How Net-to-Gross Earnings are Calculated

The Calculate Gross Earnings process calculates gross compensation values based on payroll frequency and the element entries attached to an employee. Calculations apply to the gross value of regular and supplemental earnings element classifications.

Run results don't include any results for taxable benefits, statutory information, absences, or voluntary or involuntary deductions. You can verify the results by viewing the statement of earnings, run results, and predefined payroll reports.

The process reports these deductions at the payroll relationship level:

Flat amounts for the primary assignment only
Percentage amounts aggregated for each assignment or terms record

Settings That Affect the Calculation

You can enter these parameters when running the process to calculate gross earnings.

Parameter	Purpose
Payroll Flow	Name that you assign when you submit the process. After running the process, you can use this name to search and monitor its status.
Payroll	Name of the payroll definition that determines the payroll period, calendar, and frequency.
Payroll Period	Payroll period for the payroll you're calculating, which determines other dates for processing.
Process Date	Optional. First date range on which to retrieve effective data for calculation, typically the process dates of the specified payroll definition.
Date Earned	Optional. Date of element entries to include in the calculation run. Overrides the default value determined by calendar of the specified payroll definition.
Consolidation Group	Optional. Name of the grouping of payroll runs for the specified payroll definition. Overrides the default consolidation group for post-run processing.
Run Type	Name of the run type that determines which payroll calculations to perform.
Payroll Relationship Group	Optional. Name of a group of payroll relationships to limit the people that are included in the run.
Payroll Configuration Group	Optional. Name of a group that determines performance parameters such as logging, chunk size, and number of threads. Overrides the default process configuration group.
Element Group	Optional. Name of a group of regular or supplemental earnings elements included in the run. You create element groups on the Object Groups page.

How Results Are Calculated

Calculations of gross earnings occur at the payroll relationship level. The payroll relationship structure groups employment terms and assignments together for calculations based on the payroll statutory unit. The resulting multilevel aggregation ensures the correct calculation and distribution of earnings. This figure illustrates the calculation process.

The main steps of the calculation process are as follows:

The process identifies the payroll relationships to process. If you specify a payroll relationship group, the parameter limits processing to the people in the group.
The process creates a payroll action representing the payroll and a payroll relationship action for each relationship processed.
The process loads into memory the element entries for the payroll relationship action.
The process identifies and determines any formulas to run for calculating the element entries.
At the end of the process, you find one run result value for each element entry value. If the element entry involves currency conversion, the payroll calculation uses the current conversion rate and rounds the monetary result based on the formula rules.
For each run result, the process determines which balances the result should feed. The process then writes and updates the balances to the database.

Example 1: Calculation Based on Annual Salary Basis

Your payroll provider might require you to pass values for gross earnings periodically, based on the payroll frequency of each employee. If you use an annual salary basis to store the values, run the Calculate Gross Earnings process to calculate the values by payroll period.

The formula attached to the annual salary calculates the periodic value and feeds the value to a run result during the payroll run. You can extract the run result value using a payroll interface report.

Example 2: Calculation Based on an Element Group

To avoid processing all the regular and supplemental earnings in a calculation process, the process considers only the earnings elements that you associate with an element group. Specify the value of the element group as a parameter while you submit the Calculate Gross Earnings process.