Employee wage components
A fixed wage entry is an entry that is valid for multiple periods. Fixed wage entries are posted by adding wage components to the employee in Profit.
Description
A wage component is analogous to a black box that performs part of the wage calculation. To make its calculations, a wage component requires values, referred to as parameters, and a formula - the wage component’s calculation rule. The wage component calculates its value using the parameters and the calculation rule.
Example:
The input for the wage component for overtime consists of the number of hours of overtime worked, the employee’s hourly wage and the percentage rate applied to the overtime.
The formula is: Number of hours x Hourly wage x Percentage. For 10 hours of overtime at 150%, at an hourly wage of € 15.00 the result would be € 225.00.
The input for a wage component is made against so called parameters. In the above example, the number of hours, the hourly wage and the percentage are the parameters for the overtime wage component.
You record wage components for an employee if you want to deviate from the configuration at a higher level. Profit will include any wage components you set in the wage processing for the validity term that you specify.
Advice concerning wage components that are dependent on an hourly wage
For example, if you want to record overtime hours in a period during which the hourly wage changes, you can make use of wage components into which you can enter the number of hours as well as the hourly wage. You must then keep track to make sure that you post the correct number of hours and the correct hourly wage to this wage component.
Preparation
Procedure
- Add wage components
The preference is for you to set up the wage components at the highest possible level, since this results in the least possible maintenance. However, sometimes a regulation applies to a specific employee. In such instances you must add a wage component to an employee.
- View wage components
In the employee properties Profit displays a complete overview of any wage components that were ever changed. These are wage components for which at least one parameter was changed at the employee level.
- Add or change a parameter value
For most entries you enter a new parameter value with a specific start date.
- Add a parameter value using a weighted period calculation
You can give a wage component a different value during a period. For example, if the employee moved during the month and you consequently have to adjust the travel expense amount.
- Manage payroll arrangements
You can use the Maintain payroll arrangements functionality to check your payroll configuration. This function allows you to view and change all parameter value entries at the CLA, employer and employee levels.
- Terminate a wage component
A wage component that has been changed for an employer has one or more changed parameters. By entering an end date for these parameters, the wage component will no longer be paid after this.
- Pro forma calculation
A potential employee often asks the question 'What is my net pay?', when the employee is informed of his/her gross wage. You can use a pro forma calculation to make a quick calculation without processing it.
- Allocation per wage component
In Profit, you can record a deviating allocation per employer or employee. You can record this, for example, for allowances, temporary regulations or study costs.