1. Implementing Payroll for Bahrain
  2. Overview of Deduction Reference

Overview of Deduction Reference

Deduction Reference maintains voluntary deduction balances for each reference number provided.

The deduction reference is a mandatory input value and must be entered to maintain the balances. It should not be made non-mandatory and left blank to avoid the incorrect balance calculations.

This input value gets created in specific scenarios, as mentioned below, and there by the arrears and accrued balances are tracked with respect to a specific reference entered using Deduction Reference input value.

There are 2 element template questions in Voluntary Deductions that control the creation of deduction reference and the corresponding defined balances. You can track and report the arrears / total owed (loan) balances with respect to a specific reference and it does not combine with another entry either during the same time or even in future.

  1. What should happen when there are insufficient funds to cover the deductions? If you enable arrears, a reference is required for each deduction entry. Available Options:
    1. Do not take a partial deduction or create arrears
    2. Do not take partial deduction, place all in arrears
    3. Take a partial deduction, but do not create arrears
    4. Take a partial deduction, place remaining in arrears

      Scenario 1: If you select either (b) or (d) options, mandatory Deduction Reference input value and the corresponding "reference" related dimensions, such as Relationship Tax Unit, Reference Run are created.

      Scenario 2: If you select (a) or (c), Deduction Reference input value is not created and the non-reference related defined balances, such as Relationship Tax Unit, Run is created. Reference related dimensions are not created.

  2. Do you want to stop processing when the total owed is reached? If you enable total owed, a reference is required for each deduction entry.
If you select "Yes" for the above template question, mandatory Deduction Reference input value and the corresponding "reference" related dimensions, such as Relationship Tax Unit, Reference Run are created.
Note: Get Reference Code from Database Sequence is a default formula that generates a unique reference number for each element entry. You could also write the formula, such as using Person Number as the Deduction Reference, if you would like to continue the balances across entries for an employee.

Prerequisites

Review the below points before using the deduction reference functionality:

  • If you would like to have the compatibility of the previous functionality prior to 21C such that the balances will be maintained across element entries, you can choose any one of the below:
    • Use the default formula to default the person number as suggested in this document.
    • Write the default formula to default the payroll relationship number as suggested in the release documentation.
    • Default a constant value.
  • You should not add or delete the defined balances in balance dimensions of the primary balance of the element or balance group. Otherwise, it will cause duplicate records in the reports and in the archive.
  • If you would like to maintain the balances separately for each element entry, you can use the delivered default formula, Get Reference Code from Database Sequence, that generates the unique sequence number as the reference number for each element entry.
  • For the elements using a Benefits module that meets one of the above conditions, we suggest you use a Default reference value for all entries or use a formula to create a reference based on the Person Number of the employee or Benefits Plan name. This is because, when an employee is enrolled into a benefits plan, an element entry is created. When there is a subsequent life event and enrollments, it end-dates the previous element entry and creates a new entry. If you use the above delivered default formula, the balances will be re-initiated which is not expected.
    Note: You need to attach the default formula at element level while using the Person Number as the default. If you are using benefits plan name as the default, you need to define the formula using extra input type and associate it at Extra Inputs section of benefits plan for deduction reference input value.
  • The deduction reference input value is mandatory. Oracle does not recommend making it optional. The validation formula ensures that the element entry is not created without the deduction reference even if the deduction reference input value is made optional.

Create Fast Formula

You need to create 2 fast formulas of type “Element Input Validation” to populate the default value in deduction reference input value and raise an error exception when no value is entered in deduction reference input value.
Note: Use the delivered default formula, Get Reference Code from Database Sequence, for elements such as Loans to maintain balances with respect to each entry.
  1. Formula to return the person number
    Below is the sample formula that returns the person number. Attach this formula to the Default Formula attribute in element in Default Entry Values and Validation Section.
    /* Sample Formula Begins – Defaulting Person Number */
   DEFAULT FOR PER_PER_PERSON_NUMBER is '-1'
   Inputs are Deduction_Reference (text)
   l_person_number = PER_PER_PERSON_NUMBER
   Deduction_Reference = l_person_number
   Return Deduction_Reference
 /* End of Sample Formula – Defaulting Person Number */
  2. Formula to validate the element entry
    Below is the sample formula that validates the element entry when no value is entered for Deduction Reference input value. Attach this formula to the Validation Formula attribute for Deduction Reference input value in Default Entry Values and Validation Section.
    /* Sample Formula Begins – Validate required attribution of Deduction Reference input value */
   DEFAULT FOR ENTRY_VALUE IS 'NO VALUE'
   INPUTS ARE ENTRY_VALUE (text)
   IF ENTRY_VALUE WAS DEFAULTED then
   (
      FORMULA_MESSAGE = 'The deduction reference cannot be null. You must enter a value.'
      FORMULA_STATUS = 'E'
   )
   RETURN FORMULA_STATUS, FORMULA_MESSAGE
 /* End of Sample Formula – Validate required attribution of Deduction Reference input value */

Attach Formulas to Element

  1. Attach the default formula to Default Formula attribute in Default Entry Values and Validation Section at element level.
  2. Attach the validation formula to Validation Formula attribute for Deduction Reference input value in Default Entry Values and Validation Section.
    Note:
    • You need to date track to the start date of the element.
    • If you have any date effective update record of the element, ensure that the formulas are associated to all date effective records.
    • Once you attach these formulas, the default value will be populated while creating the element entry and validation will be performed.

Calculation example with and without reference

Let's examine two common examples: calculations with reference and calculations without reference.

  • Deductions with Arrears only enabled
  • Arrears Enabled but no Total Owed – Without Reference

Deductions with only Arrears enabled

  1. Arrears Enabled but no Total Owed – Without Reference

    You create an element entry with every pay period deduction of $100. The entry starts from 01-Sep-2020. Below are the sample calculation results:

    Element Name Pay Period Deduction (RUN) Arrears (RUN) Total Deduction (ITD) Arrears (ITD)
    Deduction1 30-Sep-2020 100 0 100 0
    31-Oct-2020 100 0 200 0
    30-Nov-2020 70 30 270 30
    31-Dec-2020 80 20 350 50

    In Nov and Dec, the employee does not have sufficient earnings and hence partial deduction has happened. At the end of the Dec-2020 period, the accrued arrears were 50.

    Now, you have end dated the entry.

    You create a new element entry of the same element in the month of Apr-2021 with every pay period deduction as $70. Below are the sample calculation results. Assume that there is a cap of $100 as maximum amount.

    Element Name Pay Period Deduction (RUN) Arrears (RUN) Total Deduction (ITD) Arrears (ITD)
    Deduction1 30-Apr-2021 100 (70+30 from previous arrears) -30 (from previous arrears. ideally, should be 0) 450 (ideally, it should be 70 for this entry) 20 (from previous arrears. Ideally, it should be 0)
    31-May-2021 90 (70+20 from previous arrears) -20 (from previous arrears. ideally, should be 0) 540 (ideally, it should be 140) 0
  2. Arrears Enabled but no Total Owed – With same Reference such as Person Number

    If you use the same reference number (such as Person Number) as the Deduction Reference after 21C, then the calculations would be the same as the results without reference prior to 21C.

  3. Arrears Enabled but no Total Owed – With Unique Reference

    You create an element entry with every pay period deduction of $100. The entry starts from 01-Sep-2020. Below are the sample calculation results. The arrears are maintained using the reference PLN2020.

    Element Name Pay Period Deduction (RUN) Arrears (RUN) Total Deduction (ITD) Arrears (ITD) Deduction Reference
    Deduction1 30-Sep-2020 100 0 100 0 PLN2020
    31-Oct-2020 100 0 200 0 PLN2020
    30-Nov-2020 70 30 270 30 PLN2020
    31-Dec-2020 80 20 350 50 PLN2020
    In Nov and Dec, the employee does not have sufficient earnings and hence partial deduction has happened. At the end of the Dec-2020 period, the accrued arrears were 50.Now, the user has end dated the entry.

    You create a new element entry of the same element in the month of Apr-2021 with every pay period deduction as $70. Below are the sample calculation results. Assume that there is a cap of $100 as maximum amount. The entry is maintained with reference PLN2021.

    Element Name Pay Period Deduction (RUN) Arrears (RUN) Total Deduction (ITD) Arrears (ITD) Deduction Reference
    Deduction1 30-Apr-2021 70 0 70 0 PLN2021
    31-May-2021 70 0 140 0 PLN2021
    Note: Here PLN2020 and PLN2021 are user entered unique reference numbers. You can use the delivered default formula, Get Reference Code from Database Sequence, that generates the unique reference number from database sequence that starts with 1.

Deductions with Arrears and Total Owed enabled

  1. Arrears Enabled with Total Owed – Without Reference

    You create an element entry with every pay period deduction of $100 and with Total Owed as $400. The entry starts from 01-Jan-2020. Below are the sample calculation results:

    Element Name Pay Period Deduction (RUN) Arrears (RUN) Total Deduction (ITD) Arrears (ITD) Remaining Balance
    Deduction2 31-Jan-2020 100 0 100 0 300
    29-Feb-2020 100 0 200 0 200
    31-Mar-2020 70 30 270 30 130
    30-Apr-2020 80 20 350 50 50

    You have end dated the entry after 30-Apr-2020. Loan is not cleared. Arrears is left over and remaining balance is also left over.

    1. Total Owed in the 2nd entry is less than Total Accrued in the 1st Entry.

      You create a new element entry of the same element in the month of Aug-2020 with every pay period deduction as $70 and Total Owed as 280. Below are the sample calculation results.

      It gets end dated immediately in the 1st run as the accrued deduction from the previous entry is already 350 and the current total owed is 280. It returns the amount 70 with the assumption that it has deducted additional. It gets end dated in the 1st pay period itself.

      Element Name Pay Period Deduction (RUN) Arrears (RUN) Total Deduction (ITD) Arrears (ITD) Remaining Balance
      Deduction2 31-Aug-2020 -70 -50 280 0 0

    2. Total Owed in the 2nd entry is greater than Total Accrued in the 1st Entry.

      You create a new element entry of the same element in the month of Aug-2020 with every pay period deduction as $70 and Total Owed as 410. Below are the sample calculation results.

      It gets end dated immediately in the 1st run after deducting the 60 with the calculation of subtracting total accrued deduction of previous period from total owed of current period.

      Element Name Pay Period Deduction (RUN) Arrears (RUN) Total Deduction (ITD) Arrears (ITD) Remaining Balance
      Deduction2 31-Aug-2020 60 -50 410 0 0
  2. Arrears Enabled with Total Owed – With same Reference such as Person Number

    If you use the same reference number (such as Person Number) as the Deduction Reference in the 2nd entry also after 21C, then the calculations would be same as the results without reference prior to 21C.

  3. Arrears Enabled with Total Owed – With Unique Reference

    You create an element entry with every pay period deduction of $100 and with Total Owed as $400. The entry starts from 01-Jan-2020. Below are the sample calculation results:

    Element Name Pay Period Deduction (RUN) Arrears (RUN) Total Deduction (ITD) Arrears (ITD) Remaining Balance Deduction Reference
    Deduction2 31-Jan-2020 100 0 100 0 300 LOAN1
    29-Feb-2020 100 0 200 0 200 LOAN1
    31-Mar-2020 70 30 270 30 130 LOAN1
    30-Apr-2020 80 20 350 50 50 LOAN1

    You have end dated the entry after 30-Apr-2020. Loan is not cleared. Arrears is left over, and the remaining balance is also left over.

    You create a new element entry of the same element in the month of Aug-2020 with every pay period deduction as $70 and Total Owed as 350. Below are the sample calculation results.

    It gets calculated correctly and the deduction balances are maintained correctly.

    Element Name Pay Period Deduction (RUN) Arrears (RUN) Total Deduction (ITD) Arrears (ITD) Remaining Balance Deduction Reference
    Deduction2 31-Aug-2020 70 0 70 0 280 LOAN2
    30-Sep-2020 70 0 140 0 210 LOAN2
    31-Oct-2020 70 0 210 0 140 LOAN2
    30-Nov-2020 70 0 280 0 70 LOAN2
    31-Dec-2020 70 0 350 0 0 LOAN2
    Note: Here LOAN1 and LOAN2 are user entered unique reference numbers. You can use the delivered default formula, Get Reference Code from Database Sequence, that generates the unique reference number from database sequence that starts with 100.