Germany Cross Midnight Recording in Time Tracking
Welcome to another best practice blog. We have got some exciting news around cross midnight recording for Germany as part of SAP SuccessFactors Time Tracking Solution. We are going to deliver a sample time recording mechanism and profile for Germany which caters to various cross midnight shift premiums. This would be delivered as part of upgrade center which is a usual methodology for any best practice solution package.
Disclaimer: This is just a sample and may not exactly match your requirements. Nevertheless, this would give you a clear idea on how to build time valuations for cross midnight shifts and utilize these concepts to either extend our sample or build your own valuations from scratch.
Now let’s get to the business point and sample requirement
Sample Requirement for Germany Night Shifts
As part of Germany localization, a sample time recording profile is delivered where an employee gets additional night shift premiums for night shift work. Further we have a detection of core night where the employee is eligible for higher tax-free portion of premiums between 00:00 (12 AM) and 04:00 when an employee has started working before 00:00 i.e midnight. The percentage of premium can vary for Mon – Fri, Sat and Sunday work. In Germany this is called as “§3b Einkommensteuergesetz”
Just as an example: Say an employee works between 00:00 AM (12 AM) to 04:00 AM. The Employer pays 125% premium pay for work on say Monday. According to the rules, 25% is made tax free. The other 100% needs to be fully taxed. Taxing is normally done by Payroll. From Time evaluation, we create specific time pay types which for example can hold the hours recorded and which is eligible for 25% tax free premiums and this can be integrated with payroll.
What are the sample rules for premiums delivered?
Premiums: 08:00 PM – 00:00 AM 25% Taxable
12:00 AM – 04:00 AM 25% Taxfree
04:00 AM – 06:00 AM 25% Taxable
In addition, there is a core night check which adds to additional complexity here. We need to check if employee has some hours recorded before midnight. If yes, the additional premium received for 12:00 to 04:00 is 25% and is completely tax free. If not, then entire 25% premium received is fully taxable.
Summary of all Sample Night Shift Rules:
- Mon – Fri and Sat: Times recorded between 08:00 PM and 12:00 AM receive an additional night shift premium of 25% which is fully taxable
- Mon – Fri : 12:00 – 04:00 AM receives an additional premium of 25% and this is fully tax free
Further, there are two conditions to this: 1) 25% premium received for 12:00 -04:00 is fully tax-free only if an employee records time before midnight in that shift. 2) If there are no recorded times before midnight for that shift day, it becomes fully taxable
- Mon – Fri : 04:00 to 06:00 AM gets 25% premium which is fully taxable
- Saturday Shift: Sunday times 12:00 – 04:00 AM receives an additional premium of 50%
- These times between 12:00 to 04:00 AM Premium 50% is tax free up to 40% only if there are times recorded before midnight on Saturday
- If there are no times recorded before midnight these 50% premiums are fully taxable
- Saturday Shift : Sunday times recorded as part of Saturday shift between from 04:00 AM to 23:59 PM gets 50% premium which is fully taxable
- Sunday Times : Times recorded only on Sunday between 12:00 AM to midnight 12:00 receives 50% premium which is fully taxable
There can be some variations to these rules, and I will explain them shortly when I walk through the time valuation’s part.
Further the sample rules delivered does not deal with work into or out of a public holiday. But the mechanisms listed in this blog can be enhanced from customers to cover the correct taxable values even in those constellations
Now let’s jump directly to sample configuration
The sample time recording Profile delivered as part of best practice is below
In the interest of time, I will walk through a few important time valuations and you would be able to figure out the rest and trace them when you apply the best practices in your instance.
The first three valuations are basically to get the working time and we then deduct the breaks (Mostly dynamic breaks in case of this sample). The result is that we get the net working hours without breaks. Pretty straight forward
Time valuation: DE Night Mon- Fri 08:00 PM -12:00 AM(25% Premium Fully taxable)
This has a time segment filter with start time 08:00 PM and 12:00 AM with filter from Mon- Fri. It extracts the time recorded as part of Mon – Friday shifts from the recorded net working times which is passed as input time type group. The result of the hours recorded in this segment is then stored in another time type group DE_N1_25 as shown. Further the additional premiums (25% received) are fully taxable
Time valuation: DE Core Night 0:00-4:00
This evaluation takes the time segment filter as 12 AM to 04:00 AM but we have a flag called “Next Day” with time records filter from Mon- Fri. This basically means the times recorded say from midnight on Tuesday are part of logical shift on Monday and should be considered as part of Monday time evaluation result. We again pass the net working time as input and the recorded hours extracted for this time segment is then put in the time type group below DE_CN2
Time valuation: DE Core Night 4:00-6:00 (25% Premium Fully Taxable)
Pretty similar to one described above. This extracts the hours recorded between 04:00 to 06:00 in the early morning as part of the shifts. The output is stored under time type group DE_CN3
Time valuation : Time Valuation: DE Core Night Check Mo-Fr
This is an important valuation, and you should really pay attention to this. This is the actual core night check. The time valuation method used here is “Compare Threshold with comparison group to route input”. The comparison group is DE_N1_25 which is times recorded before midnight i.e from 08:00 PM to 12:00 AM. We basically check if there are times recorded before the midnight and this is compared with threshold zero (0) . If there are times recorded before midnight, then the input group which is nothing but times between 12 AM (00:00) to 04:00 AM is moved to time type group DE_CN4 (25% premium which is paid as fully tax free). If there are no times before midnight, then the input group (00:00 to 04:00 AM) is moved to time type group DE_CN5 which is then paid out as 25 % premium fully taxable.
Now you could also ask, can we add different variations to these rules? For example, say you want to add a higher percentage of tax-free premiums say if employee worked before midnight, he/she gets 40% of premium as tax free and If employee works only post-midnight, he/she gets only 25% premium as tax free. You can use the same concept which is described on top and enhance your solution on top of best practices
The time valuation for this can look like below
The blog is going to be huge if I cover all the time valuations. By now, you should have some idea on how to basically extract the cross-midnight times for different time segments and premium calculations. The rest of the time valuations considers Saturday and Sunday times and it similar to ones described above. In the end we aggregate all premiums which are taxed in a separate time pay type and the ones which are tax free in another time pay type.
I leave it to you to explore the same further.
Consider an employee who has a work schedule from 10 PM to 5 AM and say a dynamic break of 30 minutes after 6 hours and another 15 mins after 9 hours
If the employee applies planned time as it is on Thursday shift, the below would be the result from our sample
In summary this would transform as
10 PM – 12 AM is 2 hours and this gets 25 % additional premium which is taxable
12 AM to 4 AM is 4 hours and this gets 25 % additional premium which is tax free
4 AM to 5 AM is 1 hour but there is a dynamic break of 30 mins which means only 0.5 hours receive 25 % premium and this is taxable
In the end we aggregate the tax free and taxable premiums in different time pay types which needs to be sent to payroll.
So total taxable = 2.5 hours
Total tax free = 4 hours
Employee records only times after midnight i.e from 12 AM to 5 AM
In summary this would transform as
Times between 12:00 to 04:00 AM is 4 hours => 25 % additional premium fully taxable
Times between 04:00 to 05:00 AM is 1 hour => 25 % additional premium fully taxable
Total 5 hours which gets 25 % additional premium fully taxable
How can you enable this sample for your implementation and perhaps an extension?
You can use upgrade centre and you would get this sample in matter of minutes and this can help you to kick start your implementation
This upgrade would be available in b2111 SF Release. I would also like to thank EC Time Product Management for helping with this blog
LATEST UPDATE 2023
We updated our best practices time valuations to match the current local tax-free percentages of Germany. Here is the table and time valuations which demonstrate this change
Hope you found this blog informative.
Stay Safe & Healthy