Consultant Guide to Australia Termination Organizer – (EC Cloud Payroll / SAP Payroll)
Anyone who has worked with SAP Payroll – Australia is well aware of (and probably dreads!) the powerful “Termination Organizer”. This program (or transaction PC00_M13_CTO3) is basically used to enable termination or reinstatement of employees. The reason it is such a powerful tool provided by SAP is that it helps to bring together varied termination considerations like leave payouts, severance payments, eligible termination payments etc. under one consolidated report run. Its literally a blessing. However, as is the case with any blessing (in disguise!), the termination organizer has posed quite a challenge for many consultants and configuration personnel in that it is like a black box with so many things going on all at once which enhance its complexity exponentially.
In this article, I make a feeble attempt to decode this report functionality from a configuration cum lead consultant perspective enabling the audience to understand how and from where we can:
a) obtain information to set up client specific rules
b) understand the outcome of the termination organizer run
Termination Organizer for SAP On – Premise Payroll with SAP Time Management in place
In the transaction code PC00_M13_CTO3, the termination organizer handles the payouts configured in the payroll system. Leave quotas are read from IT 2006 and and compensation rules for quota types write the required values into IT 0416. The considerations for other termination / redundancy payments will be discussed in detail in this article.
Termination Organizer Considerations for EC Payroll
Enablement of Termination Organizer for EC Payroll – Non Public Sector
a) It is assumed that EC is the leading time system for the EC Payroll system in consideration. For EC Payroll, the main concern is on how to read the leave quotas – entitlement and/or accruals for payout on termination by the termination organizer report run.
b) To solve this problem, SAP has rolled out a new interface report RP_HRSFEC_TERM_INTERFACE which will be used to select the employees that have been terminated in the EC system and which calls the termination organizer report to ensure further processing. For mapping the leave quotas in ECP into the leave payout wage types coming into the system from EC, SAP has provided a new table HRSFEC_T5QLM (V_HRSFEC_T5QLM).
c) Time evaluation is completed in EC and the leave payout wage types are sent from EC to ECP on the date of termination. The payout wage types are configured to be populated in IT 0015
Enablement of Termination Organizer for EC Payroll – Public Sector
a) Public sector termination payroll function AUTLP(RPCTRMQ0_PBS) has been modified in such a way that system will calculate termination payment for employee in employee central payroll.
b) A new configuration table HREC_T5QPBSTLM with view(V_HREC_T5QPBSTLM) has been created which maps the incoming leave payout Wage Types to the quotas in ECP system.
How to drive a client workshop for getting Termination Organizer requirements?
There are numerous ways in which a client workshop for blueprint requirement gathering phase can be run but below is my way of understanding and mapping the requirements such that the client inputs are translated clearly into system configuration.
When you are preparing for a client workshop session for gathering requirements to set up the termination organizer for Australia, the main consideration is to gather the information from client which we need for mapping into our SAP system. Subtlety, however, will be your strong suit so lets see how we can mask our technical configuration questions under the garb of smart consulting skills!
1. Mapping client termination actions and termination action reasons
1a. Configuration Perspective: As a configuration consultant, I need to know which termination actions/action reasons do I need to set up in the system and which ones of these will trigger death benefits/ Life benefit ETPs etc. – basically, I need to know what redundancy / termination reasons to be set up and what termination action will trigger the employee record delimiting process in IT 0 when the termination organizer is run in update mode. Whatever the termination action that I decide to use, I need to set that up in the feature 13TRM to be used as a default termination action number in IT 0 while termination is completed through termination organizer.
1b. Consultant Perspective: As a consultant, I now need to provide answers to the questions from my configuration consultant so that she can use the details to perform the steps in (1a). For this purpose, I ask the client the following questions in the workshop:
a) Get a list of all their current termination events & event reasons from your client. Sift through the list and map them such that at the end of the exercise, you and your client agree on a single termination action and multiple action reasons that fall into neatly divided groups in the blueprint. Based on the answers to this question the configuration consultant will set up the feature 13TRM and the entries in the table V_T530.
b) We will then categorize these action reasons into one of the pre-defined SAP categories for action reasons which are: redundancy, invalidity, death – trustee of deceased, death-dependent, death – other, approved early retirement or blank(any other reason such as resignation, dismissal etc.). Based on the answers to this question and the corresponding mapping of the action reasons in the blueprint, the configuration consultant will set up the redundancy models and map them to preset categories in V_T5Q30.
2. What rules govern leave payments/leave without pay impact on years of service/ eligible termination payments (ETP)?
2a. Configuration perspective: As a configuration consultant, my main concern is to understand what leave payouts/ETP etc. are triggered on termination/redundancy as well as the correct calculation of years of service in cases where an employee has been on loss of pay leave/unpaid leave. I will need to know how I need to classify my terminations/redundancy payouts based on several classifications such as action type reasons, organizational elements such as employee subgroups etc. This will essentially help me to configure the redundancy models in the feature 13RDN which will then be used further to classify leave quota payments/years of service/ termination payments and ETP. A configuration consultant also needs to understand if the years of service are to be calculated from IT 0023 – Other / Previous employers and whether the termination date or the notice date needs to be used for calculation of the ETP/ projection of leaves.
2b. Consultant perspective: As a consultant, I will get together with my client and pose the below questions in a workshop to understand:
a) Do you have different payment criteria for your employees, say for e.g. severance pay for employee subgroups Q1 to Q4 is 2 weeks pay while for the subgroups Q5 to Q7 it is 4 weeks? [Based on the answer to this question multiple configuration points are set up but the most basic which the consultant will document in the blueprint is for building the feature 13RDN]
b) In order to set up the non taxable portion of the ETP, we need to understand if any of the redundancy wage types currently being used by the client are lumpsum D or invalidity payments. Once we have a clarity on the categories of the redundancy wage types then this will help us in setting up the blueprint for populating the table V_T5QRP which will link the redundancy models set up in (a) with the wage types that are configured for being non taxable component of the ETP for lumpsum D or invalidity.] It is to be noted here that not all ETP are lumpsum D or invalidity payments. Also, these wage types we design in the table V_T5QRP will be generated only in cases of redundancy and not other cases such as resignation. Hence we need to make sure that the redundancy models being set up in the table are pertaining only to redundancy and not other reasons like dismissal or resignation.
c) Ensure that you double check and confirm with the client on all the termination and redundancy payments to be configured in the system. [This information will help us build the blueprint with assignment of the termination wage types to the termination wage type group in the system i.e. under the group TRM2 and table VV_52D7_B_TRM2_AL0]
3. Classifying the redundancy wage types into categories for payments
3a. Configuration perspective: As a configuration consultant my most important concern about redundancy payments is the different tax implications for the various ETP. When I set up wage types, I need to consider two important processing classes i.e. 77 and 78 along with the evaluation class 12. Processing class 77 will tell the termination organizer how to create the wage types for taxation purpose. For e.g. for Death (Non – Dependent) there can be two different specifications for Pr. Class 77 as U or V based on capping considerations. Also, I will need to know which wage types do I need to consider to calculate severance pay, additional payments or payment in lieu of notice period. For this purpose, I will use the processing class 78 to include/exclude the particular wage types in calculation of severance/additional payments/lieu of notice. For e.g. if I want to include base salary in the calculation then I will mark Pr. Class 78 for base salary wage type as required from the list of options in the processing class. In cases where taxation needs to be overridden, the processing class 66 shall be used and the corresponding wage types need to be set up as wage types for tax override in Taxation node of Australia payroll in SPRO.
3b. Consultant perspective: As a consultant my approach to this portion of the termination / redundancy set up has been to copy the model SAP wage types into customer specific name space and put them into the blueprint document. On the day of the workshop, I would sit together with the client and go through the list and strike off whichever wage types are not relevant for them as per their current process being followed. The model wage types come with preset values in the processing classes as well as evaluation classes. Also, understanding that SAP has already put in a lot of research in setting up these wage types, it becomes a robust starting point for the workshop to take off. In case there are some wage types that the client uses currently that do not match into these model wage types, then the questions to ask would center around what kind of wage type it is, which specification in Pr. Class 77 would fit in and thereby set up the new wage type in accordance to the already existing model wage type with a little tweak.
4. Setup of termination payouts based on leave quotas or leave accruals?
4a. Configuration perspective: As a configuration consultant, I need to know whether I am to set up the termination based on leave quotas or accruals – this would be the basis of the termination rules set up for payouts and whether configuration is required in SAP Time module or not. If we are using ECP with EC as the leading time solution then the procedure to get the entitlements and accruals is different along with the procedure for the termination organizer run. For now, I will consider the SAP time management module as the one we are looking for.
4b. Consulting perspective: As a consultant, we will ask our client some specific questions to understand their termination payouts:
a) Quota types currently being paid out. (Useful for set up of Quota Compensation IT 0416 rules)
b) Ask your client which part of the leave is being paid out on termination currently. Is it entitlement or accruals or both? (Based on the answer to this question, the fields “Payments for leave payment” under the specific redundancy model will be set up in the table V_T5QTR. The compensation method we will set up as part of the answer to question (a) will also be used in this section along with the set up of the wage types for the entitlement / accruals and negative entitlement)
c) Understand from your client if there are any particular number of years that the employees in their organization should be in service of the company to be paid out their leaves. If yes, take those requirements. (This will be used to fill in the details for the field of MAXYR in the table V_T5QTR)
d) We will also need to understand from the client by asking them if they a) have leave loading payments and if yes, then b) would these be paid out on remaining entitlement of the leaves / entitlement transfer till notice date / accruals. (This question will help us in the configuration of the section on leave loading payments in V_T5QTR)
5. What leave types impact your length of service calculations?
5a. Configuration perspective: As a configuration consultant, I need to know which absences in the service period of the employee will impact his length of service. Based on these absences in the employee’s service, the length of service will be adjusted accordingly.
5b. Consultant perspective: As a consultant who is interacting with the client to understand the absences that will impact the length of service, I will need to ask the below questions:
a) Which leaves will reduce the length of service of your employees? [Direct result of this question would be the list of absences that would usually be loss of pay / maternity unpaid leaves/ other unpaid leaves. These will be entered into the table V_T5QRA]
b) Are these leaves the same across all the redundancy models defined by you in the step 1. If not, then you will need to classify and set up the leaves applicable for each redundancy model [If a particular redundancy model is not impacted by absences during the length of service then there is no need to set that up in the table V_T5QRA]
6. What conditions govern payments for severance, additional payments & lieu of notice?
6a. Configuration perspective: As a configuration consultant, I need to know details of how these payments are impacted by age, payout criteria, proration and whether a direct dollar value is to be used. Also, I would need to know if there are any particular number of years that the employee has to be in service before being paid out the payments.
6b. Consultant perspective: As a consultant, during a client workshop, I will begin with understanding the below details from the client to set up these payments:
a) Are the payments uniform for all groups and if not, then what are the groups that can be clubbed together while payments are made? [Direct result of this question would be the distinction based on the redundancy models that help us categorize the employees using the feature 13RDN. This would then enable us to set up the severance/ additional/ lieu in notice payments in the table V_T5QRS]
b) Do you prorate your payments based on the length of service of your employee? If yes, document the time unit – whether weeks/days /months etc. for the calculation of the prorated value. This will directly help us in configuring the fields ZEINH and PARTT in the table V_T5QRS.
c) Document the details on the maximum continuous service years that the client would use for the payments and this will be used for filling the field of MAXYR in the table V_T5QRS.
d) Understand from the client on whether they would be paying based on number of weeks or a direct dollar value. Also, understand if they have any considerations about payment based on whether an employee is above or below a certain age.
e) Last but not the least, check with the client whether they have any minimum weeks/dollars to be paid so that this can be configured in the table V_T5QRS.
Australia Termination Organizer is a vast topic and it is intricately woven together with a lot of legal and company specific considerations. SAP model wage types and the knowledge accumulated through years of implementation and support experience will help you sail through!