Wage Type Concepts:
Wage type being the back bone of entire payroll module thought of sharing some important concepts related to wage type via this document. I hope it will help all those who are taking their first step to to become a payroll consultant.
Types of Wage types:
Wage type can be categorized into different based on the way they store information, purpose for which they are used etc.
Dialogue Wage Type/Primary Wage Type vs. Technical Wage Type/Secondary Wage Type
Dialogue Wage Type/Primary Wage Type-These are the wage types for which data is entered in Infotype. They are created by copying model wage types (model Wage types provided by SAP).SAP stores information about model wage type from which wage type is created in V_T52DZ.
Technical Wage Type/Secondary Wage Type-These are predefined wage types defined from SAP which starts by /.
Time Wage Types
As name suggests time wage types are wage types used to store time related information. Time wage type is link between payroll and time management. These wage types are generated during time evaluation. Configuration through T510S or Custom PCR are two ways to generate these wage types. Dialogue wage types for which only number is available are generally time wage types.
Payroll Wage Types
Apart from dialogue wage types and technical wage types, wage types which are generated/calculated during payroll run can be categorised as payroll wage types,
Deduction Wage Types
Deduction wage type can be defined by marking deduction wage type indicator in V_T511.When value is assigned to such wage types it is automatically reversed by multiplying it with -1
Elements of Wage Type
Amount (AMT), Rate (RTE), Number (NUM) are different elements of wage type.
Depending on wage type purpose it can have value in one, two or all fields.
For Ex: Bonus pay will have only AMT and basic pay may have RTE and NUM
Processing Wage types
Processing Class, Cumulation Class, Evaluation class determines how wage type should be processed. These properties of wage type is defined in V_512W_D
Processing Class:-Determines how a wage type should be processed during payroll run
Example: If processing class 01 specification of wage type say TEST, 5 it means wage type is valuation base.
Cumulation Class: Cumulation class defines how a wage type should be cumulated.
Evaluation class: Value for evaluation class determines how wage type should be printed into Pay slip
Wage type permissibility
Wage type permissibility for Infotype: By defining permissibility of wage type for Infotype we define wage type should be displayed in which Infotype for which period.
Wage type permissibility for Employee subgroup and personnel subarea: Wage type could be limited to certain employee subgroup and personnel subarea based on employee subgroup grouping and personnel subarea grouping.
Wage type model
Wage type model is group of wage types which we want to get defaulted into IT0008 based on some criteria (like EG group, PSA, country, allowance grouping etc).We can group wage types in wage type model in table T539A.
The amount of wage type can be directly entered, or it may be indirectly evaluated. There are different methods available for indirect evaluation, one can give fixed amount to wage types based on allowance grouping or value for wage type can be derived from other wage types.
Pay scale type, Pay scale area, group, level and ESG for CAP are grouped together in combination to form allowance grouping. LGMST is the feature which helps in defaulting wage type model to allowance grouping.
In scenarios when employee has worked only for partial period or employee’s data like unit, designation, salary etc. is changed in middle of period, payroll period needs to be divided into partial period in order to calculate exact pay of employee. It’s called factoring/wage type split. In SAP factoring is done through partial period factors ranging from /801 to /816. Each representing different rule. Splits could be WPBP (Work Center Basic Pay split, Cost center Split (KR Split). In case of substitution during a payroll period an employee needs to be remunerated differently in such case ALP split (Split for different pay) is used. If for an employee country-specific information for tax, social insurance etc. is available then Country specific splits are used.
Features and Tables
LGMST feature defaults wage type model. Which in turns decides which wage types should be defaulted in IT 0008.
Wage type characteristic [V_T511]
Wage type characteristics helps in determining following things.
· Is wage type is deduction wage type?
· Will wage type have amount, number/unit, both or either of them?
· What is maximum or minimum amount/number allowed?
· Modules of indirect valuation.
Maintain wage type processing classes, cumulation classes and evaluation classes [V_512W_D]
Wage type model definition/defaulting wage types in IT0008 [V_T539A]
Maintain valuation of base Wage types [V_T539J]
Wage type permissibility for PS and ESG [V_511_B]
Wage type permissibility for Infotype [V_T512Z]
Thanks & Regards,