Annual Salary Calculation for 9- month contract period in Successfactors Employee Central for Hourly Employees working Part Time
When implementing Successfactors for a Higher Education or K-12 customer, there are unique challenges and one of them is employees with 9 month, 10 month, 11 month and 12 month contract periods.
The annual salary need to reflect the actual amount based on the contract. It is possible to achieve this with SAP ECC HCM functionality using the feature PFREQ and capacity utilization field which automatically adjust the annual salary based on your contract for hourly employees. However, in Employee Central this is not a supported feature yet, and requires a workaround. I hope this blog will give you one prospective to solve this issue.
Issue
The annualization factor in the Frequency is a key factor which calculates the annual salary taking into account FTE of an hourly employee. The annualization factor for a standard frequency in EC is defined in the configuration of object Frequency under "Manage Organization, Pay and Job Structures" as seen below
As seen annualization factor can be defined with different numbers for a salaried but for hourly the annualization factor is "0" . The standard HOURLY frequency support standard annual hours 2080 for 12 month contract only at this point. An employee with a 9-month contract should have an annual salary based on 1520 hours.
Here is a summary of various scenarios, and whether calculated of annual salary is supported through standard functionality in SAP HCM or SF Employee Central:
Scenarios - Here are some of the scenarios for salary calculation in SAP and Successfactors EC.
Scenario A: Calculation of Annual Salary for a salaried employee with 9 month contract and FTE=1
(A-1): SAP HCM Solution:
9 Month Contract
FTE = 1
Monthly pay = $10000
Annual Salary as $10000 X 9 = $90000
(A-2): SuccessFactors Employee Central Solution:
Create a custom frequency with 9 as the annualization factor and annual salary calculated as per expectations
Scenario B: Calculation of Annual Salary in SAP for a Hourly employee with 12 month contract with FTE =1
(B-1): SAP HCM Solution:
For an hourly employee the annual salary is automatically adjusted in SAP as well as in Successfactors Employee Central.
Standard functionality based on the FTE reduces the annual salary and adjust it accordingly.
9 Month Contract
FTE=1
Hourly Rate = $16.51
Annual Salary as $16.51 X 2080 = $34341.00
(B-2): Successfactors Employee Central Solution:
Scenario C: Calculation of Annual Salary In SAP for a Hourly employee with 12 month contract and FTE=1
(C-1): SAP HCM Solution:
12 Month Contract
FTE=0.5
Hourly Rate = $16.51
Annual Salary as $16.51 X 2080 X 0.5 = $17170.00
(C-2): Successfactors Employee Central Solution:
Scenario D. Calculation of Annual Salary in SAP for a Hourly employee with 9 month contract with FTE =1
(D -1): SAP HCM Solution
9 Month Contract
FTE=1
Hourly Rate = $14.50
Annual Salary as $14.50 X 1520 = $22040
(D-2): Successfactors Employee Central Solution: Not Supported
(D-2) Solution:
Quick Easy workaround solution - Build a custom frequency with 9 month contract hours (1520)as the annualization factor
Scenario E. Calculation of Annual Salary in Successfactors for a Hourly employee with 9 month contract with FTE =0.5 or anything less than 1
9 Month Contract
FTE=0.5
Hourly Rate = $14.50
Annual Salary as $14.50 X 1520 X 0.5 = $11020
(E - 1) SAP Solution:
(E - 2) Successfactors Employee Central Functionality: Not Supported
(E - 2) Solution:
In order to solve the issue, you can create multiple frequencies, each representing an annualization factor annualizing factor based on multiple FTE values. These frequencies are a combination of FTE and 9, 10 and 11 months. Then create a look up table and business rule to default this frequency.
The below steps are explained in detail
- Create Frequencies
- Create Look Up Table
- Create a Business Rule to default the frequency
- Assign the rule
- Additional Validation (optional)
Step 1: Create Frequencies -
To create all types of permutation and combination 300 frequencies are required. Below is an example of the table with hours listed for each frequency. This data was uploaded in the object frequency using transaction import foundation data. (see below file format)
First two numbers (91) reflect the FTE % and the last text (9Monhrly) represent the contract period
Example of one record after the upload
The Annualization factor is derived as below
100% FTE is 1520 Hours
99% FTE is 1520X99/100 = 1504.8 hours
Step 2: Create Look Up Table -
Create a look up table with the 9, 10, 11 month contract which was indicated by Employment Type in this case and the other field being FTE and assign the appropriate frequency
Upload all the values using T code Import and Export Data. (See below file format)
Note - How to create look up table, refer to implementation guide " Implementing the Metadata Framework (MDF)"
Example of a record after data upload
Step 3: Create a Business Rule to default the frequency
T Code - Configure Business Rules
The rule uses base component of compensation with conditions of
- Pay Component
- 9/10/11 Month Contract
When the above condition is met the rule is triggered.
Once the rule is triggered it checks FTE and Employment type on employees job info section and the look up table and defaults the frequency.
Step 4: Assign the rule
Transaction code - Manage Business Configuration
Select - Recurring pay component
Field - Pay Component
Rule assigned Event Type "On Change"
Any time pay component is selected the rule will trigger and default the frequency
Step 5: Additional Validation (optional)
Business rule to alert the user when FTE or Contract Type 9, 10 ,11 month is changed in job info
T Code - Configure Business Rules and Manage Data
Create a message definition for alert to check the frequency when the FTE or employment type is changed
Finally we are able to see the annual salary as expected
Thanks for reading, hopefully this workaround solution will help someone solve a similar issue.
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