This tutorial deals with Fusion Payroll, and how it functions. In this part, we will discuss about Earnings and Deductions.

Earnings and Deductions

The following tasks are associated with Earnings and Deductions in Payroll: Manage Element Classifications, Manage Elements , Manage Calculation Value Definitions, Manage Payroll Calculation Information, Manage Component Group Rules , Add Eligibility Rules for Predefined Elements, Manage Rate Definitions.

First, we shall look into the basic terms and components that comprise the Earnings and Deductions.

Elements

Elements are building blocks of Payroll that help determine the payment of base pay, benefits, absences, and other earnings and deductions. Apart from within Payroll (for bonuses, overtime earnings, etc.), this is also used in Compensation Benefits (on the basis of the base pay) and Absence Management (for absence payments like in the case of maternity leaves and other long leaves).

Fig. 1 - Elements for different types of earnings and deductions

Element Classifications

They are a mechanism by which you classify the Element as Earnings or Deductions and defines a default processing priority for the element in payroll runs.

There are three types of element classifications:

• Primary Classifications - They are given by the payroll and enabled at the country-specific module. They meet the legislative requirements of your country or territory, so you cannot change them.

• Secondary Classifications - They are subsets of the primary classifications. They are used to manage wage basis rules for deductions and taxes.

• Subclassifications - they are a way to feed balances depending upon some criteria.

The Costing information and Frequency Rules are the components that can be modified.

Element Creation

In Fusion Payroll, the organisation or legislation provides a set of predefined elements either for regulatory purposes or deductions. The first thing to be done is to identify these predefined elements and make them eligible to all employees.

For the creation of elements, templates are used. Primary Classification, Payroll Product Usage, and Category determine the templates that are used. Any number of elements can be created depending on your requirement.

For elements, there are certain Critical Child Entities: Input Values, Element Eligibility Records, Status Processing Rules, and Formula Result Rules. These need to be active for the earnings.

Upon element creation, Related Formulas, Related Elements, and related Balances are created based on the template used in the creation wizard.

Input Values

An element’s input values define the entry values available on each entry of that particular element. In Fusion, any number of input values can be created depending upon your requirement. In most cases, the template will create the input values for you.

The critical attributes for input values are:

• Special Purpose - the purpose of the value

• Unit of Measure - can be currency, hours, weeks, etc.

• Display Sequence - the level in which the value needs to come up

• Create a Database Item - to create a separate item for the value

• Required - whether yes/no during element entry

• Validation Formula - validation criteria

• Validation Source - the source of the validation

• Lookup Type - for the appropriate lookup to be displayed

Element Eligibility

Element eligibility determines which people are eligible for an element. To determine eligibility, you have to select a specific criteria that people must have to receive entries of that particular element.

The eligibility criteria can be selected from the following:

• All payrolls or for specific payrolls

• Payroll Statutory Unit

• Legal Employer

• Payroll relationship type

• Department in which the person works

• Location of person’s office

• Job (e.g. associate professor or secretary)

• Position

• Grade

• People group

Status Processing Rules and Formula Result Rules

These identify the formula that the payroll run uses to process the element for workers with a specified assignment status. The formulas return formula results such as the amount to be paid or a message.

These results can update the current element entry or another target element entry with a lower processing priority, which means that it is processed later in the payroll run.

There are different types of formula results:

• Direct Result - updates the entry after calculation

• Indirect Result - updates the entry of a non-recurring element

• Message - gives a message to the entry value

• Order Indirect - lowers priority within the element based on the calculation

• Stop - omits an entry from further calculation

Payroll Calculation Information

The following flowchart explains how the payroll earnings and deductions are calculated:

Fig. 2 - Payroll Calculation Information

The Payroll Component is enabled and has rules and rates defined for a particular classification. Depending upon the primary and secondary classifications, the Wage Basis Rules are seeded at the legislative level.

At the calculation level, the calculation value definitions are derived from the calculation factors, telling which values are to be utilised for the calculation.

Krishnaa Lakshmanan

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