Oracle Payroll Student Guide

8/19/2019 Oracle Payroll Student Guide

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R12.x Oracle Payroll

Fundamentals: Configuration

(Global)

Student Guide

D60571GC10

Edition 1.0

March 2010

D65978


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Copyright © 2007, 2009 Oracle. All rights reserved.

Disclaimer

This document contains proprietary information and is protected by copyright and other intellectual property laws. You may copy andprint this document solely for your own use in an Oracle training course. The document may not be modified or altered in any way.Except where your use constitutes "fair use" under copyright law, you may not use, share, download, upload, copy, print, display,perform, reproduce, publish, license, post, transmit, or distribute this document in whole or in part without the express authorizationof Oracle.

The information contained in this document is subject to change without notice. If you find any problems in the document, pleasereport them in writing to: Oracle University, 500 Oracle Parkway, Redwood Shores, California 94065 USA. This document is notwarranted to be error-free.

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If this documentation is delivered to the United States Government or anyone using the documentation on behalf of the UnitedStates Government, the following notice is applicable:

U.S. GOVERNMENT RIGHTSThe U.S. Government’s rights to use, modify, reproduce, release, perform, display, or disclose these training materials are restrictedby the terms of the applicable Oracle license agreement and/or the applicable U.S. Government contract.

Trademark Notice

Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective

owners.

Author

Swathi Mathur

Technical Contributors and Reviewers

Bob Oganovic

This book was published using: Oracle Tutor


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Copyright © Oracle 2009. All rights reserved.

R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsi

Table of Contents

R12.x Payroll Configuration - Introduction..................................................................................................1-1 Payroll Configuration - Introduction .............................................................................................................1-3 Objectives......................................................................................................................................................1-4

Topics ............................................................................................................................................................1-5 Payroll Configuration Fundamentals ............................................................................................................2-1

Payroll Configuration Fundamentals.............................................................................................................2-3 Overview .......................................................................................................................................................2-4 Paying Your Employees ................................................................................................................................2-5 Choosing QuickPay or Batch Processing ......................................................................................................2-6 Choosing Single or Multiple Payment Methods............................................................................................2-7 Quiz ...............................................................................................................................................................2-8 Choosing Single or Multiple Currencies .......................................................................................................2-9 Quiz ...............................................................................................................................................................2-10 Choosing Single or Multiple Payrolls............................................................................................................2-11 Question : What Is "a Payroll"?.....................................................................................................................2-12 Suggestions: What Is "a Payroll"?.................................................................................................................2-13

The Criteria that Define a Payroll..................................................................................................................2-14 Further Potential Uses of HRMS Payrolls.....................................................................................................2-15 Payroll Configuration and Processing ...........................................................................................................2-16 Quiz ...............................................................................................................................................................2-17 Summary........................................................................................................................................................2-18

Defining Payrolls for Your Organization .......... ........... ........... .......... ........... ........... ........... .......... .......... .......3-1 Defining Payrolls for Your Organization ......................................................................................................3-3 Overview .......................................................................................................................................................3-4 Payroll Configuration: Overview ..................................................................................................................3-5 Understanding Payment Method Types.........................................................................................................3-6 Payment Method Types: Required Information ............................................................................................3-7 Payrolls: How Many Payment Methods? ......................................................................................................3-8 Source Accounts: How Many Payment Methods? ........................................................................................3-9

Defining Payment Methods ...........................................................................................................................3-10 Quiz ...............................................................................................................................................................3-11 Consolidating Results for Several Payrolls ...................................................................................................3-12 Question: Essential Details for a Payroll? .....................................................................................................3-13 Defining a Payroll..........................................................................................................................................3-14 Understanding Pay Calendars........................................................................................................................3-15 Specifying Payroll Periods ............................................................................................................................3-17 Quiz ...............................................................................................................................................................3-18 Understanding the Pay Period Cycle .............................................................................................................3-19 Quiz ...............................................................................................................................................................3-21 Entering Further Information for a Payroll....................................................................................................3-22 Defining Exchange Rates and Currencies ....................................................................................................3-24 Establishing a Payroll Contact.......................................................................................................................3-25

Setting Up Payroll Contact Information........................................................................................................3-26 Allocating a Payroll Contact..........................................................................................................................3-27 Deleting a Payroll ..........................................................................................................................................3-28 Summary........................................................................................................................................................3-29

Maintaining PAYE and NI (UK only)............................................................................................................4-1 Maintaining PAYE and NI (U.K.).................................................................................................................4-3 Overview .......................................................................................................................................................4-4 PAYE and NI (U.K.) .....................................................................................................................................4-5 Essential Information: PAYE and NI ............................................................................................................4-6


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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsii

Sources of Essential Information...................................................................................................................4-7 Quiz ...............................................................................................................................................................4-8 Entering PAYE and NI Details for an Employee ..........................................................................................4-9 Quiz ...............................................................................................................................................................4-11 Entering NI Details for a Director .................................................................................................................4-13 Quiz ...............................................................................................................................................................4-14 Summary: Setting Up PAYE and NI (U.K.)..................................................................................................4-15

Maintaining Other Deductions (UK.only) .......... ........... .......... ........... ........... .......... ........... .......... .......... .......5-1 Maintaining Other Deductions (U.K. Only) ..................................................................................................5-3 Overview .......................................................................................................................................................5-4 Maintaining Student Loans (U.K. Only) .......................................................................................................5-5 Maintaining Tax Credits (U.K. Only)............................................................................................................5-7 Quiz ...............................................................................................................................................................5-8 Summary........................................................................................................................................................5-11

Costing Overview.............................................................................................................................................6-1 Costing Overview..........................................................................................................................................6-3 Objectives......................................................................................................................................................6-4 The Oracle HRMS Costing Solution .............................................................................................................6-5 Costing Options .............................................................................................................................................6-6 Oracle HRMS Costing...................................................................................................................................6-8

Cost Distribution in HR.................................................................................................................................6-9 What Costing Rules Apply in Your Enterprise?............................................................................................6-10 Handling Rule-Based Costing .......................................................................................................................6-11 Quiz ...............................................................................................................................................................6-13 What Exceptions Occur in Your Enterprise?.................................................................................................6-14 Managing Exceptions to Costing Rules.........................................................................................................6-15 Processing Costs............................................................................................................................................6-16 Quiz ...............................................................................................................................................................6-17 Summary........................................................................................................................................................6-19

Processing Costs...............................................................................................................................................7-1 Processing Costs............................................................................................................................................7-3 Objectives......................................................................................................................................................7-4 Overview: Costing and the Payroll Process...................................................................................................7-5 Typical Costing Issues? .................................................................................................................................7-7 Typical Costing Issues...................................................................................................................................7-8 Costing Solutions...........................................................................................................................................7-9 Costing Processes in Oracle Payroll ..............................................................................................................7-10 View Costing Results ....................................................................................................................................7-12 Partial Period Accruals ..................................................................................................................................7-13 Previewing Cost Allocations .........................................................................................................................7-14 Subledger Accounting: Terminology.............................................................................................................7-15 Quiz ...............................................................................................................................................................7-16 Approving Assignment Costing Details ........................................................................................................7-17 Subledger Accounting ...................................................................................................................................7-19 The RetroCosting Process .............................................................................................................................7-20 Quiz ...............................................................................................................................................................7-21

Costing of Payments: Overview....................................................................................................................7-22 Costing of Payments: Two Approaches.........................................................................................................7-23 Quiz ...............................................................................................................................................................7-24 Costing of Payments: Viewing Results .........................................................................................................7-25 Summary........................................................................................................................................................7-26

Payroll Configuration Fundamentals - Summary .......... ........... ........... .......... ........... ........... .......... ........... ...8-1 Payroll Configuration - Summary .................................................................................................................8-3 Summary........................................................................................................................................................8-4


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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsiii


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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsv

Preface

Profile

Before You Begin This Course

• Working experience with Oracle Applications

• Working experience with earnings and deductions elements in Oracle HRMS

Prerequisites

• D48180GC10 R12 HRMS Total View

• D60573GC10 R12 Compensation Management Fundamentals: Earnings andDeductions

• D47341GC10 R12 Compensation Workbench and Salary Configuration

• D17308GC10 11i Compensation Management Fundamentals: Earnings and Deductions

How This Course Is Organized

This is an instructor-led course featuring lecture and hands-on exercises. Online demonstrations

and written practice sessions reinforce the concepts and skills introduced.


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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsvi

Related Publications

Oracle Publications

Title Part Number

Oracle HRMS Payroll Processing Management Guide E13514-03

Additional Publications

• System release bulletins

• Installation and user’s guides

• Read-me files

• International Oracle User’s Group (IOUG) articles

• Oracle Magazine


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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsvii

Typographic Conventions

Typographic Conventions in Text

Convention Element Example

Bold italic Glossary term (ifthere is a glossary)

The algorithm inserts the new key.

Caps and

lowercase

Buttons,

check boxes,

triggers,

windows

Click the Executable button.

Select the Can’t Delete Card check box.

Assign a When-Validate-Item trigger to the ORD block.

Open the Master Schedule window.

Courier new,

case sensitive

(default is

lowercase)

Code output,

directory names,

filenames,

passwords,

pathnames,

URLs,

user input,usernames

Code output: debug.set (‘I”, 300);

Directory: bin (DOS), $FMHOME (UNIX)

Filename: Locate the init.ora file.

Password: User tiger as your password.

Pathname: Open c:\my_docs\projects

URL: Go to http://www.oracle.com

User input: Enter 300

Username: Log on as scott

Initial cap Graphics labels

(unless the term is a

proper noun)

Customer address (but Oracle Payables)

Italic Emphasized words

and phrases,

titles of books and

courses,

variables

Do not save changes to the database.

For further information, see Oracle7 Server SQL Language

Reference Manual.

Enter [email protected], where user_id is the

name of the user.

Quotation

marks

Interface elements

with long namesthat have only

initial caps;

lesson and chapter

titles in cross-

references

Select “Include a reusable module component” and click Finish.

This subject is covered in Unit II, Lesson 3, “Working with

Objects.”

Uppercase SQL column

names, commands,

functions, schemas,

table names

Use the SELECT command to view information stored in the

LAST_NAME

column of the EMP table.

Arrow Menu paths Select File > Save.Brackets Key names Press [Enter].

Commas Key sequences Press and release keys one at a time:[Alternate], [F], [D]

Plus signs Key combinations Press and hold these keys simultaneously: [Ctrl]+[Alt]+[Del]


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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsviii

Typographic Conventions in Code

Convention Element Example

Caps and

lowercase

Oracle Forms

triggers

When-Validate-Item

Lowercase Column names,

table names

SELECT last_nameFROM s_emp;

Passwords DROP USER scottIDENTIFIED BY tiger;

PL/SQL objects OG_ACTIVATE_LAYER(OG_GET_LAYER (‘prod_pie_layer’))

Lowercase

italic

Syntax variables CREATE ROLE role

Uppercase SQL commands and

functions

SELECT useridFROM emp;

Typographic Conventions in Oracle Application Navigation Paths

This course uses simplified navigation paths, such as the following example, to direct you

through Oracle Applications.

(N) Invoice > Entry > Invoice Batches Summary (M) Query > Find (B) Approve

This simplified path translates to the following:

1. (N) From the Navigator window, select Invoice then Entry then Invoice Batches

Summary.

2. (M) From the menu, select Query then Find.

3. (B) Click the Approve button.

Notations:

(N) = Navigator

(M) = Menu

(T) = Tab

(B) = Button

(I) = Icon

(H) = Hyperlink

(ST) = Sub Tab


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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsix

Typographical Conventions in Oracle Application Help System Paths

This course uses a “navigation path” convention to represent actions you perform to find

pertinent information in the Oracle Applications Help System.

The following help navigation path, for example—

(Help) General Ledger > Journals > Enter Journals

—represents the following sequence of actions:

1. In the navigation frame of the help system window, expand the General Ledger entry.

2. Under the General Ledger entry, expand Journals.

3. Under Journals, select Enter Journals.

4. Review the Enter Journals topic that appears in the document frame of the help system

window.


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Copyright © Oracle, 2009. All rights reserved.

R12.x Payroll Configuration - IntroductionChapter 1 - Page 1

R12.x Payroll Configuration -Introduction

Chapter 1


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Objectives


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Topics


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Payroll Configuration FundamentalsChapter 2 - Page 1

Payroll ConfigurationFundamentals

Chapter 2


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Payroll Configuration Fundamentals


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Overview


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Paying Your Employees

Paying Your Employees

This is an overview of the activities involved in paying your employees. You capture the

details of earnings and deductions for each or your employees. You then run the payroll

process to calculate gross pay and derive the net amount of payment for each employee.

Finally, you ensure that each employee receives payment at the correct time in a valid paymentmethod. The criteria for successful completion are:

• Accurate and timely payment of your workforce

• Compliance with statutory reporting obligations in your localization

In most organizations, the bulk of payroll processing is concentrated into a short period of time just before employees receive payment. By configuring your payrolls correctly, you can ensure

that your payrolls run as efficiently as possible. This makes it easier for your organization tomeet the criteria for accuracy and timeliness. In the rest of this course we shall see how correct payroll configuration contributes to smooth running of the payroll process and accurate

payment of your employees.


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Choosing QuickPay or Batch Processing

Choosing QuickPay or Batch Processing

When calculating pay, you can choose whether to run:

• The QuickPay process which is always for one employee only

• A batch process that enables you to process all employees, or a subset of employees.

Typically you use batch processing to calculate pay for all employees in your organization, or

for an employee subset. However, QuickPay is useful when you are testing the creation of anew employee, or when you want to calculate pay for an employee who has recently started

employment or recently terminated a period of employment.

For batch processing, you can use assignment sets and consolidation sets to focus on subsets ofemployees rather than on all the employees in a full payroll.


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Choosing Single or Multiple Payment Methods

Choosing Single or Multiple Payment Methods

When your employees receive payment, you can arrange to pay them in any of the payment

method types that are valid for payrolls in your localization. You can also combine valid

payment method types, so that an employee could receive 50% of payment by check/cheque,

40% by direct deposit, and the remaining 10% in cash. Note, however that not all paymentmethod types are available across all localizations. For example, U.K. employees can receive

cash payments, but U.S. employees cannot.

You enable this flexibility of payment when you set up your payroll. First, you define anorganizational payment method, and then link the payment method to a payroll.


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Quiz

Answers: 1


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Choosing Single or Multiple Currencies

Choosing Single or Multiple Currencies

Your business group has a default currency and this is the usual currency in which you

calculate and disburse employee pay. However, you can work in an entirely different currency

or add an additional currency to your payroll calculations. For example, if you have employees

working in an overseas subsidiary you may want to pay them in an entirely different currency,or pay them in a combination of default currency and local currency. The payroll processes

(Payroll run and PrePayments) automatically manage any conversion between currencies that

you have enabled for your organization. The details of how to set up currencies in OracleHRMS are outside the scope of this course, but it is possible to work with additional currencies

provided that your System Administrator has enabled them.

For details on how to complete the payment method window please refer to Defining aPayment Method in the online help.


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Choosing Single or Multiple Payrolls

Choosing Single or Multiple Payrolls

If your organization has multiple sites each with a separate payroll supervisor, and with all

employees on the same pay frequency and pay date, you can choose one of these alternative

approaches to payroll definition: Define one payroll for your entire organization, and then

process each site using an assignment set or define each site as a separate payroll.Your choicedepends on the degree of administrative freedom or responsibility that each supervisor needs.

For example:

• If everything is kept separate before and after pay run, then separate payrolls are useful.You will find it easier to query and view results by payroll.

• If only processing is separate but results are combined for further processing then one

payroll may be better for configuration and maintenance of data.


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Question : What Is “a Payroll”?


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Suggestions: What Is “a Payroll”?


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The Criteria that Define a Payroll

The Criteria That Define a Payroll

A payroll defines a group of employees with a common frequency of payment and a common

pay date.


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Further Potential Uses of HRMS Payrolls

Further Potential Uses of HRMS Payrolls

You typically use an HRMS payroll to identify a group of employees with common payment

characteristics and then process all the individual payments for each pay period. However, you

can also use an HRMS payroll to do each of the following:

• Define a security profile to control secure access to HRMS

• Determine benefits eligibility by setting up an eligibility profile based on membership of

a payroll

• Specify eligibility for a particular element by linking the element to a payroll.

• Specify OTL timecard preferences based on the membership of a payroll.

• Run payroll reporting for specific groups of employees.


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Payroll Configuration and Processing

Payroll Configuration and Processing

Correct payroll configuration provides the basis of all the later payroll processes. For example,

as part of payroll configuration, you determine:

• What tax information can be captured for employees for inclusion in a payroll run

• How many payrolls you want to operate in your organization

• What payment methods are appropriate for your employees

You can change the initial configuration details to reflect changes in the business needs of your

organization. For example, you can:

• Extend the end date of a payroll.

• Delete a payroll provided that you delete it at an appropriate point in the payroll cycle.• Modify end date of a payroll period to avoid coinciding with a holiday or vacation.


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Quiz

Answers: 2, 4


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Summary

Summary

We have seen that payroll processing is a critical business process. It is subject to time and

accuracy constraints, and statutory requirements. Using Oracle Payroll, you can configure a

payroll or set of payrolls that best represents the business needs of your organization.

Remember that a payroll represents all those employees who share a common paymentfrequency and a common pay date.

You can use your payroll configuration activities to determine payment methods for your

employees, and the number of payrolls in your organization. Ultimately, the efficiency andaccuracy of your payroll processes depend on the accuracy of your payroll configuration.


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Defining Payrolls for Your OrganizationChapter 3 - Page 3

Defining Payrolls for Your Organization


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Overview


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Understanding Payment Method Types

Understanding Payment Method Types

Oracle Payroll supports three Payment Method Types:

• Check/cheque

• Direct deposit. Exists as a payment method type for all localizations, but differently

named in each localization. For example, direct deposits are processed by the NationalAutomated Clearing House Association (NACHA) in the U.S. and the Banks Automated

Clearing System (BACS) in the U.K.

• Cash (if valid for your localization). You can define a series of payment methods for each

payment method type that is available in your localization.


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Payment Method Types: Required Information

Payment Method Types: Required Information

You must supply different information for each payment method type:

• For check/cheque, supply source bank account name and number. Source account is the

account from which your organization makes this payment. The payee account details are

known only to the payee. You do not record them in Oracle Payroll.

• For direct deposit payments, supply both the source and destination account details. The

destination account is the payee account. Because this is a direct transfer to a named

account, Oracle Payroll can only process direct deposits if you supply source and

destination details.

• For cash, supply a coinage analysis. If your localization allows cash payment, you use the

coinage analysis to calculate and order the correct cash denominations.

You can also set up third party payments so that your employees can discharge payments to

third parties. Although, these are usually involuntary deductions, third party payments can also be voluntary deductions to charities and so on.


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Payrolls: How Many Payment Methods?

Payrolls: How Many Payment Methods?

Your payroll must have at least one payment method. But, you can define as many additional

payment methods as you need to represent the payroll requirements of your organization.


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Defining Payment Methods

Defining Payment Methods

This slide summarise the sequence of activities when you are defining a payment method for

an employee. You do each of the following:

• Define organizational payment methods.

• Link the organizational payment methods to your payroll to create valid paymentmethods for the payroll.

• Define personal payment methods for your employees and assign each employee to a

payroll.

For details on how to complete the payment method window please refer to Defining aPayment Method in the online help.


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Quiz

Answers: 1


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Consolidating Results for Several Payrolls

Consolidating Results for Several Payrolls

A consolidation set is a label identifying a group of payrolls that you process as a single

payroll. This set is useful to focus on a particular payroll process such a PrePayments, or to see

the results for a subgroup of employees.

You select a consolidation set when you define your payroll. Each business group always has adefault consolidation set. However, you can always change the default set, and the set that you

initially select to match changes in your processing requirements.


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Question: Essential Details for a Payroll?

Expected Answer: You define:

• A name for the payroll

• A start date and end date for the payroll

Some students may also mention:

• Costing information

• Further information specific to a legislation

• Assigning an employee to the payroll

• A consolidation set and an organizational payment method. (This is an acceptable

answer, although it is not the exact response expected).


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Defining a Payroll

Defining a Payroll

These are some of the defining features of a payroll, and these criteria are important when you

are configuring a payroll. For example, if you are configuring multiple payrolls for your

organization, it is important to choose names that sufficiently distinguish between them.

You can also specify whether:

• Negative payments are allowed by checking the Negative Payment Allowed check box.

• Multiple assignments are allowed by checking the Multiple Assignments check box.


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Understanding Pay Calendars

Understanding Pay Calendars

In addition to the actual calendar year, and the tax calendar for your legislation, each individual

payroll has an implied calendar of its own. This slide illustrates the relationship between each

of these calendars, and how the different calendars for calendar year, tax year and individual

payrolls can overlay each other

In some countries, including U.S. the tax year and the calendar year are the same while in some

countries, including U.K. Canada and Australia they are different. U.K. starts 06 April.

The number of pay periods is determined by the frequency of pay. For example, monthly = 12,

weekly = 52, 53 or 54.

The pay period number is determined by the frequency of pay and the tax year calendar, for

example, week 1-54, month 1-12, bi-week 1-26 and so on. This number uniquely identifieseach pay period for processing and reporting.

Government reporting takes place at defined quarter and year end periods and typically doesnot match the specific processing dates of any single cycle. You can start an Oracle Payroll

calendar at any time – although typically you would try to start with the tax year or the start of

a new quarter to simplify balance loading and reporting. When you define a payroll you canenter the end date of the first period and the system will generate all the correct numbers and


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dates. Good advice is to define a payroll with a start date from the beginning of the current or

previous tax year to simplify balance loading.


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Specifying Payroll Periods

Specifying Payroll Periods

When you are specifying payroll periods, use these criteria to determine your pay periods:

• For the first period end date use the first check/cheque date for the current or the previous

year.

• Do not create lots of historical pay periods. If you do, you will have more informationthan you can usefully process.

• Identify how many years of pay periods you want. Start with 3 or 5 years. You can easily

extend this later if you need to.

• If you have several payrolls with the same frequency, use names that a user can recognizeeasily.


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Understanding the Pay Period Cycle

Understanding the Pay Period Cycle

This processing cycle is constant for every payroll period in your calendar. When you define

the length of your pay period, you are also defining when these key processing points occur.

The cycle applies whether the period is a week, a month, or any other frequency.

Note: The pay period dates are the start and end dates for any nonrecurring elements you enterfor an employee assignment.

The key dates in the cycle are:

Cut Off

• Date when all changes to the payroll should be completed before the final run

• For information only in Oracle PayrollScheduled Run

• Date when regular payroll run is processed

• For information only in Oracle Payroll

Check/Cheque Date

• Pay date or the date of constructive receipt of pay

• Used for tax calculations


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You can also make use of date offsets. Date offsets are payroll calendar defaults created

automatically when the payroll is saved. For example, U.S. Payrolls can have a cut-off date fora semi-monthly payroll to three days before the period-end date (-3). The scheduled run and

check dates could be 5 and 7 days after the period-end date. In Canada, you could keep the

same cut-off date and set the pay date to five days after the period end date.

You can manually change dates if, for example, a check/cheque date falls on a holiday or

weekend.You can also change the default Open status to Closed to prevent further element entries. You

can also reopen the period if necessary. Use this feature carefully since you cannot enter orchange element entries that span a closed payroll period. For instance, if you are terminating an

employee and an element should be end-dated, a “closed” payroll prevents you from

performing this task.

You can use offsets to determine when employees are allowed to view payslips. Employeescan normally view payslips as soon as all payroll processes have completed, that is, several

days before the official payment date. However, you can specify that the first view of a payslip

should coincide with the payment date. You align the payslip date with the payment date bysetting a payslip offset date in the Payroll window. For example, if the payroll processes are

complete on 15th May 2005, but the payment date is 20th May 2005, you can enter 5 as youroffset so that employees cannot view their payslips before the payment date.

The PrePayments process enables you to select a payment method to pay your employees. You

can distribute employee pay over more than one method using either a percentage or monetary

split.

The External/Manual Payments Process enables you to make cash payments or to pay

employees from external sources.

When you complete a payroll run, you can distribute the associated costs across particular cost

centres using the Costing process. You can use a post-payroll run process to accumulate

payroll costs by cost centre, GL account code, and the labor distribution codes in use at yourenterprise.


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Quiz

Answers: 2


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Entering Further Information for a Payroll

Entering Further Information for a Payroll (Global and US)

Your localization may support the entry of further payroll information, for example:

• Hours Calculation Type – specifies whether hours calculation is Annualized, (the hourly

rate varies according to the number of hours in a pay period), or Standard, (the hourly

rate is always constant because it is derived by dividing the weekly salary by the numberof scheduled hours in a week.

• Pre-notification Allowed (US only) – specifies whether the NACHA payment method

should be paid in the first available payroll run, or whether prior notification is necessary.

• Tax Multiple Payments as One (US only) – “Yes” to base tax for the second payment on period to date taxable wages rather than on the current period. “No” to calculate FIT and

SIT from the current payment amount.

• Terminate Seeded Earnings By (US only) – select a termination rule to override the

termination rule for the business group.

• Iterative Method – Select Interpolation or Binary to determine the algorithm for iterative

calculation of pre tax deductions.

• Interpolation and Binary Methods are mathematical algorithms used within the net to

gross processing. This is an iterative process where you run the payroll iteratively with


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Establishing a Payroll Contact

Establishing a Payroll Contact

When payroll queries arise it is useful to have a named payroll contact who is familiar with

payroll details for a particular employee so that you can resolve outstanding issues quickly and

efficiently.

You can set up a payroll contact based on criteria that you specify. For example, you canspecify organizational criteria so that all employees in the same department share the same

payroll contact. Alternatively, you can specify an alphabetical range so that all employees in

the A to E surname range have one contact whereas those employees in the F to J alphabeticalrange have a different contact name.


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Setting Up Payroll Contact Information

Setting Up Payroll Contact Information

To specify a payroll contact, you firstly do each of the following:

• Add the Payroll Contact EIT to your responsibility. (Refer to Responsibilities in the

online help.)

• Write a formula to specify the contact criteria. For example, you can write a formula toassociate the leading letter of an employee name with a particular payroll contact. (All

employees with names beginning with “A” have the same payroll contact, whereas all

employees with names beginning with “B” could either have the same contact, or a

different contact). For an example of a formula that assigns alphabetical criteria, refer toSample Formula for Payroll Contact in the online help. You can vary the formula to

specify other criteria, such as the department to which an employee belongs. You canalso write several formulas to cover different allocation criteria, and then select theformula containing the particular criteria that you want to use.


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Allocating a Payroll Contact

Allocating a Payroll Contact

Once you have added the Payroll Contact EIT to your responsibility, and written the formula

that specifies your contact criteria you can then run the Allocate Payroll Contact program to

apply the payroll contact details for each assignment.

You provide the Allocate Payroll Contact program with:

• A start date that denotes which assignments will have payroll contact information. For

example, if you enter 20-MAR-2007, then all assignments that are effective at this date

will have a payroll contact provided that they satisfy the criteria described in your

formula.

• The name of the payroll formula that contains your allocation criteria.

Alternatively, you can allocate a payroll contact by navigating to the Extra Assignment

Information window, selecting the Payroll Contact information type, and modifying the payroll

contact details in the Details descriptive flexfield.


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Deleting a Payroll


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Maintaining PAYE and NI (UK only)Chapter 4 - Page 1

Maintaining PAYE and NI (UKonly)

Chapter 4


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Maintaining PAYE and NI (U.K.)


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Overview


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PAYE and NI (U.K.)

PAYE and NI (U.K.)

The rest of this module covers the maintenance of PAYE and NIC payments for UK

employees:

• PAYE (Pay as You Earn) is the system used to calculate and collect income tax from all

taxable income paid to employees.

• NI (National Insurance Contributions) are payable by employees on any taxable benefits

that they receive, unless exempted by age or employment contract. In addition,

employers also pay national insurance as a contribution to social insurance for their

employees.


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Essential Information: PAYE and NI

Essential Information for PAYE Processing

To calculate PAYE accurately for your employees, the employee payroll requires these

categories of information:

• Tax tables. The underlying rules for national assessment of PAYE and NI as determined

in an annual or interim budget. These rules specify maximum and minimum levels ofPAYE, and any tax thresholds and exemptions.

• Individual rates for each employee. The tax tables deliver a series of tax codes to reflect

PAYE liability for broad categories of individual employment. Oracle Payroll needs to

know which personal tax codes apply to individuals on your payroll.

• Tax office. This is the Inland Revenue office that administers the PAYE records for your

employees, and receives payment of the final PAYE assessment.


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Sources of Essential Information

Sources of Essential Information (PAYE)

This is how you obtain the essential information in each category:

• Latest tax tables. These are always available in Oracle Payroll provided that you have

applied the latest patch from Oracle Development. There is always an annual patch to

deliver changes for the forthcoming tax year. This patch incorporates any necessarychanges to the Start of Year and End of Year processes, and also includes the predefined

elements, formulas and balances that reflect the latest updates.

• Adding details of individual tax rates. This is a payroll setup activity, and we explain how

to do this on the next slide.

• Specifying a tax office for payment. This is also a payroll setup activity. For reference,

see Defining a Payroll in the online help.


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Entering PAYE and NI Details for an Employee

Entering PAYE and NI Details for an Employee

You use the Statutory Details window to enter PAYE and NI details for an employee. This

window becomes available when you query the person and select the assignment.

Note that all Earnings elements are subject to NI unless you remove the NIABLE sub-

classification from the element. This enables you to specify that particular employees shouldnot be subject to NI. This typically occurs where there is an exemption on grounds of age, or as

otherwise defined in the employment contract.

For reference, see Entering Employee PAYE and NI details in the online help.

Example of a manual adjustment

It proves impossible to pay a new starter in the period of starting so the employee receives a

double payment in the next period. You calculate this employee’s NIC separately for each

period: it should not be aggregated in the second period. The system does not calculate this

method automatically for new starters, so a manual adjustment is required.

Calculation of NIC

If a wrong category code is used for an employee, too much or too little NIC may be deducted.

You can correct this as follows:


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If the employee has been overcharged: The balances maintained for year-end reporting against

each category code need to be corrected and the excess deduction refunded.

If the employee has been undercharged: The balances maintained for year-end reporting also

need to be corrected and the balance of secondary contributions owing must be paid to the

Inland Revenue with the next payment.


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Quiz

Answers: 2


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Quiz

Answers: 1


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Entering NI Details for a Director

Entering NIC Details for a Director

Directors have a different pattern of remuneration. They typically receive bonuses and

directorial fees as a single annual payment. If you derive NIC for these payments solely from

the pay period in which the director received payment there is likely to be an underpayment of

NIC. This is because directors only pay NIC on amounts within the Upper Earnings Limit forthe period.

The main features of the calculation of directors’ NI are:

• The use of an annual or prorated earnings period. (This avoids the underpayment issue).

• The use of the exact percentage method.

• Calculation on the director’s cumulative earnings.

• Deduction of the difference between NI paid and NI due. (Directors can make interim

NIC payments on account. Oracle Payroll calculates what has already been paid and

derives the outstanding amount).

For details of how to set up NI for a director, see Updating an Employee to a Director in the

online help.


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Quiz

Answers: 2


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Summary: Setting Up PAYE and NI (U.K.)

Reminder: Setting Up PAYE and NIC (U.K.)

This overall setup sequence applies in all localizations. You perform each of these activities to

ensure that your U.K payrolls can process PAYE and NIC:

• Set up the tax district details to specify which tax district receives payment. For details of

how to do this, refer to these online help topics:

- Business Groups: Setting Up Tax Details.

- Defining a Payroll.

• Set up the PAYE and NIC details for an individual employee to specify the basis for

calculating individual contributions.

• Link your employee PAYE and NIC details to at least one payroll so that you can use this payroll to calculate tax for this employee.

Please refer to the additional guide for labs and/or demos for this lesson.


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Maintaining Other Deductions (UK.only)Chapter 5 - Page 1

Maintaining OtherDeductions (UK.only)

Chapter 5


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Maintaining Other Deductions (U.K. Only)


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Overview


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Maintaining Student Loans (U.K. Only)

Maintaining Student Loans (U.K. Only)

You maintain student loans from the Student Loans Window.

Employers are required to:

• Deduct student loan repayments from employees who have become liable for repayment.

• Display the amount of the deduction on the employee payslip.

• Submit monthly or quarterly remittances of student loans to the Collector of Taxes and to provide details of loan repayments in the end-of-year documents.

The following conditions apply:

• Repayments are only taken if NIable pay for the periods exceeds the period value of the

£10,000 annual threshold.• Existing CCAEO or CTAEO court orders must become inactive before student loan

repayments are activated.

• Other Court Orders with a higher priority take precedence and reduce the repayment of

student loans to an amount that will not reduce assessable pay below the protectedamount.


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• You can recover underpayments of student loans provided that you attempt recovery

within the same tax year as the initial payment.

See Maintaining Student Loans in the online help.


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Maintaining Tax Credits (U.K. Only)

Maintaining Tax Credits (U.K. Only)

Employers are required to add tax credits to employee wages and display the amount of the

credit on employee pay slips. The following conditions apply:

• The Inland Revenue provides notification to employers of the employees to receive the

credit, the amount of the credit and the start and end date of the credit.

• Employers recover credit payments from PAYE and NIC.

• Only one tax credit may be active at any one time, although an employee may have

multiple tax credits provided that they do not overlap.

To set up a tax credit, you use the Element Link window to link the working tax credit elementto your payrolls. You can obsolete a link by giving it an end date, provided that your obsolete

element does not have any element entries.

When you receive notification of a working tax credit from the Inland Revenue, you use the

Element Entry window to enter the details. You can also restart a tax credit that has previously been stopped. You can amend a tax credit twice in one month, and decide whether to

implement a request for a third amendment. You can stop a tax credit if the Inland Revenue

request a stop. Enforce this stop by providing a stop date and a stop reason. Do not end-datethe element – it must remain in place at the end of the month.


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Quiz

Answers: 2


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Quiz

Answers: 1


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Quiz

Answers: 2


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Summary

Please refer to the additional guide for labs and/or demos for this lesson.


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Costing OverviewChapter 6 - Page 1

Costing Overview

Chapter 6


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Costing Overview


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Objectives

Objectives

Explain that when you are configuring a payroll, you need to ensure that your configuration

actions enable you to allocate costs correctly. Later in the course, we’ll describe how to

configure your payroll for correct costing. In this topic however, we begin with an overview of:

• The different costing models available within HRMS

• The distribution of costs across HRMS and General Ledger

• The default rules for costing

• How HRMS processes your costs


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The Oracle HRMS Costing Solution

The Oracle HRMS Costing Solution

Oracle HRMS costing provides a highly configurable solution that meets the needs of many

diverse customers. The same solution applies whether you are in the public or commercial

sector, whether you are a national or global enterprise, whether you are project based or

consultant based, or whether you are a service industry or manufacturing based enterprise.Different types of business can use the same solution, but configured in different ways.

Using the Cost Allocation Key Flexfield, you can define the cost information you want to

capture and any validation you need.

You define the data entry levels at which you want enter default cost information, and at whichyou want to enter cost information to override the system defaults.

You decide how you want to distribute your costs across different headings, such as costcenters and projects. You decide how you want to map costs between your payroll cost codesand your GL cost codes. If you are sending cost information to other accounting areas, such as

project or grants, you can enter these codes and map that information to those accounts.

You can also set up separate costing structures for country-specific organizations as required,

to allow for variations in costing requirements across countries.


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Costing Options

Costing Options

Your method of costing using Oracle tools depends on your type of organization.

• Your organization may be commercial, and does not tie costs to projects. You need to

track labor costs for General Ledger reporting purposes.

• Your organization may be commercial and project driven. In this case, you need todistribute costs across projects and General Ledger reporting structures.

• Your organization may be public sector, in which case you need to keep track of grants

and projects expenditure. You also need to distribute costs across General Ledger

reporting structures.

We show you how to use different combinations of Oracle modules to get the costing results

your organization requires. You can then make the right decisions for your Costing setup in

Oracle HR.

The details of each option are beyond the scope of this course, but as a brief summary:

• Commercial, Non-Project-Driven - use Oracle HR to allocate your labor costs to different

cost codes. Include GL segments in the flexfield setup so that you can distribute costs

across the GL reporting codes. Use Payroll to calculate pay, then distribute the pay results

across your cost codes and finally post the costing results to GL.


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• Commercial, Project Driven Option 1 – do exactly as above, but when you have posted

your costing results to GL, additionally use Oracle Projects to to assign people to projects, cost the projects, and post the results to GL. Ask your consultant how to resolve

the double posting of costs to GL

• Commercial, Project Driven Option 2 – for this option, you do not use Oracle Projects, but you do include a Projects segment so that you can allocate costs to GL.

• Public Sector, Externally Funded Option 1 - use Payroll to calculate pay, then post the pay results to Labor Distribution. Post the costing results from Labor Distribution to

Oracle Projects, Oracle Awards, and GL. This is the only option that requires no costsetup in HR.

• Public Sector, Externally Funded Option 2 - use Oracle HR to allocate your labor costs to

different cost codes. Include GL segments in the flexfield setup so that you can distribute

costs across the GL reporting codes. Also include Grant, Project and Award segments toenable you to allocate costs across these areas. Use Payroll to calculate pay, then

distribute the pay results across your cost codes. Finally, post the costing results to GL.


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Cost Distribution in HR

Cost Distribution in HR

You can use HR Costing to distribute costs for General Ledger (GL) reporting. In GL, there are

legal accounting requirements you must meet. For example, you need to be able to distribute

costs across account codes, cost center codes, and balancing codes for bookkeeping purposes.

You may also want to allocate labor costs to particular departments, or to particular products or projects. You may be using other modules to handle these costing requirements. If not, you can

handle them using HR Costing.


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What Costing Rules Apply in Your Enterprise?


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Handling Rule-Based Costing

Handling Rule-Based Costing

Oracle HRMS enables you to implement rule-based costing.

Typically, you allocate and report employment costs as you incur them, that is, as you deploy

and pay people. We recommend that you default costs at a lower level because you can then

avoid multiple entry of costing rules that apply to a range of costs. Default costing rulesgenerally apply to people based on enterprise-wide definitions. Costs can also be inherited

from the payroll or the organization that you belong to. So, costs for a specific payroll may be

allocated to a specific company; costs for an organization may be associated with a specific project.

For these standard costs, implement your costing rules at the installation of Oracle HR so that

costing is subsequently automatic. At installation time you can allocate labor costs to costcenters, GL codes, and project or product codes.

Your rules may require you to distribute costs across a set of cost centers. For example, you

may need to distribute employer charges, such as employee benefits, across a range of other

cost centers, typically for a set of earnings.


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You may have different costing requirements in different countries, for example in the U.S.

and U.K. you need to maintain cost details for specific types of tax. You therefore need theability to apply different costing rules in different country organizations.

You can also set defaults for assignment costs if you use Position Control to create

assignments. Typically, you also need to allow for exceptions to the costing rules. You canoverride costs at the point of data input to handle exceptions to the general rules.


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Quiz

Answers: 2


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What Exceptions Occur in Your Enterprise?


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Managing Exceptions to Costing Rules

Managing Exceptions to Costing Rules

Oracle HRMS enables you to override default costing rules for individuals.

You can override default costing rules for an individual at the assignment level, when you

deploy, relocate, transfer, or promote the employee, or make any other changes to the

employee assignment. For example, in certain instances you may want to allocate assignmentcosts to a separate project.

You can also override default costing rules at element entry level, where you may want to

allocate costs for a specific element to a different cost code.

You also need to handle split costs. For example, there may be separate funding sources for a particular assignment that require you to split the assignment costs between two or more

individual cost centers. So, at the level of the assignment, you need to split costs on a percentage basis.


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Processing Costs

Processing Costs

You use the Cost Allocation Key Flexfield to capture your default costing rules and any

exceptions. You enter the appropriate cost codes into the the flexfield segments during

installation and data input to determine the distribution of costs across your organization.

The Payroll Run process generates pay results.

The Costing process distributes the pay results according to the Costing codes. Your costs are

then available for GL and HR reporting. You can view cost distribution using the Cost

Breakdown report.

If you have installed Oracle General Ledger, you run the Transfer to GL process to transfercosts to Oracle General Ledger.

Online help topics:

Labor Costs in Oracle HRMS

Labor Cost Allocation Example


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Quiz

Answers: 2


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Quiz

Answers: 1


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Summary


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Processing CostsChapter 7 - Page 1

Processing Costs

Chapter 7


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Processing Costs


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Objectives


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Overview: Costing and the Payroll Process

Overview: Costing and the Payroll Process

Once costing information has been entered, all that remains is to process payroll for employees

and to accumulate costs according to the results produced.

This slide summarizes the operation of Oracle Payroll with the major activities of pre- and

post-payroll run processing.

• Data Input

- The typical payroll processing model includes data entry of time capture, salary

management, and adjustments using Data Input.

• Payroll Calculations

- A payroll process runs and produces the gross-to-net results.• Prepayments and Disbursement

- The normal payroll cycle goes through prepayments and disbursement of pay. The

costing process takes the results of payroll processing and costs them according to

the costing codes you have entered.

The costing information is then available for transfer to GL.


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An important point here is that the results of payroll processing are transferred to GL. If you do

not have Oracle Payroll you must rely on your payroll system to calculate results and transferactual costs to GL.

Note: Standard and Advanced Benefits have an additional process for costing Benefits. Setup

and administration of this is covered in detail in the Benefits modules. This manages thecalculation of employer costs associated with benefits.


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Typical Costing Issues?


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Typical Costing Issues

Typical Costing Issues

In order to complete your costing processes accurately, you may need to do each of the

following:

• Incorporate outstanding costs in those instances where your accounting period ends

before the current payroll period so that you have a period of unprocessed costs from the previous period.

• Check that costs have been allocated correctly so that you can identify and fix any

discrepancies before you run the Costing process.

• Use subledgers so that you can obtain better audit information on how costs aredistributed within your organization.

• Make late changes to reprocess any costs that have been assigned to the wrong costing

code.

• Update your journal entries automatically rather than relying on a manual update.


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Costing Solutions

Costing Solutions

Oracle Payroll offers the following solutions to common costing issues:

• Run Partial Period Accruals

• Preview Cost Allocations

• Notify and Approve Assignment Costing Details using Self-Service

• Transfer to SLA (Subledger Accounting)

• Upgrade Historical Payroll Data to SLA

• Run the RetroCosting process

• Run the Costing of Payments process


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Costing Processes in Oracle Payroll

Costing Processes in Oracle Payroll

Three processes are associated with costing.

• First, you need to run the Costing process to accumulate the payroll results to the cost

codes you have entered at the various levels. The process places the results into payroll

cost tables. If you are using GL, this information is available to you to transfer to yourown GL system.

Note: If you have not installed Oracle GL, you need to write your own process to extract

costing information from the payroll cost tables and post it to your own system.

• If your accounting period closes before the end of your current payroll period, and youhave outstanding costs that have accrued since the end of your last complete payroll

period, run the Partial Period Accrual Calculation process. The Partial Period AccrualCalculation process estimates the costs to transfer into the General Ledger.

• If you are using Oracle GL, there is a further process, which is the Transfer to GL process. This makes use of the GL mapping that we discussed earlier to identify which

journal entries have to be made for individual segments.


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- Run the Transfer to GL process to create the journal entries to the GL interface

tables, ready for posting to GL. There is a separate process from GL to import t

Documents

Oracle Payroll Student Guide