Elements and Links

We have talked a little about elements before. It’s a placeholder to hold the values that can be assigned to store an entity of payroll; like an earning, a deduction, a life insurance premium etc. Elements are the building block of the payroll. If we look at a payslip, we will see different types of pay, like the basic, travel allowance, Medical allowance, deductions etc. Those are all elements.

Before going ahead and creating elements, we must make sure we list down all the elements that we need, along with their names, reporting names (that will appear on the pay slip), type of the element etc.

There are two ways to create an element.

• Use the traditional Element screen
• Use a template

Let's learn about the traditional way first.

Using Traditional Way

Before creating anything related to a date tracked table, we must date track to a date that will be able to catch all our historic information. What's that date? May be 01-JAN-1951, or 01-JAN-1980? We can use any date which is well enough in past that all our transactions could be recorded on or after that date. The most popularly used date is, 01-JAN-1951. We must date track to that date we have decided to go with; before entering any information.

Now, let’s open the elements screen.

Responsibility: HRMS Manager

Navigation: Total Compensation -> Basics -> Element Description

Steps: Create a new record and start filling in the details.

Figure 5 Define Elements

(Figure 5.5 – Define Elements)

Now, Lets save the changes and move to buttons.

Input Values

We know that the elements store values. However the actual places where the values are stored / recorded by the elements are known as Input Values. These are the place holders that keep the values that can be used for calculations related to payroll. One element can have one or more input values attached to it. The input values store the different values that are used for the calculation of the final value of the element. In some cases one Input value for an element might feed values to another element for its calculations. Those are called indirect results.

Let's play an example; we are storing the Overtime with an element. So what are the things we should track? One Input Value storing the number of hours we have worked, and another to store the hourly overtime rate of the employee. That will give us the money to be credited to the employee's payroll. So will need another Input value to store the final amount.

The one input value that stores the final amount must be stored in an Input value with name "Pay Value".

Let's navigate through the form. See Figure 5.6 – Input Values.

Figure 6 Input Values

(Figure 5.6 – Input Values)

Classifications

Choosing a correct primary and secondary classification is very important in order to ensure the elements behave the way they are designed to. The primary classification is a seeded functionality, however the secondary classification is customizable, and we can add new secondary classifications based on our business needs. Here is the list of Primary classifications, the categories and their meanings.

Formula Results

Fast Formulas can be used for various purposes like, Calculating Pay values, validating entries, Skipping a payroll etc. There are precise places where we can use a particular FF. We will concentrate on the most widely used one; the payroll calculation formula.

Let's see the form, and discuss about the various possibilities. See Figure 5.7 – Formula Results.

Responsibility: HRMS Manager

Navigation: Total Compensation -> Basics -> Formula Results

Steps: Query for the Element in concern

Figure 7 Formula Results

(Figure 5.7 – Formula Results)

Formula Result Types

A payroll calculation formula is capable of returning many values. And based on the need, the return values are used, either in the element it is called from or passed on to another element for further calculations. There are cases, where we would need one element to pass a value to another element, based on which the calculation of the later will take place. For an example, the bonus can be calculated as 15% of Regular Salary, and the final amount (pay value) of Regular Salary can be calculated by the fast formula attached to the basic and then fed into the Bonus element for its calculation. Let’s look at the different ways we can use a return value of a fast formula.

Direct Result: This is used when we are updating the pay value of the element being evaluated.

Indirect Result: This is used when the calculation result of one of the Input Value of the element being evaluated needs to be fed to another element's input value. The later then takes it as an Input and processes its calculation. Continuing with our example, If Bonus needs to be 15% of the regular Salary. Regular Salary might have an Indirect result to feed the value to the Bonus element. Bonus element can then take the value and calculate 15% of the value and use that amount as pay value. So to pass the value from Regular salary to Bonus element, we can use the Indirect Results.

Order Incorrect: This result updates the sub priority of the element selected in element field.

Stop: This formula result uses the effective date of the payroll run to put an end date on a recurring entry of this or another element (which must be defined with multiple entries not allowed.)

Update Recurring Entry: This result updates recurring entries of this or another element. The receiving element must be defined with multiple entries not allowed unless we are passing a recurring element's entries to itself, which is updating another entry of the same element.

Message: Sometimes, we want a simple message to be displayed based on the calculation. That can be done using a Message type.

6.7.6 Laws of Elements

• We can make an element standard, only if it’s recurring and multiple entries are not allowed.
• A category type field must be entered in the DFF for all elements. The LOV is populated from the look up types: "US_EARNINGS" and "US_SUPPLEMENTAL_EARNINGS".
• Never check "Closed for Entry" for a standard element. It will create issues with Hiring and terminations.
• For validation, we can use any one of the three possibilities (Lookup / formula/ min and max).

Using Earning Templates

As the elements are of different types, there are two templates in Oracle payroll that helps us create elements and a lot of other related things. These templates save time, make the elements standardized and easy to manage. The two templates are called, Earnings and Deductions.

Let’s start with earnings template first. It is more or less a type of classification. However using this template to create an earning type of element creates the following things in Oracle Payroll.

• One element with the same name as earning
• Two support elements (one special input and one Adjustment/ special feature)
• One Fast Formula
• One Balance
• The input values

So let's configure the earning

Responsibility: HRMS Manager

Navigation: Total Compensation -> Basics -> Earnings

Steps: Create a new record and start filling in the details. See Figure 5.8 – Earnings Template.

Figure 8 Earnings Template

(Figure 5.8 – Earnings Template)

Let's talk about the standard Calculation rule a little bit. There are four predefined standard calculation rules in place:

· Flat amount: The Earning is a flat amount.

· Hours X Rate: The Earning is a multiple of number of Hours worked and Rate per hour.

· Hours X Rate Multiple: This is as good as Hours X Rate, however multiple entries are allowed.

· Percentage of Regular Earning: The Earning is a percentage of the Regular Earning.

Now, what about the two special elements we talked about earlier? The two elements are used for adjustments. For an example, if an employee’s regular salary is entered, and now, we want the salary to be increased by $50 just for this pay period, because of some adjustments. How do we do that? We can use the special Input elements. It can have two input values:

· Replacement Value: This amount, if entered will replace the amount filled in with the original element.

· Adjustment Value: This amount, if entered will be adjusted against the amount filled in with the original element.

To continue the same example further, we will use the replacement amount and put the new regular salary there, or will put in $50 in the adjustment value, so that it will be added to the original element while processing.

Using Deductions Template

What’s a deduction? It's the amount that needs to be deducted from the payroll. When we consider deductions, there are two major types:

• Tax Deductions
• Non Tax Deductions

We know what tax deductions are. These are the taxes we pay. Oracle has tied up with a vendor called Vertex, who takes care of all the taxes in Oracle Payroll in US. So we do not have to worry about the tax percentage and everything as of now. Oracle has got it covered. It will get cut from the employee's payroll automatically, based on his work address and home address. For all other localizations, there are specific taxing rules that are to be followed.

What are the Non Tax Deductions? These are the voluntary and involuntary deductions. Like a Life Insurance Premium / rate or a loan amount to be paid or a debt to be paid back to the company etc. So to configure these types of non tax deductions, we can either go for an element creation or create it via a template. Let's see how the template looks like. See Figure 5.9 – Deductions Template.

Responsibility: HRMS Manager

Navigation: Total Compensation -> Basics -> Deductions

Steps: Create a new record and start filling in the details.

Figure 9 Deductions Template

(Figure 5.9 – Deductions Template)

In few cases, the deductions have to be made based on a particular frequency. For an example, an enterprise may wish to deduct $10 towards Company Car as of first pay period of every month. So, for an employee in weekly payroll, the $10 will get cut as of first week of every month; and for all other pay periods in that month, there will be no deductions towards the Company Car.

For requirements like these, Deductions have a mechanism known as Frequency Rules. One can choose the desired number of times deductions are to happen in one month, for each payroll. To satisfy the requirement in the example cited earlier, we must go to frequency rules button on the Deductions screen, and check the check box 1 against the required payroll. Here the number one signifies the first week of the month. Like wise one must check the numbers of the week on which the deductions are to be made.

Once the elements are in place, some eligibility criteria must be defined to help the system determine, whether an element can be attached to a particular employee or not. That concept is known as linking. Element links help us define the criteria using a set of indicative data. The elements will be visible on the element entry screen of an employee, only if s/he passes the eligibility criteria. One element must have at least one, and can have more than one links in order to be attached to an employee’s element entry.

The indicative data with which the eligibility criteria of an element link can be defined are:

• Organization
• People Group
• Job
• Position
• Grade
• Location
• Employment Category
• Payroll
• Salary Basis

Responsibility: HRMS Manager

Navigation: Total Compensation -> Basics -> Link

Steps: Create a new record and populate the details. See Figure 5.10 – Element Links.

Figure 10 Element Links

(Figure 5.10 – Element Links)