Personnel (Set Up Payroll Related Codes)
Set Up Payroll Related Codes
Navigation: Personnel>> Setup>> Organization >> Payroll Related Codes>>Pay groups
How to set up a Pay group (via the Personnel Module)?
Pay Group
A pay group is a logical grouping of employees based on shared characteristics that facilitate payroll processing because of common requirements such as employee type, pay frequency, same country location, and so on. A pay group is unique and consolidates a set of employees within a company for payroll processing. E.g. Monthly, Fortnightly, Executives, etc.
• Pay Group : Enter a unique and user defined code which represents your pay group. This field accepts a Minimum of 3 and a Maximum of 5 alphanumeric characters. CAPS are required and special characters are Not accepted.
Pay Group Name : The paygroup name should describe the pay period and the group of employees it represents. E.g. Monthly Executives. This field accepts a Minimum of 1 and a Maximum of 40 alphanumeric and special characters.
Pay Period: This describes the frequency in which persons are paid in that paygroup. Select from the available options. i.e. Monthly, Bi-Monthly, Fortnightly, Weekly, Quaterly.
Fixed Grade: If this pay group is paid strictly paid via a fixed grade, then select 'Yes'. Otherwise select No.
Salary Grade Type: If the fixed grade was set to 'Yes', then indicate if the salary grade setup is based on a point or ratio system.
Hours in Cycle: The total working hours in each pay cycle/period e.g. 35 or 40 hours for a weekly cycle, 80 h ours for a bi-weekly/fortnightly, 173.4 for Monthly, etc. This is used in calculating the hourly rate of pay on the employee's pay profile.
Currency : Select the currency from the drop down list. The employees will be paid in this currency.
Active Year : Enter the active year based on the first cycle that you will run on HRplus for that pay group.
Tax Method: There are several Tax Methods from which you can choose, each of which will determine how the taxes are calculated. Below is a brief description of what how each rule is applied. Follow the links provided for more details on each tax method. For more details and worked spreadsheets see Payroll Manual.
Smoothing Formula: This is designed for Employees who work all year round, excluding vacation periods, and taxes, therefore, are evenly distributed throughout the year. Additional Notes on Smoothing Formula
Semi-Smoothing TT only: How does the Semi-Smoothing Formula work?
Smoothing Formula 2 TT only: How is tax calculated using Smoothing Formula 2
Pay Group Access
Once a pay group has been created, access must then be granted to the relevant users via the security module. Follow the link below for a guide on:
Tax Table: Select the Tax Table that will be used in processing tax for the selected pay group.
Personnel>> Setup>> Organisation>> Structure>> Salary Grades
Related articles on Help Site:
How do I enter an employee's salary.
If salary grades are being used, once the points are setup for a grade you must also setup the salary
range with at least the minimum and maximum salary.
How do I setup a Salary Grade with either Salary Grade Points or a Salary Range?
Salary Grade
A salary grade scale is a pay format where employees are placed within a pay level based on their education and work experience.
Salary Surveys are tools used to determine the median or average compensation paid to employees in one or more jobs. Compensation data, collected from several employers, is analyzed to develop an understanding of the amount of compensation paid. The outcome of this is a salary grading scale where employees are paid based on pay points or a pay range for jobs within an industry.
If salary grades are not being used in your organization, then this setup can be omitted.
Steps to setup a salary grade scale:
Expand the salary grade and setup:
Repeat steps 1 & 2 to setup additional salary grades.
This is because if the salary change transaction entered for the employee falls outside either the minimum the maximum of the range, the record will be red-flagged alerting to this discrepancy. If there are no values entered for the salary range, then the record will also be red flagged.
Step 1: Enter a New Salary Grade
Step 1.1: Enter details of the Salary Grade
Company: Select the company for which the salary grades are being configured.
Salary Grade: Enter a unique and user defined code which represents the Salary Grade Description. A Salary grade scale using either points or a range should be clearly documented prior to setting this up on HRPlus.
Overtime Allowed: Check Yes or No to indicate whether employees who belong to this salary grade can earn overtime or not. Only employees belonging to the company, union and bargaining unit selected for this salary grade can be paid using the selected salary grade.
Description: Enter a description for the Salary Grade. Eg. Labourers, Administrative Staff, Executives, etc.
Union: Select the Union from the drop options previously setup on HRplus for your company. If your organisation does not use unions, then this field can be left blank.
Bargaining Unit: Select the Bargaining Unit from the drop options previously setup on HRplus for your company. If your organisation does not use unions, then this field can be left blank.
Date From: Enter the date from which the salary grade is applicable.
Date To: Enter the date until which the salary grade is applicable. This may apply in the case of union agreements where pay grades may have an end date based on new pay rates agreed upon in an updated bargaining unit.
If the Date To field is left blank, then the salary grade will be effective indefinitely.
Overtime Allowed
If the Overtime Allowed check box is flagged as "Yes", this means that you will not be allowed to enter an overtime record for any employee linked to that salary grade. If you attempt to enter a cycle
change with overtime for any of the impacted employees, the record will not be saved.
Step 2: Expand the Salary Grade to Setup Grade Points
Company: The company is auto filled as this was previously entered when creating the salary grade.
Salary Grade: This field is auto filled and shows the code for the salary grade for which you are creating the points.
Point: Enter the grade point (1, 2, 3 etc.). Note that if salary grade points are being used, each salary grade must have at least one point setup.
Pay: Enter the salary amount here or hourly rate.
Date From: Enter the date from which the grade point will be applicable.
Date To: Enter the date until which the salary grade is applicable. This may apply in the case of union agreements where pay grades may have an end date based on new pay rates agreed upon in an updated bargaining unit.
If the Date To field is left blank, then the salary grade will be effective indefinitely.
Union Code: The union available for selection here is based on the union selected when creating the salary grade.
Step 2.1 Enter a New Salary Grade Point
Unit Code: The bargaining unit available for selection here is based on the unit selected when creating the salary grade.
Repeat steps for additional Salary Grade Points.
Step 3: Enter a Salary Range
Date From: This is the date from which the pay range becomes effective for those positions linked to the salary grade.
Date To: This is the date from which the pay range expires for those positions linked to the salary grade, and perhaps a new salary bench-marking exercise should be scheduled. Note that this field can be left blank so that the pay range will be effective indefinitely.
Salary Minimum: The minimum of the pay range represents the lowest rate you are willing to pay for the job. This rate is typically set 10%, 15% or 20% lower than the pay range midpoint. There are many reasons to pay an employee close to the minimum of the range, including:
The employee fails to meet or just barely meets the minimum hiring requirements for the position.
Other employees in this role are paid at the minimum, and offering a higher rate could disrupt the internal equity of individuals in any given role.
The organization cannot afford to pay more for the position.
Salary Mid Point: The midpoint of the range is considered the competitive market rate for the job. An organization who aims to pay “at market” should strive to align employee pay rates with the midpoint of their relative pay ranges. When an employee’s pay rate aligns with the midpoint:
The individual is typically in good standing with your organization and competently performs each job task associated with their role.
Salary Maximum: The maximum of the pay range represents the highest rate you are willing to pay for the job. This rate is typically set 10%, 15% or 20% higher than the pay range midpoint. (Make sure your pay range maximum and pay range minimum are established using the same percent deviation from the midpoint.) There are many reasons to pay an employee close to the maximum of the range, including:
Employee has mastered all the competencies of this position.
The employee has been identified as a high performer or has high potential within the organization.
The employee has long service and/or tenure with the organization
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