Calculate Net-to-Gross Earnings

When you create an earnings element, you can indicate that it pays a specified net amount.

Use this feature, if you need to pay a person:

• Guaranteed take-home pay (net) per payroll period

• Bonus of a specified net amount

To create an earnings element, use the Elements quick action under the My Clients Groups tab.

You can create a net-to-gross (gross-up) element for any recurring or nonrecurring earnings element using these primary classifications:

• Standard Earnings

• Supplemental Earnings

• Taxable Benefits (Imputed Earnings)

Settings That Affect Net-to-Gross Processing

Define the deductions that are used to calculate the gross amount from the specified net amount.

Answer Yes to the Use this element to calculate a gross amount from a specified net amount? prompt in the element template to create the element as a gross-up element.

In each element entry, specify the limits of the gross-up processing as follows:

• In the Net value, enter the value you want the employee to receive.

• In the To Within value, enter the allowed difference between the desired amount and the actual amount. This limit can't be 0.

Note: If these values are the same across most entries, you can enter a default value on the element eligibility record.

How Formulas Calculate the Gross Amount

The formulas for net-to-gross processing perform these actions:

1. The predefined GLB_EARN_GROSSUP iterative formula takes as input the desired net amount (Net input value) and the amount by which net can differ from the desired amount (To Within input value).

2. In the first run, the formula performs these actions:

   1. Sets the lower gross limit to the desired net amount, and the higher gross limit to twice the desired amount.

   2. Runs a function to provide the first guess of the gross.

   3. Returns three values to the element's input values: low gross, high gross, and additional amount.

3. The element's payroll formula runs. The formula adds the additional amount to the desired amount for creating the gross amount. The formula returns this value to the element's pay value for the payroll run to process.

4. In the next iteration, the iterative formula compares the additional amount to the total value of the balances that are available for gross-up for this element entry. The additional amount must not differ from this balance total by more than the amount you specified in the To Within field.

   • If the additional amount equals the balance total, the iterative processing ends.

   • If the additional amount is higher or lower than the balance total by an acceptable margin, the processing ends. The formula returns the remainder (additional amount minus balance) to the element's Remainder input value.

   • Otherwise, the formula runs the function to generate a better estimate for gross, using the remainder to determine by how much to change the guess. The formula checks the results in another iteration.