An Earning category is an item of income that makes up an employee’s pay. Earning Categories summarise types of pay into categories which can then be reported on and also allows for different methods of payment.

This document will assist in creating earning categories and outline what fields are significant for Australian payroll.

Earning Categories define the method of paying an employee an individual pay component.

Each employee’s pay components and rates can come from their contract, award, or be set as standard on their employee record.

For employees who are coved by an award, generally all their earning pay components and rates will be defined under the award.

For salaried employees, all their earnings and deduction items may be configured on their individual record as their pay may be different from other employees.

Refer to How to document on Pay Items.

On defining an earnings category, you define the type of earning. For example hourly based, amount based or memo type. You will also define if the earning category is taxable, have super payable and where is appears on the payment summary (if applicable).

Each earning category must have a corresponding Pay Item, or it will not be processed in the pay run.

Payroll > Global Setup > Aus Specifics > Earning Categories

When creating a new Earning Category, you can either Add or Copy an existing. If there are any earning categories that work in a similar way in which you require the new pay component to function it may be easier to copy and modify the record rather than adding a new pay component.

NOTE:

If an Earning Category is no longer required, DO NOT DELETE. Select the ‘Dormant’ box so that it becomes unavailable.

NOTE:

For these 3 fields if overtime/double time are zero out the field on the timesheet will be greyed out and only Regular time will be available to update.

Hours - Used if earnings are based on the number of hours worked (as submitted on the timecard).eg HOL, ORD

Amount - Used if earnings are based on an amount specified on the timecard. Eg Bonus

Memo Hours – Allows for unit based calculations. When using the Memo Hours based Earning Category, enter units under Regular Hours and rate. The rate may default from award/contract eg Meal

PAYG – item is taxable

CDEP – Community Development Employment Project

ETP – Employee Termination Payment

Non Taxable – item is tax free

2. Backpay, must be selected if the pay component is used for back pay and to be taxed as per the ATO back pay schedule 5. (COINS used method A)

3. If the Earning Category is to attract Payroll Tax tick the box, otherwise leave blank. This field is information only and has no impact on the calculation of payroll tax refer to the Taxable Details Tab.

4. Super Payable must be selected if the earning category is to have super payable. This field, much like the tax method cannot be changed in the summary form, you must return to ‘Earning Category’ and open the record to update.

NOTE:

‘Pay Sum Code’ data is populated from the lookup table EARNPAYSUMCODES.

3. Depending on which selection is made on the ‘Pay Sum Code’ will depend what selections will appear in the ‘Pay Sum Box’.

NOTE:

‘Pay Sum Box’ data is populated from the lookup table ALLOWANCES and TERMPAY.

None – no costing

Employee – will use the default costing assigned to the employee on the ‘Employee Maintenance’ form

Employee GL - will use the GL assigned to the employee on the ‘Employee Maintenance’ form

Pay Item - will use the costing method assign to the Pay Item (only GL in AU at this stage)

2. Apportion Cost refers to how oncost are assigned for the earning category.

Employee GL - oncost will use employee GL assigned on the ‘Employee Maintenance’ form.

Timecard - oncost will use employee timecard

None - no oncost on this earning category

3. Save

4. Once the record is saved, find the Earning Category created within the list and click on the hyperlink to open the record.

5. The Earning category Summary will open.

NOTE:

Once an Earning Category has been paid via timesheets, the Pay Basis cannot be modified. It is best practice to create new Earning Categories if conditions of the pay component change.

Defines whether Payroll tax and Workers Compensation to be calculated on the Earning Category.

2. Tax Authority Type will always be State

3. If payroll tax and workers compensation is payable for all states, enter the wildcard * in the Tax Authority Pattern.

If different rules apply to different states you will need to define each state.

In the above example, payroll tax will be calculated in all states except VIC, workers compensation will be calculated in all states except QLD. If a state does not have payroll tax or workers compensation then it must be included in the rule but the boxes will be blank.

NOTE:

If you define a rule for one state, you must define for all states. Otherwise use *

4. Save each line