[{TableOfContents }]
!!!Salary Rate Method

[{$applicationname}] provides for the ability to compute an hourly rate for salaried employees so that when hours are entered into the system from any of the various sources, the rate of pay is computed in such a way that the proper wages are generated.

In releases prior to 30502, generating hours and dollars for salaried employees required that the dollars be generated separate from the earnings since they did not necessarily balance with each other. It is not recommended that [{$applicationname}] be configured to pay salaried employees by generating earnings from the hours keyed, accomplished by varying the wage rate.

Since earnings are generated from the hours which are generated daily, it is likely that generated earnings will be off by pennies from the employee semi-monthly or monthly wage.  This is handled by ‘Force Balance’ logic, invoked when the transactions are brought into payroll ([UPTR]). 

In most situations only salary would be required at a variable rate.  For those clients using Cell Points pay line premiums, there may be a need to compute these premiums at a variable rate of pay based on the number of hours worked in the monthly or semi-monthly pay period.  __The setup requirement for these premiums is described at the end of this document.__

There is also a new Pay Line Based premium that can be used in place of the UPTG Period $$$ premium.  The problem with the [UPTG] premium is that it creates ‘Dollars Only’ into the [IPTR] screen, which means that the premium dollars from the hours worked in the period are not naturally generated into payroll.  If not generated from hours, the [UPRETRO] would not be able to create the retro in the past.  The correct way to handle a Pay Period premium is to use this new type.  It will be generated from the hours worked (which may vary), and the dollars assigned to each hour will be computed by [{$applicationname}] correctly so that the total will equal the Period Premium amount.  To account for any penny difference, the premium is force balanced when the transaction is brought into payroll during the execution of [UPTR].
\\  \\
---- 
!!Business Requirements
A new rate routine to calculate the Variable Rate and Variable Time method is created.  __See “Business Case Examples” later in this document.__
  
On the [IPPC] form in the PC Details Rules tab, a new salary rate method is added to point individual pay components to the Variable Rate or Variable Time.  This will allow you to select a different rate calculation for different types of time (i.e. Regular or [LWOP]). 

For Variable Rate Hours, the number of work days in the pay period is determined from the employee work calendar.  Since these are salaried employees, these work days are full days using ‘Standard Hours Per Day’.  These hours are obtained from the work calendar if present.

For Variable Rate (Elem), the number of hours worked in a pay period is determined by an element.  Generally, the variable rate is calculated by dividing the semi-monthly wage by the number of hours in the period (totaled for the pay period by adding all the pay components in the element). 

If the Salary Rate Method pay component is ‘Variable Rate (Shifts/MO), then the hourly rate is calculated by first calculating a daily rate, dividing the wage per month by the number of scheduled shifts.  The daily rate is then divided by the ‘Hours per Day’ in the employee assignment record.

The employees will have their salary calculated based on time, not the current method of generating a SM/MO salary amount in [UPTG].  Using this method, [UPTG] will support pay period employee changes such as new hires, terminations, salary changes and leaves.  

SM/MO clients will be able to use the retro program.  

%%information Please note that from the time the client changes the set up from ‘generating salary’ to ‘generating hours ONLY’,the previous pay lines are salary based and Retro will not function properly.%%

Since the time will be generated by day and each day will have an associated dollar amount, the standard [FLSA] calculations will be supported. 

Employees must be “salaried” paid which means the pay type for the employee’s group must be set to ‘Salary’.
Pay period earnings are force balanced during [UPTR] to compensate for any earnings variance caused by earnings generation on a daily basis daily.

The Variable Rate method will be invoked ONLY for monthly and semi-monthly paid employees.

This method handles changes of work schedule in the middle of a pay period by computing the variable rate for the entire period.  This ensures that the variable rate is the same for each work day within the pay period.
\\  \\
---- 
!!Pay Component Configuration
The Salary Rate Method column on [IPPC] in the ‘PC Detail’ level controls the manner in which the wage rate is computed. The column has two values that invoke logic.  It is IMPORTANT to use this set up ONLY for employees that are salaried and paid either monthly or semi-monthly.  If you are using the same pay component for both hourly and salaried employees, then you will require separate PC Rules Sets for each.
\\  \\
---- 
!!Scheduled Employees
The exact days that an employee is scheduled to work is determined by the work calendar associated with the assignment record.

If however, if the employee is scheduled in Time Management, then the number of scheduled shifts is the number of days worked.  In this method, the number of shifts scheduled in the month determines the daily rate, and the hourly rate will be this daily rate divided by standard hours worked.

When adding up scheduled shifts, only the time entry types ‘Normal Work Time’, ‘In Early’ and ‘In Late’ will be considered scheduled.
\\  \\
---- 
!!Variable Rate  Hours
The key piece of information needed in computing a variable rate is the number of days that the employee is scheduled to work in the month.  This is determined by first looking at the existing time entries for the employee in the appropriate month.  This value is then used to extend the number of days by the number of standard hours per day.

If no records are located in time entries, then the work calendar is used.

The hourly rate is always calculated by taking the monthly pay rate and dividing it by the number of scheduled hours in the pay period.

Example:\\
22 days at 8 hours per day = 176 hours in the period\\  
A monthly salary of 3,000 would provide an hourly rate of  $17.05 in the month.\\
When the employee is hired, terminated, or has a mid-period rate change, the month wage is computed by taking the daily rate and extending it by standard hours.

Example:\\
Employee is paid 3,000/month and gets an increase on March 14th to 3,500.\\
11 working days at (3,000/22) * 11 = $1500.00\\
11 working days at (3,500/22) * 11 = $1750.00\\
Monthly wages = 3,250.00
\\  \\
---- 
!!Variable Rate (Element)
The key to computation of the variable rate is to divide the semi-monthly wage by a number of hours. The hours will be determined by the creation of an element which will hold the pay components to be used in determination of the number of hours worked in this pay period.  The Variable Hours element may be a simple or compound element, defined on [IPPE].  

The computation of these hours will look at this pay header and any previously closed pay headers for this period.

!Scenarios	
#Employee works the same position throughout the period\\ \\Wage rate is determined on a semi-monthly basis through the usual annualization routine. Hours worked are computed by summing pay lines in this period for the pay components included in the Variable Hours element.\\ \\Variable Rate = Semi Month wage divided by total hours included in this element.
#Employee changes rate in mid period\\ \\Wage rate is pro-rated based upon number of days in the period that the employee is at each wage. Variable rates are computed independently for each period (pro rata).\\ \\Wage Rate 1 = semi month wage * (# days at this wage rate / # days in period)\\ \\Wage Rate 2 = semi month wage * (# days at this wage rate / # days in period)\\Hours worked are computed independently for each wage period by summing pay lines as noted above.\\ \\Variable Rate 1 = Wage Rate 1 / hours worked in period 1\\ \\Variable Rate 2 = Wage Rate 2 / hours worked in period 2.
#Employee is hired or terminated within the period, and therefore does not fulfill the entire period of employment\\ \\The pay for the period is prorated by the number of days employed (regardless of the whether they are work days or weekends) in the period and then divided into the hours from the element to determine the variable rate.
 
The Variable Hours (Element) method requires that an element be set up in [IPPE] to hold the pay components to be considered when calculating the number of hours worked in a pay period.  It can have any element code, but must be one of the ‘group elements’ in [IDGR].  The Group Element type MUST be set to ‘Variable Rate’.

Sample Pay Line Detail Audit Text\\ 
__{need screen shot}__\\ 
The calculations used to derive the rate are stored for future reference in a USER FIELD ATTACHED TO THE PAY LINE DETAIL as shown below. This example is slightly misrepresenting since it indicates that the text is on the pay line.  This was changed in November, 2008 to be recorded on the Pay Line details since it can vary at that level.\\
__{need screen shot}__
\\  \\
---- 
!!Variable Rate  (Shifts/Month)
The key piece of information needed in computing a variable rate is the number of days that the employee is scheduled to work in the month.  This is determined by first looking at the work calendar on the work rule.  
If no records are located in time entries, then the work calendar is used.

The daily rate is always calculated by taking the monthly pay rate and dividing it by the number of days scheduled in a month.  It is always a full month that is used even if the payroll frequency is semi-monthly.

Example:\\
22 Scheduled Shifts \\ 
Standard hours (From [IEAS]) = 8.5\\
Monthly Salary of $3,000\\
Hourly Rate $16.0428 = $3000 / 22 / 8.5\\  \\

When the employee is hired, terminated, or has a mid-period rate change, this formula is NOT used and the system reverts to the ‘Variable Rate Hours’ method.

Example:\\
Month 01-Sep-2005 to 30-Sep-2005\\
Employee Hired on 18-Sep-2004\\
Range Begin 01-Sep-2005\\
Range End 30-Sep-2005\\
EE is TM Scheduled, Using 'Variable Rate (Shifts/Month) Method'\\
Number of Scheduled Shifts in Sep-2005 ==> 22\\
Monthly Rate ($5,000.00) / Number Shifts (22) / Std Hours (8) = Variable Rate($28.4091)
\\  \\
---- 
!!Pay Line Audit Text Examples
When ever the Pay Line Generation logic is fired, the ‘Audit Text’ pay line is populated to assist in determining how pay line details are generated.  This text will be different if the Salary Rate Method field is populated.  Samples are provided below.

!Variable Rate For An Employee Who Works The Complete Month With No Rate Change

(1100) Time Basis ==> HR

(1100) Rate Source is Matching Assignment

(1100) Using Matching Assignment Code: 31  $50000/YR

(1100) Salary Rate Method: Variable Rate

(1100) 

Work Calendar is '5-8'

Total Work Calendar Days ==> 23

Total Work Calendar Hours ==> 184

Period Earnings($4,166.67) / Sched Hours (184) = Variable Rate($22.6449)

(1100) Pay Line Detail Computed Wage: 22.6449/HR

!Variable Rate For An Employee Who Works The Complete Month With A Rate Change
(1100) Salary Rate Method: Variable Rate\\
(1100) \\
Work Calendar is '5-8'\\
|01-Aug| $4,166.67 / 184 * 8 = $181.16
|02-Aug| $4,166.67 / 184 * 8 = $181.16
|03-Aug| $4,166.67 / 184 * 8 = $181.16
|06-Aug| $4,166.67 / 184 * 8 = $181.16
|07-Aug| $4,166.67 / 184 * 8 = $181.16
|08-Aug| $4,166.67 / 184 * 8 = $181.16
|09-Aug| $4,166.67 / 184 * 8 = $181.16
|10-Aug| $4,166.67 / 184 * 8 = $181.16
|13-Aug| $4,166.67 / 184 * 8 = $181.16
|14-Aug| $4,166.67 / 184 * 8 = $181.16
|15-Aug| $4,166.67 / 184 * 8 = $181.16
|16-Aug| $4,166.67 / 184 * 8 = $181.16
|17-Aug| $4,166.67 / 184 * 8 = $181.16
|18-Aug| $4,166.67 / 184 * 8 = $181.16
|19-Aug| $4,166.67 / 184 * 8 = $181.16
|20-Aug| $4,166.67 / 184 * 8 = $181.16
|23-Aug| $5,000.00 / 184 * 8 = $217.39
|24-Aug| $5,000.00 / 184 * 8 = $217.39
|25-Aug| $5,000.00 / 184 * 8 = $217.39
|26-Aug| $5,000.00 / 184 * 8 = $217.39
|27-Aug| $5,000.00 / 184 * 8 = $217.39
|30-Aug| $5,000.00 / 184 * 8 = $217.39
|31-Aug| $5,000.00 / 184 * 8 = $217.39
01-Sep-2005 Projected Earnings($4,420.29)\\
Period Earnings($4,420.29) / Sched Hours (184) = Variable Rate($24.0233)\\
(1100) Pay Line Detail Computed Wage: 24.0233/HR

!Variable Rate For An Employee Who Is Hired During The Month 
Work Calendar is '5-8'
Employee Hired on 10-Aug-2005
|10-Aug| $4,166.67 / 128 * 8 = $181.16
|13-Aug| $4,166.67 / 128 * 8 = $181.16
|14-Aug| $4,166.67 / 128 * 8 = $181.16
|15-Aug| $4,166.67 / 128 * 8 = $181.16
|16-Aug| $4,166.67 / 128 * 8 = $181.16
|17-Aug| $4,166.67 / 128 * 8 = $181.16
|18-Aug| $4,166.67 / 128 * 8 = $181.16
|19-Aug| $4,166.67 / 128 * 8 = $181.16
|20-Aug| $4,166.67 / 128 * 8 = $181.16
|23-Aug| $4,166.67 / 128 * 8 = $181.16
|24-Aug| $4,166.67 / 128 * 8 = $181.16
|25-Aug| $4,166.67 / 128 * 8 = $181.16
|26-Aug| $4,166.67 / 128 * 8 = $181.16
|27-Aug| $4,166.67 / 128 * 8 = $181.16
|30-Aug| $4,166.67 / 128 * 8 = $181.16
|31-Aug| $4,166.67 / 128 * 8 = $181.16
01-Sep-2005 Projected Earnings($2,898.56)\\
 Period Earnings($2,898.56) / Sched Hours (128) = Variable Rate($22.6450)

!Variable Rate For An Employee Who Is Terminated During The Month 
Work Calendar is '5-8'
Employee Terminated on 17-Aug-2005
|01-Aug| $4,166.67 / 104 * 8 = $181.16
|02-Aug| $4,166.67 / 104 * 8 = $181.16
|03-Aug| $4,166.67 / 104 * 8 = $181.16
|06-Aug| $4,166.67 / 104 * 8 = $181.16
|07-Aug| $4,166.67 / 104 * 8 = $181.16
|08-Aug| $4,166.67 / 104 * 8 = $181.16
|09-Aug| $4,166.67 / 104 * 8 = $181.16
|10-Aug| $4,166.67 / 104 * 8 = $181.16
|13-Aug| $4,166.67 / 104 * 8 = $181.16
|14-Aug| $4,166.67 / 104 * 8 = $181.16
|15-Aug| $4,166.67 / 104 * 8 = $181.16
|16-Aug| $4,166.67 / 104 * 8 = $181.16
|17-Aug| $4,166.67 / 104 * 8 = $181.16
01-Sep-2005 Projected Earnings($2,355.08)\\
 Period Earnings($2,355.08) / Sched Hours (104) = Variable Rate($22.6450)
\\  \\
---- 
!!Test Considerations
When testing this functionality the following situations should be considered:
*employee hired mid-month
*employee terminated mid-month
*salary changes mid-month
*holiday in the month
*vacation in the month
*retroactive wage change results 
*change of standard hours per day within a pay period
*test both periods in a semi-monthly payroll
\\  \\
---- 
!!Saved User Field Data
When a pay line is first generated, the shift pattern or work days are saved into a user field attached to the pay line. This is done so that the calculated work days are always available down the road in case of retroactive pay.
The audit text output from the variable rate calculation is also stored in a separate user field attached to the pay line, for future reference.
 
!Variable Rate Audit Text Sample
__{need screen shot}__\\ 
 
!Work Pattern Text Sample
__{need screen shot}__\\ 
\\  \\
---- 
!!The Theory of Computing Daily Pay Rate
The following spread sheet provides a detailed example of how the internal calculations are performed for each method.  These examples assume a Monday through Friday scheduled week.  The formula is the same for any work schedule and only the number of days in the pay period varies.
[SalaryRateMethods_01.jpg]
\\  \\
---- 
!!Salary Force Balance
For employees that use either of the variable rates, wages are computed using an hourly rate that varies depending on the number of days/hours that the employee is scheduled to work.  If the employee is scheduled to work the entire pay period, the gross earnings generated must equal their salary.

Since earnings are generated from the hours worked multiplied by the variable rate on a daily basis, the generated earnings can be wrong due to the mathematics in rounding.

To deal with this issue, [{$applicationname}] will perform ‘Force Balancing’ for variable rate employees when the transactions are brought into payroll ([UPTR]).  This balancing will occur after the last transaction for an employee has been loaded into [IPPH].  

%%information Please note that all transactions for an employee must be in the same execution of [UPTR] for force balancing to be invoked.  [UPTR] can not be executed more than once for employees using a variable rate.%%

To be eligible for this force balance, the following conditions must be met:
*the pay type ([IDGR]) must be set to ‘Salary’
*the employee must not be hired within the pay period
*the employee must not be terminated within the pay period
*there must not be a change in the employee’s compensation within the pay period
*there must be a pay component defined with the usage (Salary Force Balance)

The Force Balance pay component must point to an element containing the pay components that are part of regular earnings.  These earnings should contain anything that is generated from [UPTG] and as well as anything that may be entered as exceptions in [IPTR] that would be considered part of the employee’s regular earnings.

These will be the earnings that are accumulated during force balance to determine if an adjustment due to rounding is required.

As a safeguard, the adjusting entry will be applied ONLY if the adjustment is within a reasonable variance.   This check will ensure that salary is adjusted to a minimum and avoid incorrect adjustments when there may be setup problems.

The variance must be within 5%, unless the Force Balance pay component points to a user variable.  This optional user variable would contain the override ‘Variance’.  The example following illustrates how to provide an override variance percent.

Any computed Force Balance amount is recorded into a separate pay line in the current pay ([IPPH]).  
 
!Salary Variance Percentage
A user variable can be established to contain the acceptable salary variance.
[SalaryRateMethods_02.jpg]
 
!Salary Force Balance Element
An element must be established that determines the pay components that are part of the employee regular salary.  This element MUST be set up and attached to the force balance pay component or force balancing will be bypassed.
  
%%information Note that this element MUST contain the Force Balance pay component (PC 9810 in this example).%%

[SalaryRateMethods_03.jpg]
 
!Salary Force Balance Pay Component
The pay component used to store results from force balancing is defined by PC Usage ‘Salary Force Balance’.  This component will be used to store any force balance earnings computed into the current pay.

%%information Note that the ‘output’ pay component can be any other component. This provides for flexibility when choosing the pay component that will hold the actual adjustment.%%  

The calculation method for this component must be ‘Entered Value’.

%%information Note that all transactions making up part of the employee regular earnings are generated from the scheduled hours, and therefore will be handled perfectly by Retroactive Pay ([UPRETRO]).  Any Force Balance earnings will NOT be taken into consideration during [UPRETRO], since generation is simply set to ‘Entered Value’.%%
\\  \\
---- 
!!Cell Point Premiums
For employees that specifically use the variable rate, Cell Point premiums are computed using an hourly rate that varies depending on the number of hours that the employee is scheduled to work.  If the employee is scheduled to work the entire pay period, the total of the ‘Cell Point’ premium generated (by day) must equal the pay period value of the Cell Point premium.

Since the premium is generated from the hours worked multiplied by the variable rate on a daily basis, the generated premium can be wrong due to the mathematics in rounding.

To deal with this issue, [{$applicationname}] will perform force balancing for variable rate employees when the transactions are brought into payroll ([UPTR]).  This balancing will occur after the last transaction for an employee has been loaded into [IPPH].  

%%information Please note that all transactions for an employee must be in the same execution of [UPTR] for force balancing to be invoked.  [UPTR] can not be executed more than once for employees using a variable rate.%% 

It is important to note that the only place that balancing occurs is when the [IPTR] batches are brought into payroll during the execution of [UPTR].

%%information Note that each different cell premium is a pay is balanced separately.%%

To be eligible for this force balance, the following conditions must be met:
*the employee must not be hired within the pay period
*the employee must not be terminated in the pay period

As a safeguard, the adjusting entry will be applied ONLY if the adjustment is within a reasonable variance.   This check will ensure that premium is adjusted to a minimum and avoid incorrect adjustments when there may be ‘setup’ problems.

The variance must be within 5%, unless the ‘Cell Point Premium’ pay component points to a user variable.  This optional user variable would contain the override variance.  The following example illustrates how to provide an override variance percent.

Any computed Force Balance amount is recorded into a separate pay line in the current pay ([IPPH]).  This pay line will have the same pay component as the Cell Point pay component.

!Cell Point Premium Variance Percentage
A user variable can be established to contain the acceptable cell point variance.
  
!Cell Point Premium Pay Component
Cell Point Premium pay components must be setup as follows:

%%information Note that the output pay component can be any other component.  This provides for flexibility when choosing the pay component that will hold the actual adjustment.%%
  
The calculation method for this component must be ‘Entered Value’.

The user variable will point to the variance percentage.

The Destination pay component must be the same pay component as the Cell Point Premium pay component (Pay Line).

%%information Note that all transactions making up part of the employee regular earnings are generated from the scheduled hours, and therefore will be handled perfectly by Retroactive Pay ([UPRETRO]).  Any Force Balance earnings will NOT be taken into consideration during [UPRETRO], since generation is simply set to ‘Entered Value’.%%
\\  \\
---- 
!!Pay Period Premiums
Pay Period premiums are a new feature as of September, 2005 and are designed to replace [UPTG] premiums.   This type of premium is generated naturally from the hours worked in the pay period and is also ‘Force Balanced’ to ensure that the employee gets the exact premium amount when working a full pay period.  Pay Period premiums are computed using a variable rate per hour depending on the number of hours that the employee is scheduled to work.  If the employee is scheduled to work the entire pay period, the total of premium generated (by day) must equal the value of the Pay Period premium.

Since the premium generated from the hours worked are multiplied by the variable rate on a daily basis, the generated premium can be wrong due to the mathematics in rounding.

To deal with this issue, [{$applicationname}] will perform ‘Force Balancing’ when the transactions are brought into payroll ([UPTR]).  This balancing will occur after the last transaction for an employee has been loaded into [IPPH].  

%%information Please note that all transactions for an employee must be in the same execution of [UPTR] for force balancing to be invoked.%%  

It is important to note that the only place that balancing occurs is when the [IPTR] batches are brought into payroll during the execution of [UPTR].

%%information Note that each different Pay Period premium in a pay is balanced separately.%%

To be eligible for this force balance, the following conditions must be met:
*the employee must not be hired within the pay period
*the employee must not be terminating in the pay period

As a safeguard, the adjusting entry will be applied ONLY if the adjustment is within a reasonable variance.   This check will ensure that premium is adjusted to a minimum and avoid incorrect adjustments when there may be ‘setup’ problems.

The variance must be within 5%, unless the Pay Period Premium pay component points to a user variable.  This optional user variable would contain the override variance.  The example following illustrates how to provide an override variance percent.

Any computed Force Balance amount is recorded into a separate pay line in the current pay ([IPPH]).  This pay line will have the same pay component as the Pay Period Premium pay component.

!Pay Period Premium Variance Percentage
A user variable can be established to contain the acceptable pay period premium variance.  
 
!Pay Period Premium  Pay Component
Pay Period Premium pay components must be setup as follows:

%%information Note that the output pay component can by any other component.  This provides for flexibility when choosing the pay component that will hold the actual adjustment.%%  

The calculation method for this component must be ‘Entered Value’.

The user variable will point to the variance percentage.

The destination pay component must be the as the Pay Period Premium pay component.

%%information Note that all transactions making up part of the employee regular earnings are generated from the scheduled hours, and therefore will be handled perfectly by retroactive pay ([UPRETRO]).  Any Force Balance earnings will NOT be taken into consideration during [UPRETRO], since generation is simply set to ‘Entered Value’.%%
 
!Sample ‘Audit Text’ recorded for a Pay Period Premium

|PERIOD PREMIUM:|Premium Rate = 101.56
|PERIOD PREMIUM:|Hours in this Pay Period: 75
|PERIOD PREMIUM:|Hours on this Transaction: 4
|PERIOD PREMIUM:|Premium Amount per Pay Period = 46.87
|PERIOD PREMIUM:|Premium Rate per Hour =.6249333333333
|PERIOD PREMIUM:|Premium on this Transaction: 2.5

[CLEANUP]

----
![Notes|Edit:Internal.USING SALARY RATE METHODS] 	
[{InsertPage page='Internal.USING SALARY RATE METHODS' default='Click to create a new notes page'}]