Overview of Configure Allowances

Create your allowance elements and then create the associated rates.

This is required so that the HCM rates process can generate the correct allowance values per proration period for reporting in the MCR.

The following table shows recommended configuration options for allowances based on their payment rules.

Allowance Rate Definition Options

Payment Rule	Example	Setup Required	Teacher’s Examples
Rate can vary at employee level – flat amount, prorated	An employee is eligible for a flat amount allowance, but another employee is eligible for the same allowance at a different flat amount. Can be prorated	Setup for Variable Flat Amount Allowances	Residential emoluments Acting allowance
Rate can vary at employee level – flat amount, not prorated	An employee is eligible for a flat amount allowance, but another employee is eligible for the same allowance at a different flat amount. Lump sum not to be prorated	Setup for Variable Flat Amount Allowances	Performance-related pay
Rate can vary by multiple criteria.	Allowance is payable to employees using criteria that includes their grade, their location, and whether they are eligible for the lower or higher rate of payment.	Setup for Value by Criteria Allowances	London weighting Recruitment and Retention Teaching and learning responsibilities (separate for TLR1, TLR2 and TLR3) SEN

If you have other allowances, such as local allowances, you must determine the rate model best suited to your business requirements.

The following tasks describe how to create the various allowance element types and how to set up corresponding allowance rates.

Create a Flat Amount Allowance - With Proration

Follow the steps described here to create an allowance that is payable to eligible employees in the organization as a flat amount, where there is no dependency on salary, although proration is possible.

1. Create an allowance as a standard Regular Earnings element.
2. Select 'Flat Amount' as Calculation rule and 'Annually' as Periodicity.
3. In the Special Rules section, select the user-defined allowance proration event group and the default Entry Changes for Retro event group.
4. Create a new element rate definition that will be associated with the flat amount element:
5. Ensure that Reporting Required is selected and uncheck Calculate Live Rates, but there is no need to make changes to the Returned Rate Details and Calculation regions. The contributor type for the rate definition is created automatically as Input Value.
6. Create element entries and enter the pay value for the flat amount allowance in the Amount field.
7. Run the Generate HCM Rates process.

Create a Flat Amount Allowance - No Proration (TLR3s)

Follow the steps described above for a flat amount allowance - with proration, but don't set up a proration group, or associate any proration group to the element.

This will create an allowance that is payable to eligible employees in the organization as a flat amount lump sum. For example, do this to create your TLR3s, and other allowances that are not paid as a prorated amount based on the member’s FTE and should not be prorated for the purposes of accurate reporting in the MCR for the following data items:

• Annual Full-Time Salary – data item 26
• Part-Time Earnings – data item 27

For example, a part-time employee has an FTE of 0.5. They are paid a TLR3 of £600. This £600 is the amount that should be used in their part-time earnings and that should contribute to their reported annual full-time salary; it should not be pro-rated to £300 based on their FTE.

When you configure your annual full time-salary later (see Add Contributor to Annual Full-Time Non-Prorated Allowances Rate Definition), the contributor’s Return Full-time Rate indicator and the Full-Time Equivalent input value setting must match. We recommend that you don’t check the Allow User Entry field on the element’s input value to avoid mismatches at element entry level.

Use the Rate Definitions task to create an element type rate definition for each of your non-prorated elements.

Follow the steps described later to add these element type rate definitions as contributors to the Annual Full-Time Non-Prorated Allowances rate definition.

Create a Value by Criteria Allowance

Follow the suggested steps described in this section to set up an allowance that is paid at differing rates according to the criteria the organization uses.

1. Create a new Regular Earnings element with Category as Standard.
   • Select 'Flat Amount' as Calculation rule and 'Annually' as Periodicity.
   • In the Special Rules section, select the user-defined allowance proration event group and the default Entry Changes for Retro event group.

   If additional criteria is required, consider how it can be recorded. For example, the additional criteria could be an employee’s eligibility for the TLR1, TLR2 or TLR3. (The assumption is that the Grade and Location fields will also be referenced.) For example, the Assignment Descriptive Flexfield (PER_ASG_DF) could be configured to record the additional criteria.

   Before creating a new context create any new lookup type or value set required. For example, create a value set that contains a new lookup type for TLR1, TLR2 and TLR3.

   Note: The flexfield attribute used as this will be needed when creating the value by criteria definition.
2. Create the criteria and values that your allowance will use:
   • Using the Values Defined by Criteria task, click Create to create a new value by criteria definition.
   • Create the criteria and calculation value definitions for each set of criteria, including a default for each level.
   • Create a new rate definition that will be associated with the value by criteria, select the Value by Criteria Name created previously.
   • Ensure that Reporting Required is selected and deselect Calculate Live Rates, but there is no need to make changes to the Returned Rate Details and Calculation regions. The contributor type for the rate definition is created automatically as Input Value.

     So that the HCM rate process calculates the rate only when there is an element entry for the given period, the criteria should be based on a DB item that retrieves whether there is an element entry for the element corresponding to the rate being setup. This DBI should ideally return a Y/N value so that the setup of the criteria is based only on these two values.

     In addition, ensure you have a default criteria associated to the main criteria with a default value = 0.

3. Create a calculation value definition for the element rate definition:
   • Using the Calculation Values Definition task, click Create to create a new calculation value definition, name as the Value by Criteria Name created previously.
   • The Calculation type is 'Rate Definition'.
   • Select Date Earned in the Retrieval Date field.
   • Create a range of values in the From Value and To Value columns and link the calculation value definition to the Derived Rate definition created previously.
4. Create a calculation factor for the flat amount allowance element and link it to the calculation value definition created previously:
   • Using the Elements task, search for the flat amount allowance element.
   • Select Calculation Factors and click Create to create a new calculation factor.
   • Enter 'Calculation Step' as Rate Amount.
   • Enter Calculation Value Definition as the user-defined calculation value definition created previously.
5. Edit the formula attached to the flat amount allowance element.

   Using the Fast Formulas task, edit the earnings formula for the flat amount allowance element:

   Replace the line 'l_amount = amount' with the following lines in order to obtain the rate definition values:

   change_contexts(PART_NAME = 'ORA_RATE_AMOUNT')
           (               
                    SET_INPUT('BASE',0)
                   EXECUTE('CALL_CALC_VALUE')
                   l_amount = GET_OUTPUT('DED_AMOUNT',0)
    		        )
   

Note: You must make the same changes to the flat amount earnings element formulas created for value by criteria allowances.