Define Pay Element - A summary of the activity

Pay Elements are the various atomic components of a pay structure, combinations of which form the pay structure. Typical pay elements include Basic Salary, Dearness Allowance, House Rent Allowance and Statutory Deductions. The purpose of different pay elements is to compute pay in a measurable way, for various cadres in the company. This information is later taken into account by the system, to calculate the employees’ consolidated salary.

Through the Add Pay Element activity, you can define the various pay elements that are applicable to an organization. You define each pay element with a unique code, description and alias. You also specify the organization group to which the pay element will be made applicable.

Classifying pay elements: Pay elements can be classified into ten types. They are as follows:

• Earnings

•  Reimbursement Elements

•  Loan Deductions

•  Fund Deductions

•  Tax Deductions

•  Statutory Deductions

•  Benefit Deductions Arrears Earnings

• Arrears Deductions

• Other Deductions

Assigning attributes for a pay element: After a pay element is classified into one of these types, it must be assigned with different attributes. These attributes are described below.                       

• Recurring and non-recurring element: A pay element element is said to be recurring if it occurs at a stated interval in a pay structure. Example, House Rent Allowance. If a pay element does not recur, it is called a non-recurring element.

• Taxable and non-taxable element: If a pay element is subject to tax, it is called a taxable element. Example, Basic. Otherwise it is a non-taxable element.

• Separate Round Off: To round off a number is to increase or reduce it to the nearest whole or simple number. “Separate Round Off” of a pay element indicates that the difference of the value to its nearest whole number will be posted under a separate account number in General Ledger.         

• Cash Flow Posting: Cash flow is the money coming into and going out of a business. Money coming into the business is called Inflow, example, Arrears Deductions. Money going out is called Outflow, example Basic. A pay element’s cash flow posting can be of three types: “In“Out“ or“N“.

When the pay element’s cash flow posting type is “None” there is neither inflow nor outflow of cash. Example, PF, which although classified as a deduction, is neither an inflow nor an outflow for the business.

Specifying whether an attribute can be modified during pay element-payset mapping: Apart from assigning the pay element with these attributes, you must also specify whether these attributes can be modified while performing the “Pay Set – Element Mapping” activity. This is because there are some attributes in a pay element that differ from one location to another. For example, a certain pay element might be taxable in one country and exempted from tax in another country.  In such instances, the attribute of the pay element must be changed at the time of mapping it to a payset.

Mappings pay element to organization units: Each pay element is mapped to one or more organization units, which means that the pay element will henceforth be available to these organizational units.

Once the pay element is defined, it is mapped to an account number in the Finance Book /General Ledger, to facilitate subsequent posting of this pay element to this ledger account.

Getting familiar with the pages inside

Prerequisites

The different attributes of the pay element must have been defined in the quick codes component.

The various classifications of the pay element must have been defined in the quick codes component.

The types of accumulators must have been defined in the quick codes component.

What you can do in this activity

Define a pay element

Map accumulators

Define U.S. pay element attributes

Define a pay element

You can define a new pay element and specify its attributes.

• Use the “Create Pay element” page to define a new pay element.

• Use the “ Pay Element Attributes”  page to define various attributes of the pay element.

•  Use  the “Org. Unit(s) Mapping” page to  specify the applicability of the pay element to various organization units.

Map pay element to accumulator(s)

You can map a pay element to accumulator(s).

• Use in the “Create Pay Element” page to select a pay element.

• Use  the “Map Accumulators” page to map a pay element and specify its value.

Specify U.S. pay element attributes

• Select the pay element in the “Create Pay Element” page for which you want to specify the U.S. Pay element attributes.

• Select the “U.S. Pay Element Attributes” page.

• Specify the attributes of the pay element.

• Select the “Save” pushbutton to save the details.