Overview of 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 Component Group Rules task. The process is summarized below:

1. On the 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.