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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.

Indirect evaluation

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.

Allowance Grouping

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.

Factoring

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

Feature LGMST

LGMST feature defaults wage type model. Which in turns decides which wage types should be defaulted in IT 0008.

LGMST.png

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.

Wage Type Characterstics.png

Maintain wage type processing classes, cumulation classes and evaluation classes [V_512W_D]

V_512W_D.png

Wage type model definition/defaulting wage types in IT0008 [V_T539A]

Wage Type Model.png

Maintain valuation of base Wage types [V_T539J]

Valuation of wage type.png

Wage type permissibility for PS and ESG [V_511_B]

Wage type permissibility.png

Wage type permissibility for Infotype [V_T512Z]

Wage type permissibility1.pngWage type permissibility2.png

Thanks & Regards,

Jignya

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13 Comments

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  1. Upendra Krishna

    Jignya,

    One word I have to comment ‘EXCELLENT’, however, if you can edit the doc and elaborate the indirect valuation tab, it will be great.


    BR

    Upen

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      1. Madhava Rao Basava

        Hi Jignya,

        This a good document. Hope i will see some extension to it. Because i felt there is lot more tobe added if you want to see it as a complete one.

        Thanks

        Madhav.

        (0) 
        1. Jignya Joshi Post author

          Thanks Madhav,

          For feedback.Yes I know there is scope to add lot more to this document but have created this for beigneer who are looking for basics. I am planning to create document on Indirect Valuation as said by Upendra.

          Please let me know your suggetion detail document on which other topic relate to wage type will be beneficial.

          (0) 
          1. Upendra Krishna

            Jignya please include that with this doc, will be handy then, else two docs to search if need arises would be cumbersome.  If you are enthusiastic to help out peers then work on Valuation of Bases that is V_512W_B and the PCRs involved and wage types effected. 

            Thanks

            Upen

            (0) 
            1. Madhava Rao Basava

              Hi Jignya,

              You can add some wage type tools:

              Wage Type Reporter

              Wage Type Statement

              Payroll Journal

              PC00_M99_DKON – for verifying the wage type config

              PC_PAYRESULT

              These tools would help the beginners during the config and also to verify the payroll results when the wage types are processed.

              Recently i have created a US wage type for my client which is for donations which would be paid through a third party vendor.

              We have Regular wage and also we have supplemental wages. So, they would be processed differently and they are processed for tax in a different way.

              Coming to the retro, you can throw some light on it.Some wage types are related to Garnishments and for Taxation as well. Finally we have posting to FI on how these wage types are posting to FI.

              So, its all depends on for what purpose these wage types are required.

              I have posted some documents on wage type config tool and also on India payroll end to end process (which comes in 6 parts). I thought of posting similar docs on US payroll & Canada Payroll, but, due to time constraints i was not able to.

              Wage Type Tool for Wage Type Configuration

              SAP India Payroll End to End Documentation – Part –II

              It seems that you are working for a US client. So, if possible, please compile everything in to one and submit a document so that it would be useful for everyone.

              Thanks

              Madhav.

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              1. Upendra Krishna

                😆 😆 A Month’s project work assigned!!  But yes all mentioned are well sorted in the real time world.  All the Best Jignya, looking for those yummy docs.

                BR

                Upen

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  2. Anshu Bhagat

    Jignya,

    Good document indeed.

    In SAP, the food for Payroll is wagetypes; having said that Payroll starts with wagetype concept, payslip generated with wagetypes and posting to accounting too needs wagetypes. Accomodating all of it in one document may make it too large to digest in one go.

    In short, handy document for basic understanding. Appreciate the effort behind it.

    Good luck,

    Anshu

    (0) 

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