Pay Days Calculation for a Specific Client’s Practice
In any SAP Payroll implementation project, we need to identify and analyse various pay elements and its calculation methods or logic. The usual approach is to collect a salary register of any past month and do the analysis to study the logic. The very basic and important aspect is to identify the pay days calculation and Cut-off day for various activities.
In a specific scenario, the following dates are deadlines for various activities:
1) 21st to 20th of every month – Time data will be captured.
2) 25th of the month – Time evaluation will be complete for 21-20 calendar.
3) 26th – Trial Payroll will be run
4) 27th – Internal checking/audit will be done
5) 28th – Corrections will be complete
6) 29th – Final Payroll will be run
7) 30th – Bank transfer will be done.
Every activity will be done in sequence. The main issue here is, how the days calculation is considered from Time module to Payroll.
Method of consideration:
1)Follow the same time period for payroll calculation
2)Follow different period for payroll days calculation (Project 21-20 of previous month to the next calendar month).
The 2nd method is described monthwise in the following table-1:
challenges in implementing above scenario:
It was communicated to the client that implementing the above method is having the following challenges:
1.SAP is an integrated system. It follows single days calculation sequence for both Time and Payroll module.
2.Proration of pay elements in case of abscenses will be difficult.
3.For full month absence employees, the pay days will not match. For example:
An employee is absent for a period from 21/11/13 to 20/12/13 , absent days will be 30. But payroll will pay for excess 1 day (since there is a 1 day adjustment – given in the above table). To correct this, we must also check the full month absence case and reduce that 1 day from the pay days.
But the client wanted to implement this method of calculation of days, because they need 10 days time to have accurate calculation (including brining time evaluation results).
Client justified that, they were following the same date sequence so far, and changing it to different method would lead to incorrect calculation.
Approach for implementing the method-2:
1.Since the client used Positive Time Management, they needed to cumulate various time wage types to the last day (20th of previous month), and that will be placed in ZL table. This can be achieved using configuration and PCRs mentioned in “Understanding operation ADDMB” by Trong Minh (Woody) Nguyen which is given in the link http://scn.sap.com/docs/DOC-47492
2.Another challenge faced was, proration (or Factoring – in SAP terminology) of partial absences. SAP provides a very good method of “Counting Classes” to club the similar absences to specific counting classes and prorate the pay elements according to that counting class . Since there is a mismatch in days calculation, we were to give away the “counting classes” configuration and build the custom factoring logic in PCR’s. To do this, we were forced to write custom program to copy all the absences into intermediate wage types.
3.One more challenge was for full month absentees (as given in table -1 – TM Days & PY Days ). This was again adjusted by another custom PCR.
Finding on post implementation:
We also identified another issue on above calculation method (for employees joining after the cut-off date in any month say 21st of any month):
If an employee joins on 21st of a month, Payroll module will pay 10 or 11 days for that employee. But, his time wage types would not be taken in to account, since we consider time wage types up to 20th of that month. What would happen to the time wage types (like overtime, shift bonus, holiday work payments) etc?
He has to wait until next month, to get time-evaluated and paid in the next month salary.
So, any employee who joins after 20th who are entitled for time wage type payments, will receive only basic salary/allowances in the first month and additional time wage types will be paid in the next month salary.
The client was advised to use the method-1 of calculation, but client was asking how to break the existing practice. We recommended to pay or deduct the difference in the first month salary (during payroll go-live) for all the employees – to make the change over.
But client was not convinced. Also they specified that, how to evaluate/compare the calculation accuracy of SAP payroll when a different method is introduced.
In any Time & Payroll implementation, we should first consider the payroll days calculation and other organisation’s specific methods and to approach the solution. If this is not given the higher priority and if considered to be taken up at later stages, then it will be difficult to valuate the wage elements.
But it is not indented to just copy the client’s existing practice into SAP, instead, they should be given enough knowledge on best practices, and explain the behaviour of “Integrated” ERP system and consequences of too much of customizing (in other words, “custom coding”).