Gross up a wage component

You can gross up a wage component. In case of a grossed up wage component the amount of the wage component is a net amount. If premiums and/or ‘Loonheffing’ are due on the wage component, then Profit will increase the gross amount such that the remaining value of the wage component is the net amount.

When you gross up a wage component, Profit completes the following steps:

1. Profit determines the amount that should be produced by the Net wage component that you are grossing up. For this, Profit runs the calculation rule of the relevant wage component one time.
2. Profit calculates the other wage components in the salary processing.
3. The 'Nettoloon' calculation basis is known from the second step but is (almost always) unequal to the amount calculated in step 1.
4. Profit decreases or increases the amount of the wage component that you are grossing up, depending on the calculation.
5. The other wage components are recalculated.
6. Profit compares the 'Nettoloon' calculation basis to the desired amount from step 1.
   • If this is not the same, step 4 is performed again.
   • If it is in fact the same, the amount that you are grossing up is known and ‘ready’.

Note:

Because Profit is unable to calculate the grossing up in one iteration, different calculation iterations will be performed in a row until the exact net value is obtained. This is why a wage calculation involving a grossing up always takes longer than a regular wage calculation. This can differ by a factor of 10.

Grossing up can only be adjusted for custom-made wage components.

Wage calculation phases

Profit performs three calculations (not noticeable to you) for a wage calculation. The three calculations are required to calculate the wages correctly when there is a net wage arrangement combined with wage components (other than the salary) that are grossed up. We refer to these three calculations as ‘phases’. You determine the phase for each wage component. You can choose from:

• In advance

  Profit completes the following steps in this phase:

  1. For all wage components to be grossed up in this phase, Profit runs the calculation rule linked to the wage component one time.
  2. Profit adds up the results of the wage components calculated in step 1.
  3. Profit calculates other wage components in this phase.
  4. If the calculation basis to be grossed up is equal to the result from step 2, then this phase is complete. If it is not, the wage components to be grossed up are increased or decreased in proportion to the amounts calculated in step 1 and the system takes you back to step 3.

• In the middle

  This phase does not perform any grossing up.

  In phase 2, Profit takes all wage components (except for wage components grossed up in phase 1) which must be calculated in both phase 1 and phase 2. Wage components that were grossed up in phase 1 are not calculated, but the gross amounts ‘found’ are in fact included in the calculation bases. This way, the premiums, etc., that need to be calculated in phases 1 and 2 are calculated using the correct calculation bases.

• Afterwards

  Profit completes the following steps in this phase:

  1. For all wage components to be grossed up in this phase, Profit runs the calculation rule linked to the wage component one time.
  2. Profit adds up the results of the wage components calculated in step 1.
  3. Profit calculates all other wage components (that do not need to be grossed up) from all 3 phases. The gross amounts ‘found’ from the wage components grossed up in phase 1 are in fact included in the calculation bases so premiums, etc., are calculated with the correct calculation bases.
  4. If the 'Nettoloon' calculation basis is equal to the result of step 2 plus the 'Nettoloon' calculation bases at the end of phase 2, phase 3 is also complete. If it is not, the wage components to be grossed up are increased or decreased in proportion to the amounts calculated in step 1 and the system takes you back to step 3.

Example:

The wage components that are to be calculated In advance in Phase 1 are:

• Premium components that are dependent on a calculation basis (social insurance premiums, pension, ‘Loonheffing’);
• Wage components related to Fixed wages that are to be grossed up;
• Wage components with results that will be used in wage components that are calculated using a calculation basis or a parameter in Phase 1 (hourly and daily components).

  The wage components that are to be calculated in Phase 2 (In the middle) are:

• Non-premium components that are not grossed up (Overtime, Net deductions, Net allowances);
• Gross wage components that are not grossed up and are not part of a net wage agreement (Gross expense allowances, Gross incidental allowances);
• All wage components that do not affect the gross-net calculation (employer premiums, employer contributions).

  The wage components that are to be calculated Afterwards in Phase 3 are:

• Wage components related to allowances that have to be grossed up.

To gross up a wage component:

1. Go to: HR / Organisation / CLA.
2. Open the CLA properties.
3. Go to the tab: Wage component.
4. Open the properties of the wage component.
5. Go to the tab: Advanced.

   Profit indicates whether grossing up applies.

6. Select the Phase under Net-gross processing.
7. Click on: OK.