the Manage Legal Entity Calculation Cards task.

5. Select Employer Social Insurance Details from the list. If no card exists, click Create. Now select Employer Social Insurance Details and click Continue.

6. Enter the required details in the Employer Social Insurance Details section.

Options for Gratuity Details Calculation Card

The calculation component on the Gratuity Details calculation card corresponds to the payroll calculation element gratuity contribution, defined at the legislative level. This card is automatically created upon employee termination.

Gratuity Details Calculation Component and Component Details

The gratuity details calculation component and component details record is automatically created in the card. You can use the gratuity details component to enter data that impacts the calculation of gratuity payment.

You can also enter an override amount to be paid to the employee as gratuity. This amount will override the gratuity amount calculated using the reference formula defined at the payroll statutory unit level.

Imagine that the primary term is a fixed contract type and the subsequent terms are unlimited, then the amount of gratuity calculated is based on the fixed contract type instead of the reduced amount for the unlimited contract. In this case, you can enter an override amount at the payroll relationship level.

Employer Gratuity Details Card

This card contains PSU gratuity details. Here's the information this card uses for gratuity calculation at the legal entity level:

• Gratuity to be paid: The employer indicates the option of paying gratuity to the employees. This is applicable to Kuwaiti government or military sectors and impacts social insurance processing. For details on the calculation, see the section on social insurance calculation.

• Gratuity salary formula: You must define your own salary formula for gratuity calculation. Once defined, you can select it here. The formula must return the values using the variable MONTHLY_SALARY. Additional details on the calculation are provided in the section on gratuity calculation.

• Reference formula: You can define your own reference formula to calculate the paid gratuity amount. Once defined, you can select it here. The formula must return the values using the variable PAID_GRATUITY. This overrides the amount calculated by the default reference formula in the End of Service Details card in the gratuity details calculation component.

• Gratuity option: The Gratuity Option list includes two values:

• Standard gratuity: The gratuity payment calculation method remains the same as the current method.

• Social insurance gratuity: An additional calculation is made to reduce the gratuity payment by the total employer social insurance contributions.

Create an Employer Gratuity Details Card

Here’s how you can create this card:

1. Follow steps 1-5 used to create the Employer Social Insurance Details card.

2. Select Employer Gratuity Details.

3. Enter the required details in the Kuwait Employer Gratuity Details section.

Employee Social Insurance Calculation Card

The calculation component on the employee social insurance card corresponds to the social insurance contribution payroll deduction element, that you defined at the legislative level. The employee social insurance component details section provides you with all the additional information necessary for calculating the deduction. When the employee social insurance calculation card is created, the social insurance calculation component and the social insurance calculation component details records are automatically created. You can also create additional calculation component details such as Social Insurance Contributory Salary Override and Social Insurance Contributory Salary Adjustment Amount.

The social insurance card is automatically created when the new hire process for an employee is completed, provided the employee citizenship information is specified. If the citizenship information isn't specified, then you must manually create the social insurance card for this employee.

For the automatic card creation functionality to be enabled, your Payroll Product Usage must be set to Oracle Fusion Payroll or Payroll Interface.

Options for Kuwaiti Employee Social Insurance Calculation Card Components

When you have completed the new hire process and specified the citizenship for the employee, the employee social insurance calculation card is automatically created. You can use the Manage Personal Calculations task in the Payroll Calculation work area to view and update the card as required.

Let's look at some points to consider when completing the information in the employee social insurance calculation component details section.

Citizenship

The citizenship information is derived from Person Information in the calculation card if you have entered a value for the employee. However, if Person Information has no details, then the calculation card isn't automatically created and you have to create it manually. You must enter the citizenship information.

Nationality Obtained Date

This date is used for reporting purposes and it can't be earlier than the person's date of birth.

Nationality Number

This is a number assigned in sequence to all Kuwaiti nationals and is an optional field for you.

Article Number

This is an alphanumeric identification number assigned to a Kuwaiti national. This number helps you identify the employment sector of a person, and whether the person is Kuwaiti by birth or has an acquired Kuwaiti nationality.

Social Insurance Contributory Salary Override

This applies only to private or oil sector employees. You can use the override amount to specify a social insurance contribution amount that's different from the social insurance balance, or the amount derived from the formula you defined at the legislative level. This is processed in the first month of joining or in the month of January every year, and applies for the whole year.

This applies only to private sector employees. You can use the adjustment amount to make any changes to the social insurance contributory salary amount. You can specify this any time during the year.

Create an Employee Social Insurance Calculation Card

To get started:

2. Select the Payroll Calculations task.

3. Go to the Manage Calculation Cards task and select the person for whom you want to review the calculation card.

4. Select the Employee Social Insurance Details Card from the list.

Note: If no card exists, you need to select Create and create the calculation card manually.
5. Enter or modify the social insurance details of the employee.

Let’s look at a few things to consider when entering the data:

• Citizenship: Social insurance deductions are only processed for the GCC (Gulf Corporation Council) citizens. Remember to specify the citizenship of the employee as the social insurance card will be processed based on this information.

• Date of Acquiring Nationality: The date of acquiring nationality can’t be earlier than the employee's date of birth.

• Registered for Social Insurance: This check box indicates whether to process the social insurance calculations for the employee. For Kuwaiti citizens, this check box is always selected.

• Article: An alpha-numeric field with a limit of 120 characters.

• Nationality Number: The nationality number of the employee.

• Exception Type: For UAE citizens only.

• Exempt from SI Contribution Difference: This check box indicates whether to process the difference in the employer's subscription. The employee will normally pay the difference in the contribution unless the country of citizenship has agreed to pay the difference on behalf of the employee.

• Country of Citizen Pension: An option to indicate if the employee is receiving the pension from the country of citizenship.

• Gratuity Contribution Start Date: The start date of deducting gratuity contribution. Employees can only have gratuity contributions deducted for a maximum of 18 years from the start date.

• Gratuity Previously Received from PIFSS: An option to indicate if the employee has received gratuity payment from PIFSS.

• Gratuity Received from Previous Employer: An option to indicate if the employee has received gratuity payment from the previous employer.

• Date Gratuity Received: The date when the employee received the gratuity payment.

6. Enter the Override Amount.

To enter the employee social insurance contributory salary override or adjustment amounts, you must manually create the calculation component details.

7. Click Create to create the calculation component details and enter the required information.

Here are a few things to consider when entering the data:

• Social Insurance Contributory Salary Override: You can create the calculation component details for Social Insurance Contributory Salary Override, if applicable. You can use the override amount to specify a social insurance contribution amount that's different from the social insurance balance, or the amount derived from the reference formula at the legislative level. This is only applicable for private sector employees and can only be processed in the first month of employment and in the subsequent January each year. Once specified, this amount is applicable for the whole year.

• Social Insurance Contributory Salary Adjustment: You can create the calculation component details for Social Insurance Contributory Salary Adjustment Amount, if applicable. You can use the adjustment amount to make any changes to the social insurance contributory salary amount. This is only applicable for private sector employees and can be specified any time during the year.

8. Enter Adjustment Amounts: To enter the employee social insurance contributory salary override or adjustment amounts, you must manually create the calculation component details.

9. Click Create to create the calculation component details and enter the required information.

Note that the calculation card is associated automatically to the appropriate TRU and assignment. Click the Associations tab to ensure that the calculation card is associated with the appropriate TRU and assignment.

Note: For Kuwait localization, keep in mind that it's mandatory to associate the social insurance card to a person for running the payroll. You can of course change the TRU and assignment using the edit option, if you choose to.

Edit an Employee Social Insurance Calculation Card

Let's look at an example that demonstrates how to modify an employee social insurance card that was automatically generated. You can edit the card to reflect the employee specific values that differ from the default values.

This table summarizes the key decisions for this scenario.

Decision to Consider In this Example

Is the employee a citizen of Kuwait?

Yes

Before You Start

1. A payroll calculation for employee social insurance exists at the legislative level.

2. A calculation card definition that includes the social insurance calculation exists at the legislative level.

3. The new hire process has been completed for the person, and the person's citizenship status is specified.

4. For social insurance calculations to be applicable, the person should be an employee and a valid citizen of Kuwait.

Open the Calculation Card

1. In the Payroll Administration or Payroll Calculation work area, select the Manage Personal Calculations task.

2. Complete the fields in the Search section. Here's something to help you:

Field Value

Name

ZHRX-KW-V-Employee, Employee 1

Legislative Data Group

ZHRX-KW-V-LDG One

Effective Date

01/01/2010

3. Click Search to display a list of matching payroll relationships.

4. Click the row for ZHRX-KW-V-Employee, Employee 1, to open the Manage Personal Details page. All available calculation cards are displayed in the Search Results.

5. Click the Employee Social Insurance Details card that was automatically created for this payroll relationship.

Edit the Employee Social Insurance Components and Component Details
1. In the Calculation Card Overview pane, you can view the calculation groups associated with this calculation card. In this example, for instance, you can see the Social Insurance calculation group.

2. In the Calculation Card Overview pane, click Associations to review the TRU associations. The card and all the employment terms for the employee are automatically associated to the default TRU that belongs to the PSU for which the employee has a payroll relationship.

3. In the Calculation Component section, select Employee Social Insurance Details.

4. In the Calculation Component Details section, select Social Insurance Details.

5. Here's a look at what the default values look like:

Field Default Value

Citizenship

Kuwait

Nationality Obtained Date

Blank

Nationality Number

Blank

Article Number

Blank

Registered for Social Insurance

Selected

6. Select Edit - Correct.

7. Complete the fields in the component details. Here's something you may find helpful:

Field Value

Nationality Obtained Date

19/09/1984

Nationality Number

Optional

Article Number

Optional

8. Select Create Calculation Component Details to create additional component details. In this particular example, you create the Social Insurance Contributory Salary Override.

9. Complete the field in the component details, as shown in the table:

Field Value

Override Amount

1200 Kuwaiti Dinars per month

Note: Now that you're almost done, you can similarly create calculation components details for Social Insurance Contributory Salary Adjustment.

10. Click Save and Close.

Employee Gratuity Details Card

The component in the Employee Gratuity Details card corresponds to the payroll element gratuity contribution defined at the legislative level. This card captures additional information related to gratuity.

The Employee Gratuity Details card has only one component, and that's Employee Gratuity Details. When you create the Employee Gratuity Details card, the gratuity details component and component details record is created automatically. You can use the gratuity details component to enter data that impacts the calculation of gratuity payment.

On termination, you can choose to enter an override amount to be paid to the employee as gratuity. This amount overrides the gratuity amount calculated using the reference formula defined at the payroll statutory unit level and the legislative level formula calculation.

A Gratuity card is created automatically upon employee termination. The gratuity component, component details, and the association are automatically created simultaneously. This automatic card creation is enabled only if the Payroll Product Usage is set to Oracle Fusion Payroll or Payroll Interface.

Create an Employee Gratuity Details Card

Here’s how you can create this card:

1. Follow steps 1-4 used to create the Employee Social Insurance Details card.

2. Enter or edit the required information.

3. To enter the gratuity details override amounts, you must manually create the calculation component details. Click Create to create the calculation component details and enter the required information in the Override Amount field.

Here’s what you need to consider when entering the data:

• Override Amount: You can enter an override amount to be paid to the employee as gratuity. This amount overrides the reference formula for gratuity calculation defined at the PSU level, and the calculation formula defined at the legislative level.

Note: The calculation card is automatically associated to the appropriate TRU and assignment.
4. Click the Associations tab to ensure that the calculation card is associated with the appropriate TRU and assignment.

Automatic Social Insurance Calculation Card Creation

If the value of your country extension setting in the Manage Features by Countries or Territories page is either Payroll or Payroll Interface, an employee social insurance calculation card is created automatically when a new payroll relationship is created. You can use the Manage Personal Calculations task in the Payroll Calculation work area to view and update the card as required.

Let's look at the aspects of automatic creation:

• Calculation components and component details

• Association and association details

• Element entries

Calculation Components and Component Details

Here's a look at the details that the automatically created card contains.

Component Details Default Value

Citizenship

Derived from Person Information or entered manually

Nationality Obtained Date

Blank

Nationality Number

Blank

Article Number

Blank

Registered for Social Insurance

Not selected

Exception Type

Blank

Exempt from SI Contribution Difference

Not selected

Country of Citizenship Pension

Not selected

Note: Automatic calculation card creation occurs only if citizenship is specified for the employee.

If you have specified the employee citizenship in the Person Information during the new hire process, then this value is defaulted in the automatically created card. If you haven't specified the citizenship, you must create the calculation card manually and update the citizenship information.

If the employee isn't registered for Social Insurance, even though a Social Insurance Number is available, the card is created. You can manually amend this information on the card. You can create these additional calculation component details, if required:

• Social Insurance Contributory Salary Override

• Social Insurance Contributory Salary Adjustments

Associations and Association Details

The calculation card is automatically associated to the default tax reporting unit (TRU), for which the payroll relationship is created. Keep in mind that you can associate the calculation card and all the employment terms with only one TRU. If more than one TRU is associated with the payroll relationship, the one flagged as the main TRU is used.

Element Entries

An element entry for the Social Insurance component is created automatically when the card is created, provided you have defined the eligibility for those elements and the employee meets the eligibility criteria.

Automatic Gratuity Details Calculation Card Creation

If the value of your country extension setting in the Manage Features by Countries or Territories page is either Payroll or Payroll Interface, an employee gratuity details calculation card is created automatically when an employee is terminated. You can use the Manage Personal Calculations task in the Payroll Calculation work area to view and update the card as required. Let's look at the aspects of automatic calculation card creation.

• Calculation components and component details

• Association and association details

• Element entries

• Editing the card

Calculation Components and Component Details

The automatically created card contains these details:

Component Detail Default Value

Override Amount

Blank

Associations and Association Details

The calculation card is automatically associated to the default tax reporting unit (TRU), belonging to the payroll statutory unit (PSU) for which the payroll relationship is terminated. Keep in mind that the calculation card and all the employment terms for the employee are associated with only one TRU.

Element Entries

An element entry for Gratuity is created automatically when you create the card, provided you have defined the eligibility for those elements and the employee meets these eligibility criteria.

Edit the Card

Once the card has been created, you can view and update the card as required. Suppose you enter an amount in the Override Amount field, this amount now overrides the calculated gratuity amount to be paid to the employee.

Overview of Statutory Deductions and Gratuity Calculation

The data you enter at the TRU and person levels is the starting point for calculating statutory deductions and gratuity payment, if applicable.

Based on legislative requirements, Kuwait localization has predefined a setup with the parameters to be used in the calculation. These parameters are stored in the calculation information repository.

Social Insurance Calculation

Social insurance is applicable to all Kuwaiti citizens who work in Kuwait and are paid there. This contribution is normally paid both by the employer and the employee.

Contributions are calculated as percentages of a contributory salary. The contributory salary components are elements such as salary, social allowances, child allowance and so on. The legislation determines which elements are liable to social insurance contributions, whereas the amounts and definitions depend on the employer's regulations.

For private sector employees:

• The amount of the contributory salary can be overridden at the person level.

• If this amount isn't entered at the individual level, you can define a formula used to calculate the contributory salary at the legal employer level.

• Finally, if neither individual override, nor legal employer formula, are defined, the contributory salary uses the value of earnings elements that are subjected to social insurance. These elements are identified through secondary classification and feed the balance Subject to Social Insurance. Further detail on how Kuwait has defined element classifications and balances can be found in the related sections.

The contributory salary has a monthly minimum value and a monthly ceiling. This means that if the monthly social insurance income is lower than the minimum value, contributions are calculated on the minimum value. If the monthly social insurance income exceeds the monthly ceiling, contributions are due just on the part up to the ceiling. For the Kuwait Basic social insurance is calculated on earnings between KWD 230-1,500. Supplementary social insurance is calculated on earnings over KWD 1,500 up to a maximum of KWD 2,750.

• For the Private Sector, the current contribution rate for the employee is 10.5% and the employer is 11.5%.

• Employee contribution is inclusive of 2.5% gratuity contribution which is effective from 1st January 2015. To calculate gratuity contribution, the Employee Social Insurance Calculation Card is enhanced to capture Gratuity Contribution Start Date, Gratuity Previously Received from PIFSS, and Gratuity Received from Previous Employer.

• If the payroll relationship of an employee is terminated in the middle of the month, social insurance contributions aren't deducted. If at the end of the month, the full social insurance contributions will be deducted.

For the government sector:

• The contributory salary uses the value of earnings elements that are subjected to social insurance. These elements are identified through secondary classification and feed the balance Subject to Social Insurance. Basic social insurance is calculated on earnings between KWD 230-1,500 .Supplementary social insurance is calculated on earnings over KWD 1,500 up to a maximum of KWD 2,750.

• The current contribution rate for the employee is 10% and the employer is 11%.

• Employee contribution is inclusive of 2.5% gratuity contribution which is effective from 1st January 2015.

To calculate the gratuity contribution the Kuwait Employer Gratuity Details is enhanced to capture Gratuity to be Paid; and the Employee Social Insurance Calculation Card is enhanced to capture Gratuity Contribution Start Date, Gratuity Previously Received from PIFSS, and Gratuity Received from Previous Employer.

• On termination, the social insurance contributions are calculated up to the last working date and are always based on the balance Subject to Social Insurance. If the earnings elements that feed the balance are enabled for proration then social insurance contributions will automatically be prorated.

Social Insurance Calculation for GCC Citizens

Social Insurance is now applicable to all Gulf Cooperation Council (GCC) citizens. The legislation was changed to have a reciprocal agreement between all 6 GCC countries, which are United Arab Emirates (UAE), Kuwait (KW), Saudi Arabia (SA) Bahrain (BA), Sultanate of Oman (OM) and Qatar (QA). Social Insurance contributions are calculated and deducted from all employees who have a GCC nationality and are working in any of the GCC countries in accordance with the Unified Law of Insurance Protection Extension.

The Employee Social Insurance Calculation Card captures these additional details as well:

• Any additional personal details based on localization, for example, Exception Type in UAE.

• Whether or not it has been agreed that the country of citizenship will pay any difference in contributions.

Note: Keep in mind that Currency Conversion Rate across the country of citizenship and country of employment must be considered for SI calculation for GCC citizens working in Kuwait. You must set up conversion rates before processing SI for GCC citizens.

Social Insurance Deductions

Social insurance contribution is calculated through the Social Insurance deduction that's part of Calculation group Social Insurance. Calculations are done through the Social Insurance element.

Here's how you can view details on calculation groups, deductions and elements:

2. Go to the Manage Payroll Calculation Information task in the Payroll Calculation work area.

3. Select Social Insurance Deduction to view the details.

View Calculation Information Repository for Social Insurance

Parameters used in the calculation of social insurance are stored in the calculation information repository. These parameters are predefined by the Kuwait localization and you can’t modify them in the implementation phase.

Here’s what you need to do to view predefined parameters:

2. Go to the Manage Payroll Calculation Information task in the Payroll Calculation work area.

3. Select Social Insurance Deduction.

4. Open the Calculation Factors for the related element.

5. Click Range Values.

If you're looking for information on additional social insurance calculation, see the Oracle Fusion HRMS (Kuwait): Additional Social Insurance Implementation and Functional Considerations white paper (Doc ID 2031407.1) on My Oracle Support (MOS).

Gratuity Calculation

Persons working in Kuwait are entitled to an additional payment upon termination which is called Gratuity. The entitlement to this payment is accrued during the work relationship.

The gratuity amount to be paid is driven by Kuwaiti labor laws. If you're not following the Kuwait labor laws, you can define your own formula for gratuity processing. Here are the available options:

• You can define your own formula and create a setup according to the values to be returned to your formula run results. In this scenario, you may not need to use the localization solution for gratuity processing.

• You can define your own reference formula gratuity processing, which substitutes the gratuity formula defined at the legislative level. If a user-defined formula exists, then the seeded formula runs it.

Let's take a look at the rules that the localization solution uses for gratuity processing:

• Company type: The gratuity entitlement is based on company type and is captured in Kuwaiti Legal Employer Details.

Note: For information on Kuwaiti Legal Employer Details, you can always refer to the Legal Entity HCM Information for Legal Employers and Payroll Statutory Units section in the Oracle Fusion HRMS (Kuwait): HR Implementation and Functional Considerations white paper on My Oracle Support (MOS).
• The duration of service and the contract type (fixed or unlimited) determines the number of days of gratuity payment to which the payee is entitled per year of service. These days are retrieved from the calculation information repository setup. Keep in mind that the duration of service can be reduced by unpaid or unauthorized absences. You can get this by creating elements for Unpaid Leave classification and attaching this element to the absence type. If an absence with this newly created absence type is recorded, the Unpaid Leave element's days input value will feed the Leave Without Pay balance. In the Gratuity formula, you can use the Leave Without Pay balance to get the unpaid absences.

• The base salary for gratuity payment is calculated through the salary formula you selected at the legal employer level.

• If the person is terminated, company type, contract type and termination initiator are checked before the amount is paid:

• If the termination initiator is employer, then the complete gratuity accrued is paid to the employee.

• If the termination initiator is the employee, the application fetches the payment factor using the contract type and period of service. Payment factor is available in the calculation information repository.

Gratuity Entitlement and Payment

Let's walk through the details on gratuity entitlement and payment for various categories.

Government and Private Company

An employee is entitled to half a month's salary for the first 5 years and 1 month's salary for each additional year.

Let's go through the rules of gratuity payment:

• If the employee is dismissed by the employer or is terminated during probation period, then no gratuity is paid.

• If the employer terminates the employee, the employee is paid the complete gratuity that they're entitled to.

• If the contract type is Unlimited and the employee has resigned before completing 3 years of service, then no gratuity is paid. If the employee has completed between 3-5 years, half the gratuity amount is paid. If the employee has completed between 5-10 years, two-third the gratuity amount is paid. If the employee has completed more than 10 years, the complete gratuity amount is paid.

• If the contract type is Fixed and the employee has completed 3 years of service, complete gratuity is paid upon termination.

• The total amount paid should not be greater than 1.5 times the annual salary.

Oil Company

An employee is entitled to 1 month's salary for the first 5 years and 1.5 month's salary for each additional year.

Here are the rules of gratuity payment:

• If the employee is dismissed by the employer or is terminated during probation period, then no gratuity is paid.

• If the employer terminates the employee, the employee is paid the complete gratuity that they're entitled to.

• If the contract type is Unlimited and the employee has resigned before completing 2 years of service, then no gratuity is paid. If the employee has completed between 2-5 years, half the gratuity amount is paid. If the employee has completed between 5-10 years, three-fourth the gratuity amount is paid. If the employee has completed more than 10 years, the complete gratuity amount is paid.

• If the contract type is fixed and the employee has completed 2 years of service, complete gratuity is paid upon termination.

• The total amount paid should not be greater than 1.5 times the annual salary.

Gratuity Payment Exception for Women

A female worker is entitled to full gratuity if she voluntarily resigns (voluntary termination) within 6 months of her marriage. If the marital status change date is less than 6 months before the date of termination, gratuity will be calculated based on the total length of service for the sector, irrespective of the type of contract.

Starting 1st January 2013, an employer can opt to pay a reduced or nil gratuity amount based on the social insurance contributions paid by the employer for an employee.

If the gratuity payment is based on the social insurance contributions paid by the employer, then the amount of those contributions are taken into account after the gratuity payment has been calculated using the eligibility criteria.

If the social insurance contributions paid by the employer are:

• Less than the gratuity payment, then the difference between the contributions and gratuity is paid to the employee as a gratuity payment.

• More than or equal to the gratuity value, then no gratuity payment is made.

Kuwait Employer Gratuity Details is enhanced to capture additional information. The Gratuity Payment element is enhanced to capture additional attributes. The corresponding balances are predefined to view the eligible gratuity allowance and employer social insurance contributions on the SOE.

Calculation Groups and Deductions for Gratuity

Gratuity payment is calculated through supplemental earnings Gratuity Payment that's part of the calculation group Gratuity. Calculations are done through the element created as Gratuity Payment.

Here's how you can view details on calculation groups, deductions and elements.

2. Go to the Manage Payroll Deductions task in the Payroll Calculation work area.

3. Select Gratuity Calculation and view the details.

View Calculation Information Repository for Gratuity

Let’s take a look at how to view the predefined parameters:

2. Go to the Manage Payroll Calculation Information task in the Payroll Calculation work area.

3. Select GRATUITY deduction.

4. Open Calculation Factors for the related element.

The calculation factors are used for calculating gratuity payments; gratuity bands represent the eligibility months.

5. Click Range Values to view details of the calculation factors.

Monthly Gratuity Accrual

The application calculates the accrual of gratuity on a monthly basis. This is the amount that an employee is entitled to, if they're terminated at the end of that month and if they're eligible for payment. The monthly gratuity accrual calculation is done through the Gratuity Accrual Initiator element. The application keeps a record of the total accrued amount and the incremented accrued amount (periodic difference).

Here are the details that the monthly gratuity accrual considers to calculate the gratuity:

• Date of termination: The current pay period end date is taken as the date of termination.

• Length of service: All types of paid leave are considered in calculating the length of service. Unpaid leave isn't included.

• Base salary: The base salary for gratuity payment is calculated through the salary formula that you selected at the legal employer level.

• Termination initiator: The calculation assumes the employer as the termination initiator, and the employee is entitled to the full amount.

• Probation: If the employee is on probation, the accrual amount is zero.

• Company type: The entitlement is based on the company type and is captured on Kuwaiti Legal Employer Details.

Note: If you're looking for information on Kuwaiti Legal Employer Details, refer to the section on Legal Entity HCM Information for Legal Employers and Payroll Statutory Units of Oracle Fusion HRMS (Kuwait): HR Implementation and Functional Considerations white paper on My Oracle Support (MOS).
• Entitlement:

• Government and Private Company: An employee is entitled to half a month's salary for the first 5 years and 1 month's salary for each additional year.

• Oil Company: An employee is entitled to 1 month's salary for the first 5 years and 1.5 month's salary for each additional year.

• Maximum Limit: The total amount accrued must not be greater than 1.5 times the annual salary.

FAQ for Calculation Cards

What's the difference between Social Insurance contributory salary override amount and adjustment amount

You can use the social insurance contributory salary override amount to override any value derived from the reference user formula or the social insurance balance. The override amount is considered only in the first period of the calendar year when the employees' pay is processed. For new employees, this is set for the first month when their pay is processed.

On the other hand, you can use the social insurance contributory adjustment amount to correct any existing value for the social insurance contributory base amount. You can use this to increase or decrease the amount of social insurance contribution. These adjustments can be done any time during the year.

Calculation Value Definitions

A calculation value definition specifies how a value is provided or calculated. The value isn't necessarily monetary. Typically, it's a flat amount or rate, but it could be a date or a text value, such as a tax code, depending on the calculation type. Some definitions hold the values in a table, so that different values apply to different employees.

For example, a graduated tax varies depending on the employee's earnings balance. The calculation value definition for this tax might contain two rows where you define the tax rate for:

• Earnings under 50,000

• Earnings above 50,000

Calculation Value Definitions Provided

Each localization provides a set of predefined calculation value definitions used to calculate statutory and involuntary deductions. You can't edit the predefined calculation value definitions.

In addition, when you create the following element types, the element template creates calculation value definitions based on your selections:

• Pensions

• Involuntary deductions

• Absences

• Time cards

Create or Edit Calculation Value Definitions

The element template creates calculation value definitions when you create elements with a certain category such as benefits, absences, and time card elements.

You can also create or edit calculation value definitions using the Manage Calculation Value Definitions task in the Payroll Calculation area. For example, you can create value definitions to capture additional attributes that are required for your company's absence or time calculations.

You can also create value definitions to calculate a rate derived from a rate definition or values defined by criteria.

Value Definition Groups

When you create a calculation value definition, either select an existing group or create a new one. The group categorizes related calculation value definitions. The predefined set of standard groups is available to all countries or territories.

Examples of predefined value definition groups include Time and Absences. You must select these when creating value definitions for elements with the corresponding element category.

Calculation Factors

Some elements, such as statutory deductions, require a large number of calculation value definitions. They use calculation factors to determine when and how to apply each calculation value definition, based on a reference value.

For example, a calculation factor may direct the payroll process to:

• Use a calculation value definition only if the person lives in Region B.

• Annualize the calculated result to produce the final amount

Use the Manage Payroll Calculation Information task in the Payroll Calculation work area to view and manage calculation factors.

In these deduction examples, the calculation value depends on where the employee falls in an earnings range. The From and To values of the range can be static or dynamic. Dynamic values are a fraction of the value of a database item, such as gross earnings. These examples also illustrate how to override the default calculation type for selected values in the range.

Static Values

The calculation value definition for a regional income tax uses a default calculation type of Flat Rate. However, for the lowest and highest incomes, a flat amount applies. For these two values, the Flat Amount calculation type overrides the default type, and uses a monetary value rather than a percentage. The Basis of Calculation Values field is blank, so the values are static.

The following table shows sample static values for this calculation value definition.

From Value To Value Calculation Type Override Rate or Amount

0

199

Flat Amount

0

200

999

_

4 (percent)

1000

1999

_

6 (percent)

2000

999,999,999

Flat Amount

300

Dynamic Values

The calculation value definition for a tax exemption uses a default calculation type of Incremental Rate. The first and last values specify the Flat Amount calculation type, which overrides the default type. The Basis of Calculation Values field specifies the Gross Earnings YTD database item. This means the From and To values represent a percentage of year-to-date gross earnings.

The following table shows sample dynamic values for this calculation value definition.

From Value To Value Calculation Type Override Rate or Amount

0

.1

Flat Amount

300

.1

.2

_

10 (percent)

.2

.9

_

30 (percent)

.9

1

Flat Amount

0

The first row defines a flat amount of 300 that applies to the first 10 percent of gross earnings. The second row defines a 10 percent rate that applies to the next 10 percent of gross earnings. The third row defines a 30 percent rate that applies to between 20 and 90 percent of gross earnings. The final row defines a flat amount of 0 between 90 and 100 percent.

Some values entered on a calculation card override values defined in a calculation value definition. For example, you might set a default tax rate for the legislative data group, and allow the rate to be overridden by a flat amount entered on a personal calculation card.

The following table explains where you can enter override values on calculation cards. It also provides the order in which the Calculate Payroll process checks for values entered on calculation cards. When the process finds an entered value, it stops checking and uses the values defined at that level.

Order Type of Values Task Offering/Functional Area

1

Values for a payroll relationship on any type of calculation card

Calculation Cards

2

Values for a tax reporting unit for certain deductions, which vary by country or territory

Legal Reporting Unit Calculation Cards

Offering: Workforce Deployment

Functional Area: Payroll

Task: Legal Reporting Unit Calculation Cards

3

Values for a payroll statutory unit for certain deductions, which vary by country or territory

Legal Entity Calculation Cards

Offering: Workforce Deployment

Functional Area: Payroll

Task: Legal Reporting Unit Calculation Cards

Allowing Enterable Values on Calculation Cards

The ability to enter values on calculation cards is controlled by the Enterable Calculation Values on Calculation Cards section of the calculation value definition:

• For user defined calculation value definitions, you can specify an enterable calculation value in this section. You provide:

• The display name to appear on the calculation card.

• The value type, such as total amount or additional amount.

• Enterable values for statutory and involuntary deductions are predefined. You can't allow new enterable values for predefined calculation value definitions.

Enterable Value Types

The list of value types available for entry depends on the calculation type. For example, you can allow users to enter the percentage value for a flat rate calculation or the monetary value for a flat amount calculation.

The following value types are available for all calculation types except text:

Value Type Description

Calculation value definition

Uses the calculation value definition entered on a calculation card to calculate the amount.

Total amount

Uses the amount entered on the calculation card as the total amount.

Adds the amount entered on the calculation card to the calculated amount.

The calculation type determines which values you must provide in the Calculation Values section of the Create or Edit Calculation Value Definition page. For example, if you select Flat Amount as the calculation type, then you must provide a flat amount value. You specify a default calculation type for the definition, which you can override on individual rows in the Calculation Values section.

Predefined Calculation Types

Predefined calculation types are available for each type of calculation. These work in conjunction with the predefined payroll formulas that contain specific rules for each calculation type, such as the CALL_CALC_VALUE formula.

This table describes the predefined calculation types, and indicates whether a calculation type is available for selection when you create a new value definition.

Calculation Type Description UOM Available in Create Flow

Flat Amount

Uses the specified flat amount as the total amount.

Money

Yes

Flat Amount Times Multiplier

Multiplies a flat amount by a multiplier value. If you select this option, you must specify a database item that provides the value of the multiplier.

Money

Yes

Rate Definition

Retrieves a value by calling a rate definition.

Money

Yes

Number

Uses the number entered on the value definition as the calculated value.

Number

Yes

Flat Rate

Applies the specified percentage rate to the balance.

For example, to apply a rate of 10 percent, enter 10.

Number

Yes

Incremental Rate

Applies a different percentage rate to portions of the balance.

For example, assuming that the balance is 80,000, you could apply a 1 percent rate for the first 20,000 of the balance. A 3 percent rate for the next 30,000, and a 5 percent rate to the next 30,000. This is also referred to as a blended rate.

Number

Yes

Flat Rate by Derived Base

Applies the percentage rate to a value. This value type derives the value from another value definition.

Number

Yes

Identifier

A new calculation type is required to support identifiers. For example, the value definition could capture a job ID and the value set feature would enable the user to display the name of the job on the page.

Number

Yes

Text

Uses the specified character string as the calculated value.

Text

Yes

Date

Uses the date entered as the calculated value.

Text (YY-MM-DATE, HOURS MINS SECS)

Yes

Conditional Flat Amount

Uses the specified flat amount if the condition defined in the Calculation section is met.

For example, if a person's filing status is married or head of household, that person qualifies for an exemption. In such a scenario, you specify a flat amount value in the value definition and the condition database item returns the person's filing status.

This calculation type supports predefined calculations, such as tax and social insurance.

Money

No

Flat Calculation Total

Supports retrieving value definitions for different range value criteria, including predefined calculations, such as tax and social insurance.

Money or Number

No

Supports retrieving value definitions for different range value criteria, including predefined calculations, such as tax and social insurance.

Money or Number

No

Standard Formula 1

Calculates the total amount based on the following formula:

`y = Ax - Bz`

Where:

• `y` is the deducted amount.

• `x` is the calculated amount.

• `A` and `B` are specified values.

• `z` is a factor from a predefined formula. The value defaults to 1.

Money or Number

No

Standard Formula 2

Calculates the value based on the following formula:

`y = (x - A) x B + Cz`

Where:

• `y` is the deducted amount.

• `x` is the calculated amount.

• `A`, `B`, and `C` are specified values.

• `z` is a factor from a predefined formula. The value defaults to 1.

Money or Number

No

Specify View Objects

A view object is a query result set. You can specify a view object to define the valid values that are available to the selected calculation type.

Note:
• The view objects you can specify vary depending on the calculation type. For example, if the calculation type is Conditional Flat Amount, then specify view objects for the condition and flat amount values.

• When you specify a view object, include the fully qualified path name, such as: `oracle.apps.hcm.locUS.payrollSetup.details.publicView.UsStatePVO`

Wage Basis Rules

Wage basis rules determine the earnings that are subject to a deduction. For exemptions, wage basis rules determine the elements that reduce the amount subject to deduction. Each wage basis rule is associated with a primary or secondary element classification. When you define a wage basis rule, you can associate it with up to six references that define the context for the rule.

Element Classifications

When you create a new wage basis rule, keep the following in mind regarding element classifications:

• For deduction elements, the classifications identify which types of earnings are subject to the deduction.

• For exemption elements, the classifications identify which types of earnings reduce the amount subject to calculation. For example, tax exemptions as per tax laws.

References for Wage Basis Rules

A wage basis rule may be associated with up to six references that define the context for the rule. Each reference has a number that determines the sequence in which it's evaluated for processing relative to other references. For example, if a wage basis rule for a regional tax deduction has references for both county and city, then the county reference should have a higher number than the city so that it gets evaluated first.

The wage basis rules and related references for statutory and involuntary deductions are predefined for each country.

Note: You can't edit predefined rules or references.

Creating Wage Basis Rules

You can create new wage basis rules for existing payroll components using the Manage Component Group Rules task in the Payroll Calculation work area. The process is summarized below:

1. On the Manage Component Group Rules page, select the group to which the new rule applies.

2. In the Calculation Component Group Overview section, click the group name and then click Wage Basis Rules. If wage basis rule references have been defined, click the reference.

3. In the Wage Basis Rules section, click Create.

4. Select the payroll component to which the rule applies.

5. Select the primary classifications to be used in the wage basis.

6. Provide the reference value for the rule, if applicable.

Using the Use in Wage Basis Check Box

Here are some rules on using the Use in Wage Basis check box that you should know about:

• If you're setting up rules for a non-US legislative data group, select the Use in Wage Basis check box for each primary classification you add as a wage basis rule.

• If you're setting up rules for a US legislative data group, there is an extra validation that prevents the insertion of a wage basis rule with no secondary classification. You can't select the Use in Wage Basis check box.

To illustrate how wage basis rules affect a tax calculation, let's look at an example where an employee's earnings included in the wage basis vary, depending upon where the employee lives.

Taxable Earnings by Region

Brittany is a salesperson who receives a salary of 2,000 each month. Brittany also has a company car she drives. She is responsible for reporting her "Personal Use" of the company car in order to be taxed properly. Brittany works in her company's East Coast district, and she spends 50 percent of her time in New York and 50 percent of her time in Pennsylvania. The State of New York taxes Brittany for her personal use of the company car; however, Pennsylvania doesn't. Last month, Brittany reported personal use that equated to 100 (50 personal use in New York, and 50 personal use in Pennsylvania).

For example:

• In New York, imputed earnings such as personal use of company car amounts are included in the taxable wages.

• In Pennsylvania, imputed earnings such as personal use of company car amounts are NOT included in taxable wages.

This table shows the tax calculations that apply for each region.

Region Earnings in Salary Eligible Imputed Earnings Taxable Amounts Deduction Amount

New York

1000

50

1050

35

Pennsylvania

1000

(50 - Exempt)

1000

30

The wage basis rules for this tax calculation are as follows:

Region (Reference Value) Primary Classification Secondary Classification Use in Wage Basis?

New York

Standard Earnings

Regular

Y

New York

Imputed Earnings

Personal Use of Company Car

Y

Pennsylvania

Standard Earnings

Regular

Y

Pennsylvania

Imputed Earnings

Personal Use of Company Car

N

Component Group Rules

Cost components are user-defined or come from external sources, and are mapped to cost elements which the costing application uses to track the cost of items. Use cost component groups to map cost components to cost elements, and to map source cost elements to destination cost elements when items are transferred from one inventory organization to another.

This figure illustrates the relationship between cost components, cost elements, cost component groups, and cost profiles.

Cost Components

Cost components are the most granular representation of item costs. Examples of cost components are purchase order item price, material, freight, tax, and overhead. Cost Components come from different sources:

• Predefined costs from external sources such as Purchasing, Accounts Payable, and Inventory Management

• Landed cost charges from Oracle Fusion Landed Cost Management.

Cost Elements

A cost element is the level where the costs of an item are tracked through the inventory accounting life cycle. Cost components are mapped to cost elements, which enables you to calculate item costs at different granularity levels for different business needs. For example, you may want more granularity for high-value than for low-value items.

You can define cost elements for four types of costs:

• Material cost element type for incoming material cost components.

• Overhead cost element type for costs that are calculated by the cost processor based on user-defined overhead rules.

• Profit in Inventory cost element type for tracking of internal margins when items are transferred from one inventory organization to another, including global procurement and drop shipment flows. For cost elements of this type, indicate the Profit in Inventory organization that incurs the gain or loss due to the transfer of goods.

• Adjustment cost element type for separate tracking of cost adjustments, which provides a more detailed view of item costs and profit margins.

Cost elements are defined at the set level and thereby have the advantages of set-level definitions for sharing and segregation. A Profit in Inventory cost element must be assigned to the Common cost element set so that it can be shared across cost organizations.

The following table gives examples of cost element definitions:

Cost Element Set Cost Element Cost Element Type Inventory Organization

Country 1

Metals Material

Material

Not Applicable

Country 1

Plastic Material

Material

Not Applicable

Country 1

Miscellaneous Material

Material

Not Applicable

Country 1

Miscellaneous Material

Not Applicable

Country 1

Plant Depreciation

Not Applicable

Country 1

Equipment Depreciation

Not Applicable

Country 1

Freight Charges

Not Applicable

Common

Internal Margin

Profit in Inventory

Seattle

Country 2

Dairy Material

Material

Not Applicable

Country 2

Miscellaneous Material

Material

Not Applicable

Country 2

Dairy Material

Not Applicable

Cost Component Groups

Use cost component groups to define mappings of cost components from external sources to cost elements in the costing application. These mappings provide flexibility in the granularity level where you track costs. You can map one cost component to one cost element for a detailed cost breakdown, or several cost components to one cost element for a less granular view of costs. For cost components and cost elements that are related to landed cost charges, you can choose to capitalize them into inventory value, or expense them. All other costs are automatically capitalized.

You can also map source cost elements to destination cost elements when transferring items from one inventory organization to another. This helps to maintain visibility of the item cost structure from the source application and across the supply chain.

You can specify a default cost component mapping to cost element to be used in cases where the source cost element doesn't have a matching destination cost element. The default cost component mapping is helpful when:

• The detailed mapping of a cost component to cost element isn't required, and you want to map it to a single cost element.

• The designated mapping for a cost component is missing. If the mapping is missing, the transaction automatically picks up the default cost component mapping.

Note: If the cost component mapping is missing, the cost processor logs a message in the processing log. If the cost component mapping is missing and there is no default mapping, you can create the mapping and the transactions will be processed in the next run. If there is a default mapping, the transaction is processed and you can review the message log to decide if you want to take further action: you can correct the mapping for future transactions, and you can create a cost adjustment to reclassify the costs as needed.

Cost component groups are one of the attributes of cost profiles, which the cost processor uses to determine how to calculate item costs. Cost component groups are defined at the set level and thereby have the advantages of set-level definitions for sharing and segregation. Cost component groups and cost profiles are both set enabled; therefore, only those cost component groups belonging to the same set as the cost profile are available to that cost profile.

Example 1: The following table describes mapping of one cost component to one cost element.

Mapping Group Cost Component Cost Element

MG1

PO Item Price

Material

MG1

PO Tax

Tax

MG1

Profit in Inventory

PII

MG1

Interorganization Freight

Freight Charges

MG1

Invoice Price Variance

IPV

MG1

Exchange Rate Variance

ERV

MG1

Tax Invoice Price Variance

TIPV

Example 2: The following table describes mapping of cost components to one or more cost elements.

Mapping Group Cost Component Cost Element

MG2

PO Item Price

PO Tax

NR Tax

Invoice Price Variance

Exchange Rate Variance

Tax Invoice Price Variance

Material

MG2

Interorganization Freight

Freight Charges

MG2

Profit in Inventory

PII

Example 3: The following table describes mapping of source cost elements to destination cost elements in an interorganization transfer.

Mapping Group Source Cost Element Set Source Cost Element Destination Cost Element Set Destination Cost Element

MG3

Country 1

Material Tax

Country 2

Material

MG3

Country 1

Freight Charges

Country 2

Freight Charges

MG3

Country 1

Other

Country 2

Other

You have flexibility in how you map cost component groups to items:

• Different items in a cost organization and book combination can have the same or different cost component group mappings if they use different cost profiles.

• One item can have different cost component group mappings in different cost books.

• Several cost organizations can share the same cost component group mappings if they belong to the same set, or if they're defined the same way in different sets.

The following figure illustrates different mappings of cost component groups to items. That is, in a cost organization, Item A maps to two cost groups, and item B and Item C maps to only one cost group.

Standard cost planning refers to the process of estimating standard costs for use in the costing of inventory or manufacturing transactions. Planning cost organizations, planning cost components, and estimate mappings are the main elements used in the standard cost planning process.

This figure illustrates the relationship between the standard cost planning elements, and how they're used to generate standard cost estimates.

Planning Cost Organizations

Enabling a cost organization for cost planning helps to define and maintain costs across multiple locations and production facilities. One of the modeling options is to perform cost planning at the business unit level, by mapping all the inventory organizations belonging to the business unit to one cost organization.

Calculation Factors

Calculation factors define data-driven rules for calculating complex payroll elements, such as statutory deductions. Some elements may have a large number of calculation factors, one for each unique set of rules, ranges, and references values.

Calculation factors create an association between an element, a calculation step, and a calculation value definition.

The payroll run determines which calculation factor to use based on the reference values and calculation rules of the element being processed.

For example, a calculation factor for a tax deduction element might define:

Navigate to the Element task and select an element to view and manage calculation factors.

Note: Calculation factors are predefined for statutory and involuntary deductions, and should not be changed.

To view and manage calculation factors, follow these steps:

1. Select the Payroll Calculation Information task in the Payroll Calculation work area.

2. Select the calculation component.

3. In the Calculation Overview section, expand the Related Elements node.

4. Expand the Calculation Factors node to display a list of all calculation factors associated with the element.

5. Create new calculation factors and edit existing ones that have an update status of Unlocked.

Note: You can't edit predefined calculation factors or their reference values. If you create a new calculation factor, you must edit the element's formula to use the new factor.

Aspects of a calculation factor are shown in the following figure:

Reference Values

A calculation factor may be associated with up to six references that define its context. For example, the calculation of a social insurance deduction might vary based on a person's age and employment status.

Each reference has a reference number that determines the order in which it's evaluated for processing relative to other references.

Navigate to the Manage Calculation Information task and search for a payroll component to view and manage calculation factor reference information.

Calculation Value Definition

Calculation factors create an association between an element, calculation step and a calculation value definition. The calculation value definition defines the calculation type, such as flat amount or flat rate. The calculation rates and rules may vary based on the amount subject to calculation. Predefined calculation value definitions are provided for statutory and involuntary deductions.

Navigate to the Payroll Calculation Value Definition task to view and manage value definitions.

Calculation Step

A calculation step is a name or a label assigned to a calculation factor to identify its role in a complex payroll calculation.

For example, a time calculation can consist of several parts, such as:

• Calculate hourly worked

• Calculate hourly rate

And when calculating an income tax deduction, the payroll run can do the following:

• Calculate allowance

• Calculate exemptions

• Calculate tax

This tax deduction might be defined as a single element with multiple calculation steps, each defined in a separate calculation factor. You can assign the same calculation step to more than one calculation factor. Calculation steps are optional.

Navigate to the Payroll Calculation Information task to view and manage calculation steps.

Range Values

Range values capture values required for the calculation. The type of information captured is controlled by the calculation type of the value definition such as flat amount, rate (percentage) or date.

Navigate to the Payroll Calculation Value Definition task to view and manage range values.

Calculation Methods

A calculation method references a single fast formula. It's an optional component of a calculation factor. Calculation methods operate at a higher level than the calculation types defined in the calculation value definition. They provide a wrapper around the calculation of a deduction by retrieving values from a calculation value definition, applying a formula, and returning the final deduction amount for the current run.

For example, if the calculation method is set to Cumulative, which references the Core Cumulative fast formula, then the calculation process returns the total deduction amount as a cumulative year-to-date amount. Accrual calculations for payroll balance calculations typically restart at the beginning of each calendar year. This is another type of calculation method. In this case the plan rule for the accrual term start date is January 1.

Navigate to the Payroll Calculation Information task to view and manage calculation methods.

To illustrate how the payroll run uses calculation factors to calculate different types of deductions, let's look at a social insurance deduction and a national income tax deduction using calculation steps.

Social Insurance Deduction

Employers in many countries or territories deduct social insurance payments from employees and also make contributions. Employee and employer rates are typically different. Such deductions often have wage limits.

The social insurance deduction processor element for this type of calculation might have the following calculation factors:

Employer or Employee Code (Reference Value) Calculation Method Calculation Step Calculation Value Definition Values

Employee

None

Calculate Social Insurance Employee Rate

Social Insurance Employee Rate

4 percent flat rate

Employer

None

Calculate Social Insurance Employer Rate

Social Insurance Employer Rate

2 percent flat rate

Employee

None

Calculate Social Insurance Employee Wage Limit

Social Insurance Employee Wage Limit

100,000 flat amount

Employer

None

Calculate Social Insurance Employer Wage Limit

Social Insurance Employer Wage Limit

100,000 flat amount

National Income Tax Deduction Using Calculation Steps

A national income tax calculation involves multiple steps. First, it calculates the allowance, then any exemption amount, and then it applies the tax rate.

The following table shows a subset of calculation factors that might be associated with a tax processor element.

Filing Status (Reference Value) Calculation Method Calculation Steps Calculation Value Definition Values

Single

None

Calculate Region A Allowance - Single

Region A Allowance - Single

10,000 flat amount

Single

None

Calculate Region A Exemption Amount - Single

Region A Exemption - Single

0 flat amount

Single

None

Calculate Region A Regular Rate - Single

Region A Rate - Single

7 percent flat rate

Married

None

Calculate Region A Allowance - Married

Region A Allowance - Married

10,000 flat amount

Married

None

Calculate Region A Exemption Amount - Married

Region A Exemption - Married

1,000 flat amount

Married

None

Calculate Region A Regular Rate - Married

Region A Rate - Married

6 percent flat rate

Rate Definitions

You can create rate definitions to calculate compensation rates, accrual rates, element entry values, or values defined by criteria. If the rate is based on multiple balance or element entries, or if it references other rate definitions, you can specify multiple rate contributors.

The Global Payroll application calculates rates based on a number of criteria and conditions. And returns the rate value for a periodicity specified, such as 50000 annually, or 7.25 hourly. Also, it supports rates that return a value for a unit, rather than a periodicity.

You can control if rate values are calculated live or retrieved based on the results of the Generate HCM Rates process. For example, you use the Generate HCM Rates process to calculate compensation rates for reporting purposes. In this case, you must recalculate the compensation rates in the payroll run to ensure that they're accurate with then payroll is processed.

Examples of rates defined by units:

• Piece work where a worker gets 1.50 for each widget made.

• Meal allowance rate or mileage rates where the rate paid varies based on the number of miles traveled and the type of vehicle.

Use the Rate Definitions task from the Payroll Calculation work area to define and manage rate definitions.

Categories

To create a new rate, select a category from this table.

Category What it Does

Derived and Rate

Retrieves values from one or more payroll balances or other rate definitions, including rates that retrieve element entry values. Use this option to create a rate that retrieves a value from one or more rate contributors.

Element

Retrieves a value from or posts to an element input value. The element input value must have a special purpose of either a Primary Input Value or Factor.

• Select the Primary Input Value special purpose for an amount value, such as a salary figure.

• Select the Factor special purpose for a factor value, such as a car allowance that you calculate as 3 per cent of average earnings (factor = 0.03).

Value by Criteria

Retrieves values from a single value by criteria definition. A value by criteria definition specifies one or more evaluation conditions that determine a particular value or rate. You can specify the conditions as a tree structure to define the evaluation sequence.

For example, you can define a value-by-criteria to capture car allowance and housing allowance values based on an employee's job. Define a rate definition to retrieve car allowance rates and another rate definition to retrieve housing allowance rates. Both rate definitions refer to the same value-by-criteria and use the criteria of job to retrieve the appropriate rate values for an employee.

Formula

Retrieves rules based on a worker's assignment, terms and payroll relationship attributes.

Retrieves values based on an employee's grade details.

Formula

Retrieves values from a rate definition formula. The Generate HCM Rates process supports the calculation of most formula-based rates. However, rates that include complex payroll formula contexts or use balances calculated within the payroll run, are calculated by the payroll run.

To configure rate definitions to get your desired rates, you should know how to use the various rate definition options. For rates based on a single element entry value, you can also apply override and defaulting rules.

This table describes the fields that you can configure for the Derived Rate, Element, and Value by Criteria category types.

Field Category Description

Storage Type

Element

If you select the Element category to define a rate, you must select a storage type of Amount or Percentage. For example, you can configure a rate definition using the Salary element. If the salary is held as a monetary value, select Amount. If the salary is a factor of another value, such as a balance, select Percentage.

Note: This field is hidden for all rate definition categories other than Element.

Element Name

Element

Derived Rate

For the Element category, the field is enabled only when you select the storage type.

If you select the Element category to define a rate, you must select an element name. This is required if you're configuring a primary rate. This is a rate that retrieves a value from a single element, such as salary.

For the Derived Rate category, the field is enabled when you access the page.

Employment Level

Derived Rate

Value by Criteria

Select either Payroll Relationship, Term, or Assignment. This field is mandatory for all derived rates and value by criteria rate definitions. It controls which employment ID the rates process uses when calling a rate.

If the employee has multiple assignments, the rates process uses the assignment ID to identify the correct assignment record for the employee.

Sometimes the contributor value is held at a different level to the employment level defined on the rate. In such cases, the rate process uses the employment ID to locate the correct record.

Status

Element

Derived Rate

Value by Criteria

Set the status of a rate to active or inactive. You can't assign an inactive rate to an employee. Employees that are allocated a rate while it was active aren't impacted by a change in status to inactive.

Base Rate

Element

Select this option if the rate represents a base rate that another rate uses in its calculation. For example, you might have day shift employees and night shift employees, with different base pay rates.

If each set of employees receives an allowance that's a percentage of the base rate, define one allowance rate. And that rate is calculated based on the two rates that have the Base Rate option selected.

Overall Salary

Element

Derived Rate

If you're defining rates for use on the Salary page, use the derived rate category and define an Overall Salary. To do this, you must associate a salary element to the rate. Define an Overall Salary Information element for this purpose.

Reporting Required

Element

Derived Rate

Value by Criteria

Select this option to indicate if the calculated rate value should be stored on the rate table for reporting purposes.

If you're defining rates for use on the Salary page, you must select this option.

Rate definitions with this option selected are included when the Generate HCM Rates batch process is run. Use this feature to report on primary rates and not derived rates. HCM extracts use this report to send data to third parties.

Value by Criteria Name

Value by Criteria

If you select the Value by Criteria category to define a rate, you must select a Value by Criteria name. A value by criteria definition specifies one or more evaluation conditions that determine a particular value or rate.

Returned Rate Details

You can specify the periodicity of the returned rate, factor rules, currency, decimal display, rounding rules, and minimum and maximum rules. If the process returns a rate that's outside the minimum and maximum range, you can do one of these actions.

• Set up an action that enforces the rule, displays a warning

• Forces the user to fix the error

Select the Return FTE Rate check box to instruct the rate definition process to return a part-time value by applying an employee's FTE to the rate value.

Periodicities

You must specify a periodicity, such as hourly or weekly, for the returned rate and each rate contributor. However, when you use the rate in a formula, you can override the default periodicity.

The rate calculation converts each contributor to the periodicity specified on the rate contributor. It then adds or subtracts the rate contributors, even if the periodicities are different. In most cases, they will be the same. Once the rate contributors are summed up, the rate calculation then converts them into the return periodicity and currency.

For example, for a rate with a periodicity of weekly using the Standard Rate Annualized conversion formula, the rate calculation does these actions.

1. Calculates an annual figure from the value and periodicity of each contributing earning and deduction.

2. Converts the annual figure into a weekly value.

By default, rates are converted using these predefined rate conversion formulas.

• Standard Rate Annualized

• Standard Rate Daily

• Standard Working Hours Rate Annualized

• Assignment Working Hours Rate Annualized

• Periodic Work Schedule Rate Annualized

If the values in the predefined conversion rules don't meet your requirements, you can define your own.

Factor Rules

You can apply a factor or multiplier to a calculated rate, or to an individual rate contributor. To apply a factor rule, do these steps.

• Select Value as the factor rule.

• In the Factor field, enter the number by which you want to multiply the rate.

You can apply a factor rule to the rate definition, rate contributors, or both. For example, you can define rate contributors to calculate hourly values based on salary and bonus. You can then apply a factor of 1.0 or 100 percent to the salary balance contributor and a factor of 0.5 or 50 percent to the bonus balance contributor. The factor rule is applied to the rate before the periodicity conversion is applied.

Minimum and Maximum Values

You can define minimum and maximum values for the returned rate, and for individual rate contributors.

Use the Limit Violation Action field to display an error, warning, or enforce the application to use minimum or maximum value that you enter. For example, you can enter 500 as the minimum value and then select Enforce Rules. If the returned value comes back as 400, the application uses 500 as the value.

This table explains the options for the minimum and maximum rate values.

Null

No minimum or maximum value

A specified value

Example: 2000

Based on another rate

Uses the calculated value of the rate definition that you select.

Be careful that you don't create a loop. For example, Rate A has minimum value that's based on Rate B, which has a minimum value based on Rate A. This situation would result in a runtime error.

Value by Criteria

Minimum or maximum value based on a value by criteria definition.

Override and Defaulting Rules

You can set override and default rules only if you select Element as the category when you define rate definitions. Set up override rules for the element associated with your rate definition. If you select the Override Allowed check box, you can enter rate values on the Salary page.

If an element input validation formula has been defined for the rate contributor input value, you can view it in the Override and Defaulting Rules section.

Note: You can't define override and defaulting rules if you select the Values by Criteria category to define a rate. But you can select a formula to validate any rate that's returned and also use formulas to create default values.

For example, you can use the HCM Rates Default Value formula type to define the number of workdays in a year for your organization.

``````workday = 250
periodicity = YEAR
return workday, periodicity, currency``````

In addition, you can use a value by criteria definition as the default type. Here, the process uses the value for the first record created and carries that value forward in subsequent records, unless it's manually overridden. The rate engine reevaluates the rate that the value by criteria method creates for each subsequent record. So, this rate could change. For example you could use a value by criteria definition to enable a default value of 10 percent for bonuses that are targeted to all eligible employees.

Contributor Rules

You can specify the periodicity for the contributor total. To process contributor totals as full-time equivalency amounts, select Yes in the Process Contributor Total as FTE Amount field. The final rate value is converted from this status to the Return Rate FTE status.

Information

In this section, enter text that explains the purpose of the rate, how the rate is calculated, or provides further details for the rate. This section isn't available for rate definitions using the Value by Criteria categories.

You can add four different types of rate contributors to your rate definitions. These rate contributes include, Balance, Base Rate, Overall Salary, and Rate Definitions. You can add rate contributors when you define a rate using the Derived Rate category. You can also manually add rate contributors for the Element category when the storage type is Factor.

For example, if you define a bonus rate which is 0.1 (10 percent) of average earnings, then you do these steps.

• Enter 0.1 as the factor on the element.

• Define a rate contributor based on your average earnings balance.

Rate Contributor Types

This table lists the types of rate contributors, descriptions, and the additional fields that display for each type.

Type What it Contains Additional Fields

Balance

Value calculated by these payroll processes.

• An employee's average salary rate over their last three months of salary payments

• Taxable earnings for the last tax year

• Commissions paid in the last quarter

Balance Name

Balance Dimension

Divisional Balance

Base Rate

Value from the employee's Base Rate

Employment Level

Overall Salary

Value from the employee's Overall Salary rate

Note: If the rate definition is an Overall Salary Rate, you can't select Overall Salary as a Contributor Type.

Employment Level

Rate Definition

Other rate definitions that contribute to the rate definition you're creating.

For example you can add regular salary, car allowance, and bonus pay rate contributors together to create an overall salary definition.

Rate Name

Reference Dates

You can select a reference date, which is the date the application uses to retrieve rate contributor information for the rate calculation. The reference date specifies the context for the balance dimension.

For example, to retrieve a rate as of the actual start of an absence, select Absence Start Date. To retrieve a rate as of a specific time period, select a specific time period.

The Reference Date field lists only these types of time definitions:

• Time Span - a period of time, such as three months

• Retrieval Date - a type of time definition that's based on a database item

Selecting a value for the Reference Date field is optional.

Note: If you don't select a reference date, the application uses the effective as-of date that's used by the rate engine to calculate the rate.

Single or Multiple Rate Contributors

If the rate definition is based on multiple values, you may need to create multiple rate contributors, as explained in this table.

Rate Number of Rate Contributors

A single earning or deduction, such as salary

One

A combination of earnings, such as the sum of salary and car allowance payments

Multiple, if salary and car allowance are stored as separate rate definitions

Note: All balances and element entries that contribute to a rate must use the same currency.

Example: Using multiple rate contributors, an hourly holiday pay rate could be based on adding together these values, which are all paid at the end of the previous year.

• Salary

• Incentive bonus

• Seniority bonus

• Other changeable components of remuneration

If you create rate definitions that reference element input values, you must configure them for the different calculation rules, such as Flat Amount and Factor. This ensures that the values calculated by the rate are consistent with the values processed through payroll.

Do these element configuration steps if you're using the rate feature.

1. Create an element of type Recurring or Assignment level.

2. Don't select the Multiple Entries Allowed check box.

3. Select a special purpose for each element input value.

1. Primary Input Value for an Amount value.

2. Factor for a Factor value.

3. Periodicity for a Periodicity value.

Note: When creating elements for use in rate definitions, don't select Periodically. The Rate Definition process is unable to convert rates with a periodicity of periodically to different frequencies such as annual, weekly, and daily.
4. If the flat amount is a full-time equivalent value, you must select Yes in the Default field for the Full-Time Equivalent input value.

5. Create element eligibility.

Configure Elements to Create Rate Definitions for Flat Amount Calculations

1. From the Payroll Calculation work area, select the Manage Elements task.

2. Click Create.

3. Enter these values.

Field Value

Legislative Data Group

Primary Classification

Standard Earnings

Category

Standard

4. Click Continue.

5. Enter a name, reporting name, and description.

6. Enter the effective date.

7. Answer the questions in the Duration and Standard Rules sections.

Note: Multiple entries aren't allowed.
8. For the question, At which employment level should this element be attached?, select Assignment Level.

9. For the question, Does this element recur each payroll period, or does it require explicit entry? select Recurring.

10. Click Next.

11. In the Calculation Rules section, select Flat Amount and then click Next.

12. Click Submit.

13. On the Element Summary page under the Input Values folder, select Full-Time Equivalent.

14. Check that these values exist.

Field Value or Check Box Status

Name

Full-Time Equivalent

Special Purpose

Full-Time Equivalent

Unit of Measure

Character

Displayed

Selected

Allow User Entry

Selected

Required

Deselected

Create a Database Item

Selected

Default

No

Lookup Type

PAY_TMPLT_YES_NO

Configure Elements to Create Rate Definitions for Factor Calculations

1. Repeat steps 1 through 9 in the first procedure.

2. In the Calculation Rules section, select Factor and then click Next.

3. Click Submit.

4. On the Element Summary page under the Input Values folder, select Pay Value.

5. Check that these values exist.

Field Value or Check Box Status

Name

Pay Value

Special Purpose

Primary output value

Unit of Measure

Money

Displayed

Selected

Allow User Entry

Selected

Required

Deselected

Create a Database Item

Selected

6. On the Element Summary page under the Input Values folder, select Factor.

7. Check that the following fields and values exist.

Field Value or Check Box Status

Name

Factor

Special Purpose

Factor

Unit of Measure

Number

Displayed

Selected

Allow User Entry

Selected

Required

Deselected

Create a Database Item

Selected

You're almost done. Now, to test your element configuration, follow these steps.

Note: These procedures are for payroll users only.
Step Page Do This Action

1

Payroll Dashboard

Find a payroll and an employee that you can use for testing purposes.

2

Manage Elements

For the Flat Amount element, use the Pay Value balance feed to enter an Eligible Compensation balance for the Percentage element.

3

Manage Element Entries

Add the Flat Amount and Percentage elements to the employee as element entries and enter input values.

4

Submit a Process or Report

Enter a suitable period for the payroll you selected in step 1.

5

Submit a Process or Report

Run the payroll.

6

View Payroll Process Results

Check if the payroll results are correct.

In this example, you want to calculate an employee's absence rate as of a particular date. The rate includes a combination of average salary and car allowance. The employee has an annual year-to-date salary of 26,000. The employee also receives an annual car allowance payment of 2,000. The absence rate is 26,000 + 2,000 = 28,000. To provide a daily absence rate, you convert this rate into a daily rate.

This table summarizes the key information you use in the example.

What You Need To Consider For This Example

What elements do I need to create before I define the rate?

• Salary (assignment level) - This element contains the salary value to be retrieved by the rate definition. You must create it using the Flat Amount calculation rule.

• Car Allowance (assignment level) - This element contains the car allowance value to be retrieved by the rate definition. You must create it using the Flat Amount calculation rule.

• Absence - Use the Absence template to create the element. Enter Sickness as the classification and Absence as the category.

Which balances hold the contributing values?

• Salary is fed by the Salary element.

• Car Allowance is fed by the Car Allowance element.

Should I process contributor totals as full-time equivalent amounts?

Yes

Create the Rate Definition

1. Navigate to the Payroll Calculation workarea. In the Tasks pane, select the Rate Definitions task.

2. In the Search Results section, click Create.

3. Enter these values.

Field What You Select

Category

Derived Rate

Effective Start Date

A date that's after the creation date of the objects that you're referencing

Legislative Data Group

4. Click OK.

5. In the Basic Details section, enter these values.

Field Value

Name

Absence Rate - Salary and Car Allowance

Short Name

ABS RATE - SAL/CAR ALLOW

6. In the Returned Rate Details section, Periodicity field, select Daily.

7. Click the Contributor Rules tab and in the Process Contributor Total as FTE Amount select, Yes.

The balances referenced need to be populated using payroll runs for the periods covered by the balance dimension or the rate definition won't generate a meaningful value.

Create Rate Contributors
1. In the Rate Contributors section, click Create.

2. In the Contributor Type field, select Balance and click OK.

3. On the Create Rate Contributors page, enter these values.

Field What You Enter

Balance Name

Regular Salary

Balance Dimension

Assignment State Period to Date

Periodicity

Daily

4. Click Save and Continue.

5. In the Rate Contributor section, click Create.

6. In the Contributor Type field, select Balance and click OK.

7. On the Create Rate Contributor page, enter these values.

Field What You Enter

Balance Name

Car Allowance

Balance Dimension

Assignment State Period to Date

Periodicity

Daily

8. Click Save and Continue.

9. Click Submit.

10. Assign an Absence element entry to the employee's assignment. You will then need to pass the absence entry to payroll using the absence interface.

Create a Rate Definition for Basic Salary

In this example, you create a primary rate for a basic salary. After you run the rate engine, the Element Entries - Person Details page displays the values for eligible employees.

Before you begin, create the salary element at the assignment level. This element contains the salary information to be retrieved by the rate definition. You can create it using the flat amount or factor calculation rule.

1. In the Payroll Administration work area, click the Rate Definitions task.

2. Click Create.

3. Enter these values.

Field Value

Category

Element

Effective Start Date

Enter the current date.

Legislative Data Group

Storage Type

Amount

Element Name

Regular Salary

4. Click OK.

5. In the Returned Rate Details section, complete the fields, as shown in this table.

Field Value

Periodicity

Annually

Periodicity Conversion Formula

Standard Rate Annualized

Currency

LDG Currency

6. Click Submit.

Create Rate Definitions for Overall Salary

In this example, you create a rate definition for overall salary that includes multiple rate contributors.

You do these actions.

• Create the overall salary rate definition

• Add the regular salary rate contributor

• Add the car allowance rate contributor

This table summarizes the key decisions for your scenario.

Decisions to Consider In This Example

What components of pay should be included in an employee's overall salary?

• Regular Salary

• Car Allowance

Should I include all pay for car allowance in the overall salary?

No. Only include 50 percent of the amount paid for car allowance.

Note: The overall salary rate definition is a derived rate. To populate the Overall Salary check box, select a salary element in the Element name field. You then add the regular salary rate and car allowance rate contributors to the rate definition. The rate contributors that you add should be elements that you select from the Rate Name field on the Create Rate Contributor page.

Create the Overall Salary Rate Definition

1. In the Payroll Administration work area, click the Rate Definitions task.

2. Click Create.

3. Enter these values.

Field Value

Category

Derived Rate

Effective Start Date

Enter the current date.

Legislative Data Group

4. Click OK.

5. Enter these values.

Field Value

Name

Overall Salary

Short Name

OVERALL_SAL

Element Name

Salary

6. In the Returned Rate Details section, enter these values.

Field Value

Periodicity

Weekly

Periodicity Conversion Formula

Standard Rate Annualized

Currency

LDG Currency

Add the Regular Salary Rate Contributor

1. In the Calculation section, click Create.

2. In the Create Rate Contributor dialog box, Contributor Type field, select Base Rate.

3. Enter these values.

Field Value

Employment Level

Payroll Assignment

Periodicity

Weekly

4. Click Save and Continue.

Add the Car Allowance Rate Contributor

1. In the Calculation section, click Create.

2. In the Create Rate Contributor dialog box, Contributor Type field, select Rate Definition and click OK.

3. Enter these values.

Field Value

Rate Name

Car Allowance

Periodicity

Weekly

Factor Rule

Value

Factor Value

0.5

4. Click Save and Continue.

5. Click Submit.

Generate HCM Rates

Submit the Generate HCM Rates process to calculate and store most types of rate definitions. And you can use the stored rate values for reporting payroll calculations. Run this batch process frequently to ensure the stored rate values are accurate. After you run this process, you can report on the rates using extracts. The user entity includes the database items that you can use in reports.

Use this flow to calculate and store most types of rate definitions in these scenarios.

• Rates that are associated with an element. For example, a salary rate definition is associated with a salary element. The process calculates a salary rate value for all workers with a salary element entry.

• Rates that are associated with a value definition. Certain types of elements, such as time elements, use payroll calculation information rules and definitions. For example, a value definition is generated for an overtime element and this is associated with an overtime rate definition. The process calculates an overtime rate value for all workers with an overtime element entry.

• Rates that are based on a value-by-criteria defined for an assignment level criteria, such as a worker's grade or location.

• Rates that are based on a formula. However, such rates are calculated in a payroll run.

• Rates that are derived. For example, a rate that's derived based on the sum of car and housing allowance rates. In this case, the Generate HCM Rates process calculates the car allowance rate, the housing allowance rate, and the derived rate.

The stored rate values can be used for reporting or retrieving for payroll calculation purposes.

The application provides database items to support the rate batch process. These array database items return all rates associated with a payroll relationship record as of a specific date.

Note: The REPORTING_RATE_VALUES and REPORTING_RATE_PERIODICITIES database items return values based on the return rate details defined on the rate definition. The other periodicity database items, such as REPORTING_RATE_QUARTERLY, return a rate that's converted to the specified periodicity.

The Generate HCM Rates process supports the database items listed in this table.

Database Items Description

REPORTING_RATE_NAMES

Name of the rate

REPORTING_RATE_VALUES

Value of the rate

REPORTING_RATE_PERIODICITIES

Periodicity of the rate

REPORTING_RATE_FTE_FLAGS

Full-time status of the rate

REPORTING_RATE_TERM_NUMBERS

Term number associated to the rate values

REPORTING_RATE_ASG_NUMBERS

Assignment number associated to the rate values

REPORTING_RATE_WEEKLY

Weekly rate value

REPORTING_RATE_MONTHLY

Monthly rate value

REPORTING_RATE_QUARTERLY

Quarterly rate value.

REPORTING_RATE_YEARLY

Annual rate value

REPORTING_RATE_PT_WEEKLY

Part-time weekly rate value

REPORTING_RATE_PT_MONTHLY

Part-time monthly rate value

REPORTING_RATE_PT_QUARTERLY

Part-time quarterly rate value

REPORTING_RATE_PT_YEARLY

Part-time annual rate value

REPORTING_RATE_FT_WEEKLY

Full-time weekly rate value

REPORTING_RATE_FT_MONTHLY

Full-time monthly rate value

REPORTING_RATE_FT_QUARTERLY

Full-time quarterly rate value

REPORTING_RATE_FT_YEARLY

Full-time annual rate value

Run the process if these conditions apply.

• Changes to the data referenced by the rate, which may include element entries, grade rates, and values defined by criteria. This process only reports the rate values. It doesn't update, delete, create, or have any impact on the underlying objects.

• Updates to rate definitions, such as when a new rate contributor is added or removed, or the rate is made inactive.

• Changes to employee records that impact their salary rates, such as changes to job or grade.

Note: You should run the process prior to any operation that depends on the values that are stored in the table. For example, if you have a rate based on seniority, values could change simply by the passage of time.

Let's look at the steps to run the process.

1. In the Payroll Administration work area, select the Submit a Process or Report task.

2. Select your legislative data group.

3. Select the Generate HCM Rates flow pattern.

4. Enter these values for the Process Mode field.

Mode Description Accuracy

Fast

Uses the start and end date specified to calculate the rate value. If the rate value is the same for both dates, it determines that the rate value is the same over the entire period. If the start and end values are different, this method then determines a value in the middle and compares it with the start and finish values to see where the change occurred. This process repeats until the date of the change is found. This is known as a binary chop algorithm.

This is the quickest but least accurate method to calculate rate values. It misses any changes if a rate value goes up and then back down to the same value that's calculated at the start and end dates.

Full

Calculates the rate for every day between the start and end date.

Slowest but most accurate method.

Periodic

This method works the same as Fast except you can specify the number of days the process calculates rates between the start and end dates.

The accuracy of this method is half-way between Fast and Full.

5. Click Next.

6. Select a flow submission.

Note: If you select Using a schedule, you must also select a frequency, such as once, weekly or daily.
7. Click Next and then Submit.

Rates Defined by Formula

You can define rates based on Fast Formula. Let's consider an example where an employee can work in a job at a higher grade than their normal job. The rate paid to that employee is based on different criteria and includes rules, such as the minimum rate must be at least 1.00. You can use a formula to step up the grade to the next level and to return the rate assigned to that higher grade.

On the Rate Definition page, Calculation Formula field, select the HCM Rates Calculate Value formula type. The formula type supports contexts, such as assignment, payroll relationship, and job. You can select and create the correct formula for rate definitions from all standard database items.

Write a Formula

You can write your own formula when the formula type is HCM Rates Calculate Value.

The formula has certain inputs and return value, but the rate always returns these values:

• Monetary Amount

• Currency

• Periodicity

Examples

In this formula, the return values set to 65.23, but you can add the required logic to calculate the rate return values.

``````Default for value_name is EMPTY_TEXT_NUMBER
default for value_value is EMPTY_TEXT_NUMBER
default for value_datatype is EMPTY_TEXT_NUMBER

inputs are

value_name (text_number),
value_value (text_number),
value_datatype (text_number),

AMOUNT = 65.23
CURRENCY = 'USD'
PERIODICITY = 'YEAR'
return AMOUNT, CURRENCY, PERIODICITY
``````

Let's consider another example where the formula returns a rate based on a job. You can use this formula to calculate a rate value when an employee works in a job at a higher grade than at their normal job.

``````default for value_name is EMPTY_TEXT_NUMBER
default for value_value is EMPTY_TEXT_NUMBER
default for value_datatype is EMPTY_TEXT_NUMBER

default for PER_ASG_ELIG_JOBS_CURRENCY is 'UNKNOW'
default for PER_ASG_ELIG_JOBS_END_DATE is '0001/01/01 00:00:00' (date)
default for PER_ASG_ELIG_JOBS_FREQUECY is 'YEARLY'
default for PER_ASG_ELIG_JOBS_FROM_DATE is '0001/01/01 00:00:00' (date)
default for PER_ASG_ELIG_JOBS_JOB_CODE is 'UNKNOW'
default for PER_ASG_ELIG_JOBS_JOB_ID is 0
default for PER_ASG_ELIG_JOBS_JOB_NAME is 'UNKNOWN'
default for PER_ASG_ELIG_JOBS_MANUAL_RATE is 0
default for PER_ASG_JOB_ID is 0

inputs are
value_name (text_number),
value_value (text_number),
value_datatype (text_number)

AMOUNT = 0
PERIODICITY = 'YEARLY'
CURRENCY = 'USD'

l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - count is                  : ' || to_char(value_name.count))
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - count2 is                 : ' || to_char(value_value.count))
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - count3 is                 : ' || to_char(value_datatype.count))

l_job_id = PER_ASG_JOB_ID
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - l_job_id is                  : ' || to_char(l_job_id))

i = 0
while (i < value_name.count) loop
(
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - name is                  : ' || value_name[i])
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - value is                 : ' || value_value[i])
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - datatype is              : ' || value_datatype[i])

if(value_name[i] = 'PER_ASG_JOB_ID') then
(
l_job_id = to_num(value_value[i])
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - l_job_id has been set with          : ' || to_char(l_job_id))
)

i = i + 1
)

CHANGE_CONTEXTS(JOB_ID = l_job_id)
(
l_t_dummy = PER_ASG_ELIG_JOBS_CURRENCY
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - l_t_dummy is                  : ' || l_t_dummy)
if(l_t_dummy != 'UNKNOW') then
(
CURRENCY = l_t_dummy
)

l_dt_dummy = PER_ASG_ELIG_JOBS_END_DATE
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - l_dt_dummy is                  : ' || to_char(l_dt_dummy))

l_t_dummy = PER_ASG_ELIG_JOBS_FREQUECY
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - l_t_dummy is                  : ' || l_t_dummy)
if(l_t_dummy != 'UNKNOW') then
(
PERIODICITY = l_t_dummy
)

l_dt_dummy = PER_ASG_ELIG_JOBS_FROM_DATE
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - l_dt_dummy is                  : ' || to_char(l_dt_dummy))

l_t_dummy = PER_ASG_ELIG_JOBS_JOB_CODE
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - l_t_dummy is                  : ' || l_t_dummy)

l_n_dummy = PER_ASG_ELIG_JOBS_JOB_ID
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - l_n_dummy is                  : '||to_char(l_n_dummy))

l_t_dummy = PER_ASG_ELIG_JOBS_JOB_NAME
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - l_t_dummy is                  : ' || l_t_dummy)

l_n_dummy = PER_ASG_ELIG_JOBS_MANUAL_RATE
l_log = PAY_INTERNAL_LOG_WRITE('[RATE_FML] - l_n_dummy is                  : '||to_char(l_n_dummy))
if(l_n_dummy > 0) then
(
AMOUNT = l_n_dummy
)
)

return AMOUNT, PERIODICITY, CURRENCY
``````

You can specify a rate for use in calculating an absence in an absence plan or an absence element. When processing absence entries in a payroll run, the formula associated with the absence element uses the Rate Converter global formula to convert rates. The formula checks for a rate in this sequence.

1. Absence plan

2. Absence element

3. Compensation salary element

Absence Plan

In Oracle Fusion Absence Management, you can select a rate rule on the Entries and Balances tab of the Create Absence Plan page. The rate rule calculates the units passed to payroll when you record an absence. You can select rate rules for the absence payment, final disbursement, discretionary disbursement, and liability balance calculation.

For third-party absence providers, the application transfers the rate information and override rates in the XML file attached to the Load Absence Batch process.

Absence Element

If you don't specify rates in the absence plan, you can specify a rate when you create the absence elements. The type of absence information determines the rates you can select. For example, for plans where you transfer accrual balances and absences, you can select different rates for these calculations.

• Absence payments

• Discretionary disbursement

• Final disbursement

• Liability balance rate

As best practice, specify a rate in either the plan or the element. If you specify in both, ensure the rate for the element is same as the rate you selected in the corresponding plan.

Compensation Salary Element

If the formula doesn't find a rate specified in the plan or the element, it uses the compensation salary element.

When you associate a payroll element to a salary basis, you specify an input value that holds the base pay on a worker's element entry. The monetary amount or rate recorded in the element entry is the salary value in the worker's salary information held on the assignment. If you specify a rate, the formula uses this rate if it doesn't find one defined in the absence plan or absence element.

FAQ for Rate Definitions

How does periodicity conversion work when there are multiple contributors with different periodicities?

Sometimes, you may need to add a base salary, which is an annual figure, to a 13th month salary. This 13th month salary is a monthly figure that's calculated from the annual base salary. The base salary in this example is held as an annual amount on an element entry as 24,000. The 13th month salary is 2,000 (24000 / 12). If you add each of these contributors together, the sum of the contributors is 26,000 (24,000 + 2,000).

At this point you have added an annual figure to a monthly figure, but you haven't indicated what the periodicity of the total is. On the Create Rate Definitions page, if you select Annual in the Contributor Total Periodicity field, the sum of the contributors is 26,000. If you select Monthly, the application converts the contributors to 312,000 (26,000 * 12), which is now the annual figure.

Note: When the formula is called to calculate the rate, there is an option to override the return periodicity of the rate.

Values Defined by Criteria

Each calculation value definition requires you to specify one or more evaluation conditions that determine a particular value or rate. In cases where you specify many conditions, each condition is defined as a separate level and placed in priority order to produce a tree structure.

You control the criteria that you enter and the resulting tree structure. In each branch of the tree, you can have multiple evaluation conditions. If no conditions are met, the payroll process uses the value established for the default criteria that you set up. Each criterion and value, as well as the parent criteria definition, is stored as a calculation value definition.

Values defined by criteria comprise the components listed in this table.

Component Requirement

Criteria Definition (evaluation condition)

At least one but you can have many.

Default Criteria Definition

Should have at least one in most cases to cover all conditions.

If you have a situation that where the criteria you set up covers all conditions, then you don't need a default criteria definition.

Name

Refers to the name of the value definition. This field is mandatory. This name must be unique across all value definitions within a legislative data group. It's required to enable customers to identify the parent record while you create the hierarchy through the HCM Data Loader.

Value Definition Group

Grouping that helps you manage value definitions. This field is mandatory.

Retrieval Date

Determines whether the criteria definition uses the date earned or effective date to retrieve information. The default value is effective date.

Display Name

Refers to the name of the hierarchy record created within the context of the value definition. This name doesn't need to be unique and is displayed in the value by criteria hierarchy record. If you don't enter a display name, the database item description or name displays.

Value Definitions

You can have multiple values included with a value definition. Each one is identified by the value identifier.

Database Items

One per criteria definition.

Operands

One per criteria definition.

Value Sets

Optional

Literal Values

One per criteria definition.

If you use the In operand, you can enter multiple values.

Rate

Used when you're creating a calculation value. If you select Flat Rate or Incremental Rate as the calculation type, you must enter a rate in this field.

Criteria Definitions and Evaluation Conditions

Within the tree structure you create the criteria definitions that hold the actual values or rates. There are many types of values that can be held, such as percentage, number, cash amount, or text.

You can also define a periodicity, which allows the value to be specified as a periodic value. Additionally, you can define a value in a currency that's different from the default currency specified at the legislative data group.

The supported calculation types include:

• Flat Amount

• Flat Amount Times Multiplier

• Flat Calculation

• Flat Rate

• Incremental Rate

• Number

• Rate Definition

• Standard Formula 1

• Standard Formula 2

Value Definitions

After creating the criteria, create value definitions to hold the values for each criterion. This is where you enter the calculation types and rates. If you're using a calculation type that's a flat amount, flat amount times multiplier, or number, you can also specify a periodicity.

To view or modify the calculation values you entered, click the appropriate link to access the Calculation Value Definition task. On this page you can change from and to values, override the calculation type, add new rows, change rates, and change currency. The From Value and To Value fields on this page are monetary.

You can capture multiple values for a single criterion if you specify a unique value identifier for each value. The tree structure shows this identifier instead of the value definition name. For example you may want to pay employees bonuses at different rates based on their annual salaries. In this case, you can use value identifiers to define different rates for each salary range using the From Value and To Value fields.

Database Items

Each condition refers a database item to identify where the value is used. It also determines the data type of the value, which is text, number, or date. Define conditions using predefined database items or the dynamically created database items that are generated when certain data is created, such as balances and elements.

Here is a partial list of database items that you can refer in the new hire flow:

• Job

• Job Code

• Location

• Department

• Worker Category

• Assignment Category

• Employee Category

• Salary Basis

• Legal Employer

• Period of Service (Seniority)

• Number of Dependents (between the ages 3 and 18)

Note: You can only refer database items for objects that are defined in the new hire flow, which are used to calculate salary basis. If you refer other types of database items, the process either returns zero or it uses the default criteria.

You can refer a wider range of database items if you define a value by criteria for other purposes. For example, calculating a time card or payroll rate.

You can refer any static or dynamic DBI that supports these contexts:

• HR_ASSIGNMENT_ID

• HR_TERM_ID

• PAYROLL_ASSIGNMENT_ID

• PAYROLL_TERM_ID

• PAYROLL_RELATIONSHIP_ID

• PERSON_ID

• CALC_BREAKDOWN_ID

• PAYROLL_ID

• EFFECTIVE_DATE

• DATE_EARNED

• LEGISLATIVE_DATA_GROUP_ID

Operands

You use operands when you're creating criteria. You can specify whether the value defined by the database item should be equal to, greater than, less than, greater than or equal to, or less than or equal to the literal value.

To capture multiple values for the same criteria, use the In operand. For example if you want to give employees that work in City 1 and City 2 the same bonus, you can create a single evaluation condition for both cities using the In operand.

Value Sets

Specify a value set to provide a dynamic list of values from which you can select an entry. This option is available for input values that provide text only.

Literal Values

If you specify a value set, you can select an entry from a list of values, which is based on the selected value. If you leave the Value Set field blank, you can enter any type of information that's appropriate for the value definition that you're creating.

Use the Values Defined by Criteria task to calculate or retrieve values based on one or more conditions. You can use values defined by criteria in rate definitions. You can also use value by criteria definitions in any formula used for validation.

If you use a third-party payroll product and want to extract the salary rate details, use the Generate HCM Rates process to calculate rate values. The Generate HCM Rates process is primarily used to calculate derived rate values, such as those which sum multiple salary components. However, it's also used to process primary rates, as you may define rate definitions which calculate values that are different from those stored on an element entry.

Note: The values that the Generate HCM Rates process creates are stored on a rates table. You can extract this information using the HCM Extract tool to send to your third-party payroll providers.

Use these examples to understand how you can calculate values defined by criteria for these elements of payroll.

Annual Salaries

You can calculate annual salaries for employees based on their position. For example:

• If the employee is a Consultant, pay 45,000.

• If the employee is a Senior Consultant, pay 55,000.

• If the employee is a Principal Consultant, pay 65,000.

Bonus Payments

You can chose to calculate bonus payments for employees that are weighted by their location. A more complicated scenario would be to pay bonuses based on an employee's department, years of service, and annual salary.

• To weight a bonus payment by location, you could set up criteria as follows:

• For employees working in London, pay a 15 percent bonus.

• For employees working in Manchester, pay a 13 percent bonus.

• For employees working in Southampton, pay a 9 percent bonus.

• For all other employees, pay a 5 percent bonus.

• To pay a bonus based on department, years of service, and annual salary, you could set up criteria as follows:

• If an employee working in sales has less than or equal to 5 years of service and an annual salary over 45,000, pay a 2,000 bonus.

• If an employee working in sales has less than or equal to 10 years of service and an annual salary over 45,000, pay a 5,000 bonus.

• If an employee working in sales has greater than 10 years of service and an annual salary over 45,000, pay a 9,000 bonus.

• For all other employees working in sales, pay a 7 percent bonus based on their annual salary.

Pension Contributions

Your pension plan may have rules that limit contributions based on an employee's annual salary. For example, in this scenario you could set up criteria as follows:

• Employees making less than or equal to 25,000, limit maximum contributions to 2,500.

• Employees making less than or equal to 50,000, limit maximum contributions to 7,500.

• Employees making less than or equal to 100,000, limit maximum contributions to 12,500.

• Employees making greater than 100,000, limit maximum contributions to 14 percent of pay.

Hourly Rates

In the United States, labor law mandates to pay a higher rate when a locality's minimum wage is greater than the state or federal minimum wage. To fulfill this requirement, use the Values Defined by Criteria task to set up pay rates that a worker's state, county, and profession determines.

In this example, you could set up criteria for these scenarios:

• Pay carpenters working in City 1 in County 1 greater than or equal to the rate of 15 per hour.

• Pay carpenters working in City 1 in County 2 greater than or equal to the rate of 17 per hour.

• Pay carpenters working in City 1 in County 3 greater than or equal to the rate of 19 per hour.

• For all other workers, pay rate of 12 USD per hour, the prevailing state wage for laborers.

This example demonstrates how to create criteria to pay employee bonuses at different rates based on age and location. This table summarizes the key decisions for this scenario:

Decisions to Consider In this Example

What ages and rates should be used?

• Less than age 25, pay 10 percent

• Less than age 35, pay 14 percent to City 1 employees

• Less than age 35, pay 16 percent to City 2 employees

• All other locations and ages greater than 35, pay 5 percent

What locations should be used to determine bonus rates?

• City 1

• City 2

Are there any special conditions that should be added?

Yes. In City 2 the general manager wants to pay a flat amount of 15,000 for all employees under the age of 35 who make over 100,000 per year.

In this example, we would perform these actions:

• Create the bonus rate criteria definition

• Create age criteria

• Create location criteria for age group 2

• Create a calculation value definition for age group 1

• Create calculation value definitions for locations

• Create calculation value definitions for default criteria definitions

• Modify evaluation conditions

Before You Start

In this example, HRX_US_REP_LOCATION is used as the value set for the entry of different locations. If you don't have an equivalent value set, you may need to create one.

Create the Bonus Rate Criteria Definition

1. In the Payroll Administration work area, click the Values Defined by Criteria task.

In the Setup and Maintenance work area, go to these areas:

Offering: Workforce Deployment

Functional Area: Payroll

2. Click Create.

3. Complete these fields as shown in this table.

Field Value

Name

Bonus Rate

Effective Start Date

1/1/15

Legislative Data Group

4. Select Create new value definition group.

5. Enter Bonus in the New Value Definition Group field.

6. Enter Flat Rate in the Default Calculation Type field.

7. Click OK.

Create Age Criteria
1. Select the row with the Bonus Rate criteria definition.

2. Click New.

3. Select Criteria and click OK.

4. For each criteria definition you create, complete these fields.

Field Age less than 25 Age less than 35

Calculation Value Definition Name

Bonus Rate Age Group 1

Bonus Rate Age Group 2

Value Definition Group

Bonus

Bonus

Retrieval Date

Date Earned

Date Earned

Sequence

1

2

Database Item Name

PER_PER_PERSON_AGE

PER_PER_PERSON_AGE

Operand

<

<

Literal Value

25

35

5. Click OK each time you create a criteria definition.

6. To create a default group for the age criteria, repeat steps 1 through 3.

7. Complete these fields:

Field Value

Calculation Value Definition Name

Bonus Rate Age Group Default

Value Definition Group

Bonus

Retrieval Date

Date Earned

8. Select the Default Criteria check box and click OK.

Create the Location Criteria for Age Group 2
1. Select the row with the Person Age < 35 criteria definition.

2. Click New.

3. Select Criteria and click OK.

4. For each criteria definition you create, complete these fields.

Field City 1 City 2

Calculation Value Definition Name

Bonus Range Age Group 2 Location 1

Bonus Range Age Group 2 Location 2

Value Definition Group

Bonus

Bonus

Retrieval Date

Date Earned

Date Earned

Sequence

1

2

Database Item Name

PER_ASG_LOCATION_ID

PER_ASG_LOCATION_ID

Display Name

Location

Location

Operand

=

=

Value Set

HRX_US_REP_LOCATION

HRX_US_REP_LOCATION

Literal Value

City 1

City 2

5. Click OK each time you create a criteria definition.

6. To create a default group for the location criteria, repeat steps 1 through 3.

7. Complete these fields:

Field Value

Calculation Value Definition Name

Bonus Rate Age Group 2 Location Default Rate

Value Definition Group

Bonus

Retrieval Date

Date Earned

8. Select the Default Criteria check box and click OK.

Create a Calculation Value Definition for Age Group 1
1. Select the row with the Person Age < 25 criteria definition.

2. Click New.

3. Select Value and click OK.

4. Complete these fields:

Field Value

Calculation Value Definition Name

Bonus Rate Age Group 1 Rate

Value Definition Group

Bonus

Retrieval Date

Date Earned

Calculation Type

Flat Rate

Rate

.10

5. Click OK.

Create Calculation Value Definitions for Locations
1. Select the row with the Location = City 1 criteria definition.

2. Click New.

3. Select Value and click OK.

4. Complete these fields:

Field Value

Calculation Value Definition Name

Bonus Rate Age Group 2 Location Rate 1

Value Definition Group

Bonus

Retrieval Date

Date Earned

Calculation Type

Flat Rate

Rate

.14

5. Click OK.

6. Select the row with the Location = City 2 criteria definition.

7. Click New.

8. Select Value and click OK.

9. Complete these fields:

Field Value

Calculation Value Definition Name

Bonus Rate Age Group 2 Location Rate 2

Value Definition Group

Bonus

Retrieval Date

Date Earned

Calculation Type

Flat Rate

Rate

.16

10. Click OK.

Create Value Definitions for the Default Criteria Definitions
1. Under the location criteria definition, select the row with the Default Criteria definition.

2. Click New.

3. Select Value and click OK.

4. Complete these fields:

Field Value

Calculation Value Definition Name

Age Group Location Default Rate

Value Definition Group

Bonus

Retrieval Date

Date Earned

Calculation Type

Flat Rate

Rate

.05

5. Click OK.

6. To create a calculation value definition for employees that don't meet any criteria, select the row with the last Default Criteria definition.

7. Repeat the steps described in this procedure except for the Calculation Value Definition Name field. Enter Bonus Default Rate instead.

8. Click OK.

Modify Evaluation Conditions
1. To modify the evaluation conditions for the City 2 location, click the Bonus Rate Age Group 2 Location Rate 2 link.

2. Scroll down to the Calculation Values section.

3. Enter 100,000 as the To Value.

5. Enter 100,000.01 as the From Value and 999,999,999,999 as the To Value.

From and to values are monetary, unless you're using a database item.

6. Select Flat Amount in the Calculation Type Override field.

7. Enter 15,000 as the Flat Amount.

8. Click OK and Submit.

Limit Pension Contributions

This example demonstrates how to create criteria to limit pension contributions based on annual salary amounts. This table summarizes the key decisions for this scenario.

Decisions to Consider In this Example

What salaries and contribution limits should be used?

• Salary less than or equal to 50,000, limit pension contribution to 5,000

• Salary less than or equal to 100,000, limit pension contribution to 10,000

• All other salary amounts, limit pension contribution to 17 percent of annual salary

This example:

1. Creates the pension limits criteria definition

2. Creates salary criteria

3. Creates the value definition for salary amount 1

4. Creates the value definition for salary amount 2

5. Creates the value definition for the default criteria definition

Create the Pension Limits Criteria Definition

1. In the Payroll Administration work area, click the Values Defined by Criteria task.

Go to these areas:

Offering: Workforce Deployment

Functional Area: Payroll

2. Click Create.

3. Complete the fields, as shown in this table.

Field Value

Name

Pension Limits

Effective Start Date

1/1/15

Legislative Data Group

4. Select the Use existing value definition group radio button.

5. Select Limit Rules in the Value Definition Group field.

6. Select Flat Amount in the Default Calculation Type field.

7. Click OK.

Create Salary Criteria

1. Select the row with the Pension Limits criteria definition.

2. Click New.

3. Select Criteria and then click OK.

4. For each criteria definition you create, complete the fields as shown in this table.

Field Salary less than or equal to 50,000 Salary less than or equal to 100,000

Calculation Value Definition Name

Salary less than or equal to 50,000

Salary less than or equal to 100,000

Value Definition Group

Limit Rules

Limit Rules

Retrieval Date

Date Earned

Date Earned

Sequence

1

2

Database Item Name

CMP_ASSIGNMENT_SALARY_AMOUNT

CMP_ASSIGNMENT_SALARY_AMOUNT

Operand

< =

< =

Literal Value

50,000

100,000

5. Click OK each time you create a criteria definition.

6. To create a default group for the salary criteria, repeat steps 1 through 3.

7. Complete the fields, as shown in this table.

Field Value

Calculation Value Definition Name

Salary Greater Than 100,000

Value Definition Group

Limit Rules

Retrieval Date

Date Earned

8. Select the Default Criteria check box and click OK.

Create the Value Definition for Salary Amount 1

1. Select the row with the Salary Amount < = 50,000 criteria definition.

2. Click New.

3. Select Value and click OK.

4. Complete the fields, as shown in this table.

Field Value

Calculation Value Definition Name

Contribution Limits 1

Value Definition Group

Limit Rules

Retrieval Date

Date Earned

Calculation Type

Flat Amount

Periodicity

Annually

Unit of Measure

Money

Currency

LDG Currency

Flat Amount

5,000

5. Click OK.

Create the Value Definition for Salary Amount 2

1. Select the row with the Salary Amount < = 100,000 criteria definition.

2. Click New.

3. Select Value and click OK.

4. Complete the fields, as shown in this table.

Field Value

Calculation Value Definition Name

Contribution Limits 2

Value Definition Group

Limit Rules

Retrieval Date

Date Earned

Calculation Type

Flat Amount

Periodicity

Annually

Unit of Measure

Money

Currency

LDG Currency

Flat Amount

10,000

5. Click OK.

Create the Value Definitions for the Default Criteria Definition

1. Select the row with the Default Criteria definition.

2. Click New.

3. Select Value and click OK.

4. Complete the fields, as shown in this table.

Field Value

Calculation Value Definition Name

Salary Greater Than 100,000

Value Definition Group

Limit Rules

Retrieval Date

Date Earned

Calculation Type

Flat Rate

Rate

.17

5. Click OK.

FAQ for Values Defined by Criteria

Does the order in which I add criteria definitions matter?

Yes. Each criteria definition that you add is defined as a separate level and placed in priority order. The order is used to produce a tree structure, which affects processing and the value that's returned.

For example, if the first criteria definition has the condition of salary greater than 0, and the next criteria definition in the sequence has the condition of salary greater than 100,000, all salaries would meet the first condition and there would be no results for the second condition. To fix this situation, you would reverse the order of the criteria definitions where the condition greater than 100,000 is first in the sequence.

You can change the sequence of the criteria definitions at any time to suit your business needs and fix processing problems.

Payroll Event Groups

A payroll event group defines the types of data changes that trigger retroactive event notifications or prorated calculation of a person's earnings or deductions.

There are two types of payroll event groups:

• Proration

• Retroactive

Proration

Using proration, you can calculate proportionate earnings and deduction amounts whenever payroll-relevant data changes during a payroll period.

For example, you can calculate proportionate earnings and deduction amounts if:

• A person joins or leaves an organization in the middle of a payroll period

• A person's pay rate changes during a payroll period

If you want to prorate an element, such as basic salary, assign a proration event group to the element with proration points that affect a person's salary. You can use the predefined event group, or create a new one. When you create an event group, you select the events that activate proration calculation, such as changes to:

• Hourly or annual pay rates

• Working hours

• Allowances or deductions

• Assignment changes, such as grade or position

Tip: You can only select events that represent changes to element entries, calculation cards, calculation value definitions and assignments.

Retroactive

Retroactive processing ensures that your payroll run for the current period reflects any backdated payments and deductions from previous payroll periods. A retroactive event group defines the types of changes that trigger a retroactive event notification.

Within a retroactive event group, select the events that produce notifications if a backdated change occurs. Specify the entity, update type, and attribute, as shown in the examples provided in the following table.

Entity Update Type Attribute

Element Entry Value

Correction

SCREEN_ENTRY_VALUE

Element Entry

Update

EFFECTIVE_START_DATE

Element Entry

Update

EFFECTIVE_END_DATE

Element Entry

Logical Date Change

Element Entry

Insert

Element Entry

Delete Changes

Element Proration

Use proration to calculate proportionate amounts for recurring elements when payroll-relevant data changes during a payroll period. Examples of such scenarios include a person joining the enterprise or a mid-period pay increase. Proration creates two payroll run results. The first run result is for the payroll period up to the day before the event. The second one is from the date of the event to the end of the period. When you create an element, you specify its proration event group and the calculation method.

Use proration rate conversion rules to specify a different rule than that used for periodicity. For example, you prorate based on calendar days when using work units for conversion.

To set up element proration, you do these tasks:

• Review the predefined proration event group to ensure that it includes changes you want to track. You can optionally update the event group or create a new group.

• Create an element and enable proration processing for an element.

Review the Predefined Event Group

When you create or update a recurring element, you can make it subject to proration.

1. In the Payroll Calculation work area, select the Manage Event Groups task.

2. Search for the predefined event group: Entry Changes for Proration.

3. Review the types of changes that automatically trigger proration for the elements associated with this event group.

You can edit this group or create a new event group for the element, if required. For example, you might want to add changes to calculation cards or assignments.

Enable Proration Processing for an Element

To enable proration, do these steps:

1. In the Payroll Calculation work area, select the Manage Elements task, and click Create.

2. On the Create Element: Additional Details page, select Yes for the following question: Is this element subject to proration?

3. Select the predefined event group (Entry Changes for Proration) or a new group that you created.

4. Select a Proration Units and Proration Rate Conversion Rule.

5. Select a Proration Conversion Rule formula.

Note: If the predefined conversion rules don't meet your requirements, you can create a user-defined formula.

Create Conversion Formulas for Proration

The predefined proration formula GLB_EARN_PRORATION controls how the payroll calculation prorates an element entry when it encounters an event. This could happen when there's a change to an element entry value. You can copy and edit a predefined proration formula to modify the calculation. Then, you can select the user-defined formula as the proration formula for your element.

Create a Formula

You must create a modified rate conversion before you create its related proration conversion rule.

1. Select the formula type Payroll Run Proration.

2. Search for and copy the predefined Rate Conversion Proration formula.

3. Add the suffix underscore _PRORATE to the name.

4. Update these formula inputs:

• PRORATE_START_DATE (date)

• PRORATE_END_DATE (date)

• SOURCE_PERIODICITY (text)

• DAYS_WORKED (number)

• RATE_CONV_FORMULA (text)

• HOURS_WORKED (number)

• IN_AMOUNT (number)

• UNIT_TYPE (text)

• PRORATION_UNIT (text)

5. Add the formula outputs for the element input values.

6. Save, submit, and compile the formula.

Some countries or territories supply predefined proration formulas that you can use as the basis for your modified version.

How Prorated Earnings and Deductions are Calculated

You can select from a number of different proration conversion rules to calculate standard or supplemental earnings. Select the proration conversion rule when you create an earnings or deduction element using the Manage Elements task in the Payroll Calculation work area. You can also calculate prorated earnings based on calendar days or work schedules.

This topic covers:

• How deductions are calculated

• How prorated earnings are calculated

• Examples of earnings calculation based on calendar days

• Example of earnings calculation based on work schedule

How Deductions Are Calculated

Typically, you don't prorate deductions, such as deductions based on a percentage of earnings. You might prorate fixed rate deductions, such as voluntary deduction for a fitness center membership. In most cases, use the predefined global proration formula for deductions (GLB_DEDN_PRORATION). For this formula the proration value is the periodic value multiplied by the number of calendar days in the proration period. This figure is then divided by the number of calendar days in the payroll period.

How Prorated Earnings are Calculated

Creating a recurring earnings element automatically associates it with a predefined proration formula (GLB_EARN_PRORATION). The proration formula determines how to prorate earnings in the proration period based on the proration calculation method you select.

As a guideline the global formula doesn't prorate:

• Nonrecurring elements

• Earnings elements with a calculation rule of unit multiplied by rate, if rate and hours are entered in the element entry

Note: Some predefined legislations provide a different default proration formula and rules.

These examples show how proration calculations are performed on earnings calculations, based on:

• Calendar days

• Work schedules

Example: Earnings Calculation Based on Calendar Days

The formula calculates proration results as shown in the following table.

Proration Conversion Rule and Proration Units Proration Calculation

Standard Rate Annualized rule

Daily proration units

Calendar days in proration period multiplied by annual pay and divided by annual calendar days

Example:

1. You assign a person to a monthly payroll for a salary basis of 25,000.

2. You update the salary on 10 December, 2013 to 30,000.

3. You calculate the December monthly payroll.

4. The proration formula calculates 2 proration periods with 9 calendar days in the first proration period, and 22 in the second period.

(9 * 25000) / 365 + (22 / * 30000) / 365 = 616.44 + 1808.22 = 2424.66

Standard Rate Daily rule

Daily proration units

Total pay divided by calendar days in the payroll period and multiplied by calendar days in the proration period.

Example:

1. You hire a person to a weekly payroll in the middle of the payroll period.

2. The employee works 3 calendar days and receives a location allowance of 500.

3. The proration formula calculates the employee's location allowance for the 3 days.

(500 / 7) * 3 = 214.29

Example: Earnings Calculation Based on Work Schedule

The formula calculates proration results as shown in the following table. If no working hours are defined, the proration formula checks the assignment definition for the number of working hours and frequency. If no information is found, the formula uses 40 as the number of working hours and 5 as the number of days for the work week.

Proration Conversion Rule and Proration Units Proration Calculation

Periodic Work Schedule Rate Annualized rule

Workday proration units

Work schedule days in proration period multiplied by annual pay and divided by 260 days, the default number of annual working days.

A day in a work schedule is a 24 hour period.

Example:

1. You hire a person to a monthly payroll for an annual salary basis of 25,000.

2. The employee works 5 days a week Monday through Friday.

3. You increase the monthly salary to 30,000 effective 10 December, 2013.

4. You calculate the December monthly payroll.

5. The proration formula calculates 6 working days from 1st December to 9th December, and 16 working days from 10th December to 31st December.

(6 * 25000) / 260 + (16 * 30000) / 260 = 576.92 + 1846.15 = 2423.07

Periodic Work Schedule Rate Annualized rule

Hourly proration units

Work schedule hours in proration period multiplied by the annual pay and divided by 2080, the default number of annual working hours.

Example:

1. An employee assigned to a weekly payroll receives an annual salary basis of 25,000.

2. You increase the salary to 30,000 effective 10 December, 2013.

3. The employee works 10 hours a day from 9 December to 12 December.

4. You calculate the weekly payroll for the week 8 December to 14 December.

5. The proration formula calculates 2 proration periods, with 10 working hours for the first period, and 30 for the second period.

(10 * 25000) / 2080 + (30 * 30000) / 2080 = 120.19 + 432.69 = 552.88

Periodicity

Periodicity Conversion

Rate conversion formulas convert amounts to different periodicities for payroll calculations. The following calculations use rate conversion formulas:

• Proration

• Hours multiplied by rates calculation of an element run result

• Rates based on rate definitions

Predefined Periods

Use the following predefined periods when setting periodicity.

If these values don't meet your requirements, you can copy a predefined rate conversion formula and edit its periodicity values.

Periodicity Valid for Payroll Periods Number of Periods per Year

Annually

Yes

1

Bimonthly

Yes

6

Biweekly

Yes

26

Calendar Monthly

Yes

12

Daily

No

365

Hourly

No

2920 (365 days multiplied by 8 hours)

Lunar Month

Yes

13

Periodically

No

Payroll frequency determines the number of periods to use in the rate conversion.

Quarterly

Yes

4

Semiannually

Yes

2

Semimonthly

Yes

24

Workday

No

260

Weekly

Yes

52

Work Hour

No

2080 (260 days multiplied by 8 hours)

Defining Periodicity

Here's the different ways in which you can define periodicity:

Elements

Manage Elements

The Periodicity input value specifies the frequency of the element value.

For example, salary element entries that hold annual salary values have an annual periodicity.

Payrolls

Manage Payroll Definitions

Period Type specifies the number of payroll periods.

For example, the Monthly Lunar period type includes 13 payroll periods.

Rates

Manage Rate Definitions

Rate definition can specify the following periodicities:

• Return periodicity of the rate

• Periodicity of each rate contributor

• Periodicity of the calculated sum of the rate contributors

Rate Conversion Formulas

Rate conversion formulas change the periodicity of an amount.

For example, the Standard Rate Annualized conversion formula can convert an annual salary amount to a weekly amount.

The following table lists the predefined rate conversion formulas to change the periodicity of an amount.

Rate Conversion Rule Description Example

Standard Rate Annualized

Calculates the annual rate using the input periodicity and converts the amount to an output periodicity and rate.

This rule uses default values, such as 2080 hours or 260 working days, to calculate the annual rate. You select the day or hourly basis during element definition.

To convert a weekly amount to a semimonthly periodicity, the formula:

1. Multiplies the weekly amount by 52.

2. Divides the result by 24.

Standard Rate Daily

Calculates the daily rate using the input periodicity and converts the amount to an output periodicity and rate.

This rule uses a default value, such as 260 working days a year, to calculate the daily rate.

To convert an annual amount to daily periodicity, the formula:

1. Divides the annual amount by 365.

2. Multiplies the result by the number of days in the payroll period.

Standard Working Hours Rate Annualized

Uses the employee's standard working hours to convert the monetary value and working hours to an annual value before calculating the rate.

The employee works 40 hours a week with a monthly salary of 1000:

((1000*12)/(40.00*52) = 5.77 an hour

Assignment Working Hours Rate Annualized

Uses the employee's working hours to convert the monetary value and working hours to an annual value before calculating the rate.

The employee works 40 hours a week, with 37.5 standard working hours a week, and a monthly salary of 1000:

((1000*12)/(37.50*52) = 6.15 an hour

Periodic Work Schedule Rate Annualized

Uses the employee's work schedule for the payroll period for daily and hourly conversions.

For an employee:

• With a monthly salary of 1000

• Assigned a monthly payroll

The formula checks the work schedule details for the month.

For a daily conversion:

1000 a month/20 days in the month = 50

Note: For compensation calculations where the employee isn't assigned a payroll, the rate is calculated using the weekly rate calculation. The amount is converted to an annual figure and divided by the number of days or hours in that week based on the work schedule.

The impact of rate conversion rule is summarized here.:

Periodicity: The conversion rule for periodicity applies to Flat Amount, Hours * Rate, and Days * Rate calculation rules. You can override the periodicity used as the default for the element definition at the element entry level.

Work Units: The Work Units conversion rule applies only to flat amount calculation rules for standard and supplemental earnings elements. The selection of which work units to use in reports and payslips determines the conversion calculation. The application creates the element input values using the default values of the rate conversion formulas.

For example, the following table illustrates how the payroll process determines the standard work units for any given pay period:

Work Units Selected Example

Hours

2080/24 = 86.67

Days

260/24 = 10.83

None

No input values are created

Proration: The element template includes a new question for proration units. Proration rate conversion rules replace the previous proration methods in the element template. You have greater flexibility, for example, to base proration on calendar days when using work units for conversion.

Note: If the conversion rules don't meet your requirements, you can copy and edit the rules using the Manage Fast Formulas task in the Payroll Calculation work area.

Retroactive Pay

How Retroactive Pay Is Calculated

Retroactive pay is the recalculation of prior payroll results due to changes that occur after the original calculation was run. For example, prior period adjustments backdated to a previous pay period when the payroll department makes a correction for an error or an employee receives a performance bonus.

You run the Recalculate Payroll for Retroactive Changes process to calculate retroactive pay. This process creates retroactive element entries based on retroactive events but only elements that are set up to include a retroactive event group can have retroactive element entries.

You can view automatically-created retroactive events or create them manually.

Settings That Affect Retroactive Pay

To enable retroactive processing of an element:

1. On the Manage Event Groups page, review the types of changes that automatically trigger a retroactive notification for the predefined event group, called Entry Changes for Retro. You can edit this group or create a new event group for the element, if required.

2. On the Create Element Additional Details page, select Yes for the following questions:

• Is this element subject to proration?

• Is this element subject to retroactive changes?

3. On the Create Element, select the predefined event group or a new group that you have created.

This shows you the retroactive setup.

Process Retroactive Pay

To process retroactive pay:

1. Review or create retroactive events on the Manage Event Notifications page in the Payroll Calculation work area. You can download results to Excel to view retroactive events in a report format.

2. Submit the Recalculate Payroll for Retroactive Changes process with the Submit a Process or Report task, or the process may run automatically as part of your payroll flow. This process creates one or more retroactive entries to receive the process results and never overwrites historical payroll data.

3. Run the Calculate Payroll process.

Note: Always run the Recalculate Payroll for Retroactive Changes process immediately before you run a payroll. Otherwise, if you run it after the Calculate Payroll process, retroactive adjustments are held over until the next payroll period.

If you don't get the expected retroactive notification, here are some suggestions to review:

• The originating transaction causing the event

• Element setup

• Element eligibility for the person

• The retroactive event group entities and attributes that are set up to trigger retroactive events

• The proration event group entities and attributes setup that triggers proration

This shows you the retroactive processing for a person getting a retroactive pay increase.

Retroactive Events are typically created automatically when you create retroactive adjustments, such as backdated salary changes. You can enter the retroactive event manually to generate the correct payslip, such as if payroll hasn't made the pay rate change effective last pay period for an employee being terminated effective immediately.

Create a Payroll Relationship Event

1. On the Manage Event Notifications page in the Payroll Calculation work area, select the Manage Event Notifications task.

2. Click Create.

3. Use the information in this table enter information into the Create Payroll Relationship Event window.

Field Value

Approval Status

Awaiting Processing

Payroll Relationship

The person to process

Process Date

Date when the retroactive change process is run.

Note: This date indicates when the element change was triggered.
4. Click Save and Close.

Create a Retroactive Event

1. On the Manage Event Notifications page, click the name of the person associated with the payroll relationship event you created.

2. On the Manage Retroactive Events page, click Create in the Entry Details section.

3. Select the element you want to reprocess, the date the recalculate payroll runs, and a retroactive component. The element from which the change will be paid to the person is the retroactive component.

4. Repeat the previous step if you want to recalculate multiple elements for this payroll relationship.

5. Click Submit.

Retroactive pay is the recalculation of prior payroll results due to changes that occur after the original payroll calculation is run.

Here are some examples of prior period adjustments:

• An employee receives a pay award that’s backdated to a previous pay period.

• The payroll department makes a backdated correction for an error that occurred in a previous pay period.

For example, after evaluating employee performances for the previous calendar year through a three-month review cycle, an employer may backdate the pay awards to 01, January. When such entries are made in April, it triggers retroactive events for employees receiving such pay awards. These employees have already been processed by payroll for the last three months.

A retroactive notification is generated when a retroactive payroll event is generated.

Run the Retroactive Notification Report to view retroactive notifications for events that are awaiting processing, deferred, or both. Run this report before you submit the Recalculate Payroll for Retroactive Changes process.

Use the report to view:

• Unprocessed retroactive events for each employee, enabling you to identify who are included in Recalculate Payroll for Retroactive Changes process.

• Event dates that can be used to identify which payroll periods are recalculated by the retroactive process for each employee.

• Payroll relationships that are previously deferred so that you can make some or all of them available for the next retroactive payroll process.

The earliest date across all notifications for a payroll relationship determines the reprocess date. Reprocessing is done across all runs starting from the reprocess date, as payroll calculations are cumulative.

For example, suppose a monthly paid employee has unprocessed retroactive events for 15, June and 20, August. The retroactive process recalculates payroll results for the June, July and August payroll periods. You can use the report to detect payroll relationships that are previously deferred.

Parameters

The parameter values determine which records to include in the report. Many parameters are self-explanatory. Submit the same values as you would provide for the retroactive pay processing.

Here’s the list of parameters that have special meaning in the context of this report.

Process Date

The process date determines which records to process and is the same date as when the retroactive change process is run.

Payroll

Enter the same payroll flow name as the flow you use to run the retroactive process.

This table lists the values you can select to determine the type of events to include in the report.

Status Description

Deferred

Includes events for payroll relationships whose retroactive pay processing is deferred.

Unprocessed

Includes events that are either awaiting processing or processing.

Both Deferred and Unprocessed

Includes events that are either awaiting processing or processing, or deferred. This is the default value and is a combination of the other two options.

Person

Enter a value to limit your report to a specific employee.

Process Configuration Group

Select the process configuration group, if you have defined one. Use a process configuration group to provide sets of processing parameters, primarily related to logging and performance. If you don't select a process configuration group; the parameters in the default group for the selected payroll is used.

Payroll Relationship Group

Select the payroll relationship group name, if you have defined one. Use a payroll relationship groups to limit the persons processed for payroll, data entry, and reporting.

Note: Use the Object Groups task to define any of the groups mentioned above before you can select it here.

Report Results

This table shows the sections of the PDF output of the report.

Section Name Description

Parameters Section

The parameters section is at the beginning of the report and displays the report parameters and the sort criteria. The sort criteria is: Notification Status, Retroactive Process Date, Person Name, Payroll Relationship Number, Entity, Batch Name, Attribute, Update Type, Assignment Number, Element Name, Change Effective Date, Actual Change Date and Changed By.

This section shows the total payroll relationships and total events by each type of retroactive notification status. Each payroll relationship may have multiple payroll retroactive events such as assignment updates, element entry updates, and so on. The counts reflect the number of such events that require payroll to be recalculated from a different process date.

Retroactive Process Date Summary

This section shows the different reprocessing dates for the employees and payroll relationships, and the total count of workers and events for each reprocess date. This section gives a quick snapshot of how far back the retroactive reprocessing begins and for how many workers. These totals are also broken down for each retroactive notification status.

Event Type Summary

This section shows the details of the type and number of events that cause recalculation of payroll for a particular reprocess date. You can view the number of payroll relationships and employees, and events by entity and attribute for a particular reprocess date.

Event Details by Retroactive Process Date

This detail section shows the different workers and their event details for the same type of event, reprocess date and notification status, as follows:

• If the entity is related to elements, the element name is shown as part of the event details. The batch used to make the change, if any, is displayed in the header.

• If the event is related to assignment, the assignment number is shown.

• The old value is shown for Update, Delete and Correction events while the new value is shown for Update, Insert and Correction events.

Event Details for a Person

This section sorts and lists all events by each process date and worker. Each payroll relationship has one reprocess date based on the earliest event.

• The assignment number is shown only for those events that are specific to an assignment.

• The person number and payroll relationship number are shown along with the person name, in the header.

• Batch name, if available, and the element name is shown only when the event is related to an element. For all events based on attribute, both the old and new values are shown.

FAQs for Pay Calculation Components

You probably defined the rule for the primary classification to include all secondary classifications in the wage basis. Edit the primary classification row and deselect the Select all secondary classifications option. You can then edit individual secondary classification rows, and select the Use in wage basis option only for those classifications to be considered in the wage basis.

You can view existing components on this page, but you can't create new components. Use the Elements task to create new elements. Creating some elements also creates associated calculation components. These elements can include involuntary deductions, pensions, and absence payment elements.

Yes. You can delete or edit a cost component group mapping only if it is not referenced in a cost profile.

Yes. You can delete or edit the mapping of a cost component to an analysis group, even if the cost component or the cost component group is referenced in a cost profile.