Premium Types are used to not only group like premiums together, but to also prevent more than one premium of any one type from being added to the same transaction. You must consider this issue when creating premium types.
While making a transaction entry, you are blocked from entering more than one premium of the same type on the same transaction. When the pre-calculation routine within the audit program (UPAUDT) creates transaction lines, it considers premiums from all levels: transaction, assignment, position, and job. If the same premium, or the same premium type, is encountered during this process, the following precedence is enforced: job is overridden by position, which is overridden by assignment, which is overridden by the pay line.
Example 1: #
A typical type of premium might be ‘Shift Differential’. This type could be then applied to the both the Afternoon Shift premium or Evening Shift premium. An employee may have worked one 8-hour shift crossing both the afternoon and evening shifts (5 pm - 12 am).| Premium Type | Premium |
|---|---|
| Shift Differential | Afternoon Shift 12 pm - 8 pm |
| Shift Differential | Evening Shift 7 pm - 1 am |
In this scenario, you would want to assign the same premium type to both premiums to prevent an employee from being paid twice for the same period.
As both shifts have been identified as the same ‘type’ (shift differential), they are considered to be mutually exclusive and only one or the other may exist on the same transaction. The system would prevent the employee from being paid premiums for both an afternoon shift and an evening shift; only one would be entered on the employee’s time sheet.
Example 2: #
Two other typical premiums may be Sunday Shift and Saturday Shift premium. These two premiums would be paid in addition to any premium an employee would get for afternoon or evening shifts.| Premium Type | Premium |
|---|---|
| Shift Differential | Afternoon Shift 12 pm - 8 pm |
| Shift Differential | Evening Shift 7 pm - 1 am |
| Weekend | Saturday Shift |
| Weekend | Sunday Shift |
Processing may be problematic if the Afternoon, Evening, Saturday and Sunday premiums were all considered a “shift differential” type of premium. If an employee worked Sunday evening, both Sunday and Evening premiums would be applicable, but the second premium entered would be rejected.
By identifying the Saturday and Sunday shifts premium as ‘Weekend’ premium types, you will ensure that the system will pay the employee for both their eligible premiums.
The Payroll application also uses premium types; pay components may be set up to automatically process premiums of certain types. This allows premiums that are associated to regular time (like a danger premium) to be posted only on regular time, while other premiums (such as a performance premium) to be applied to regular time and vacation time (for example).
