A Pay Calculations is an item generally used for deductions but can also be used to calculate a payment. These can be summarised into categories which can then be reported on.
This document will assist in creating pay calculations and outline what fields are significant for Australian payroll.
What is an Pay Calculation
Pay calculations define deductions from an employee’s individual pay or an oncost calculation on a pay.
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.
NOTE: Pay Items must be defined before Pay Calculations can be created. You will not be able to save any Pay Calculation if the item does not exist. It will not be processed in the pay run.
Refer to How to document on Pay Items.
On a pay calculation, you can define the method of calculation, the rate or amount, the maximum amount to deduct, where it appears on a payment summary and whether it is taxable.
Pay calculations can also be used in conjunction with earnings categories. For example, when the earnings category HOL is entered for annual leave, a pay calculation HLVL is generated for Holiday leave loading. This association is done via the HR module.
On creation of a plan, you define the types of employees who are eligible for this ‘plan’, (in this case employees who are entitled to receive holiday leave loading) and the earnings category which triggers it (in this case HOL).
The corresponding pay calculation is defined (HLVL), which is used when an eligible employee has the correct earnings category on their timesheet. Other examples of this may be shift loading, benefits generated by ordinary hours worked such as productivity incentive payments and redundancy scheme payments, loadings, and other non-income oncosts such as medical allowances etc. that are costed to the project but not given to the employee.
Pay Calculation
Payroll > Global Setup > Aus Specifics > Pay Calculations
When creating a new Pay Calculation you can either Add or Copy an existing. If there are, any pay calculations 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 a Pay Calculation is no longer required, DO NOT DELETE. Select the ‘Dormant’ box so that it becomes unavailable.
NOTE: There are Pay Calculations that are hardcoded these should not be deviated from. Please converse with COINS Payroll Consultant before modifying these.
There are three types of Pay Calculations:
Include in Pay – employee receives money for it
Not included in Pay – employee does not physical receive any payment
Eg. On-cost, accruals and super
3. Deduction – deducted from an employee’s pay
Creating New
Select Add or Copy
Pay Calculation, enter new code maximum of 8 Characters eg. UNION
Description of the Pay Calculation
Group Code if used assign group code (used in reporting only)
Select the type for the Pay Calculation ie Deductions or Fringe
Region will default to Australia
If required you can assign a percent, flat amount, rate per day, amount per hour, amount per overtime hour or amount per double time hour.
Enter pay Item number to new Pay Calculation
Save
Once the record is saved, find the new Pay Calculation created within the list and click on the hyperlink to open the record.
The Pay Calculation Summary will open.
NOTE: If a Pay Calculation is no longer required, it is best practice to create a new Pay Calculation if conditions change and mark old code dormant.
Pay Calculation Summary
This form allows you to set up further conditions of the pay component.
Main Tab
Open the record to modify
General Info
Item: This is the corresponding Pay Item for the Pay Calculation
Dormant: If the Pay Calculation is no longer require select the box so that it can no longer be used.
Apply to a computer Check Greater than 1 : Whether to apply the calculation to a timesheet cheque greater than 1. If an employee has more than one check within a Period the Pay Calculation will apply to all.
Allow Diff Amount: When the payroll calculation is preformed, a different amount can be generated if the full amount cannot be satisfied. In particular, Protected Earnings for CHILD support.
Monthly Calculation
Monthly Calculation Periods Applicable 1 – 6 : Will automatically be selected. This refers to the ‘Period Maintenance’ field ‘Monthly Calculation Period’.
NOTE: Any period greater than 6 will not have a calculation performed on a timecard. Used for Year to Date load.
Rates
Percent: enter the percent amount to be applied eg. Leave loading 17.5%
Percent Basis:
Gross by Worked Hours – Regular 8 + 2 hrs T1/2 = 10 hours
Gross by Paid Hours – Regular 8 hrs + 2 hrs T1/2 = 11 hours
Gross by Regular Hours – Regular 8 + 2 hrs T1/2 = 8 hours
3. Flat Amount: enter flat amount if it applies to the calculation.
4. Flat Amount spread basis: if Total Gross or Regular Gross
5. Rate per Day: Enter rate per day if the calculation is not a flat amount or a percentage of the gross amount
NOTE:
Maximum Amount fields are not current configured for Australia future development as at v11.09 OA
Processing Info
Federal Tax: is the Calculation a Pre Tax Deduction? YES tick the box
Super Payable: Select if super if payable on the Item
No Oncosting: if the pay calculation should be oncosted onto the timecard or not only available for FO
Fund ID: used for Super Pay Calculations can assign the default Fund ID. When you assign a fund ID the supplier will automatically popular the ‘Supplier’ field. If you leave it blank, COINS will require a supplier ID.
NOTE: A supplier is linked to a Fund ID on the Lookup Table SUPERFUND
NOTE: Payroll parameter PR-SUPER-SUPPLIER-ERRTYPE can be set to warning or error if the supplier code to a super pay calculation is blank.
Single Touch Payroll Info
Reportable via STP: if the Pay Calculation is to appear in the STP file and reported to ATO. Once you select Yes to ‘Reportable via STP’ the ‘Pay Sum Code’ field will open for selection. Select where on the Payment summary the amount recorded against this earning category will appear. E.g. Deductions, RESC
NOTE: ‘Pay Sum Code’ data is populated from the lookup table PAYSUMCODES
2. Depending on which selection is made on the ‘Pay Sum Code’ will depend what selections will appear in the ‘Pay Sum Box’.
If Gross is selected, ‘Pay Sum Box' will not open for selection
If Deductions is selected, ‘Pay Sum Box’ will have a number of selections as per the reportable allowances for STP as per the ATO rules.
NOTE:
‘Pay Sum Box’ data is populated from the lookup table DEDUCTIONS and ETPTERMPAY
Exclude Earning Categories
There is the ability to exclude specific earning categories from being included in pay calculations.
Taxable Details
Defines whether Payroll tax and Workers Compensation to be calculated on the Pay Calculation.
Tax Authority Type will always be State
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 on NSW and QLD only, workers compensation will be calculated on NSW and VIC. 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 *
3. Save each line
Employee Pay Calculations
Shows data about employees who are set up for the pay calculation.
By using the ‘Data Selector’ field at the bottom of the screen you can choose to either view setup, supplier or maximum/history data for the calculation
Pay Calculation History
Shows data for employees who have pay history for the current year.