Compensation Basis Overview

The % of Wages type compensation item opens the Workforce Administrator to enforce a calculation such as % of Gross Pay. Click here to learn more about this compensation basis option.

Illustration of Use

Compensation Item – Employer Match of Medicare Tax is setup with basis type of % of Wages and is calculated as 1.45% of Gross Pay

Gross Pay: Fulltime Salary + Overtime Salary + Accrued Vacation

% of Wages with Annual Cap works similar to % of Wages with an additional ability to specify an annual cap on the compensation item. Annual cap is calculated based on the budget year. Click here to learn more about this compensation basis option.

Illustration of Use

Suitable for compensation items such as FICA Tax, which is calculated as 6.2% of Wages with a cap of $5264 per year.

The Fixed Amount basis opens the same compensation amount for all periods and all employee types that use this basis. Click here to learn more about the Fixed Amount compensation item.

Illustration of Use

All Full-Time employees get a lunch allowance of $100 per month.

This compensation basis is typically used for fixed dollar compensation payment based on the employee attribute. Click here to learn more about this option.

Illustration of Use

• Employee: Jonas Williams
• Compensation Item: Workmen Compensation
• Workmen Compensation Class Attribute: WC1 (construction worker)
• Fixed $ amount per month: $125 per month

Fixed Amount per FTE is typically used for fixed dollar compensation payment based on the FTE of the employee. Click here to learn more about this compensation item.

Illustration of Use

Employee: Jonas Williams

FTE Value for Jonas Williams: 0.5

Compensation Item: lunch allowance

Fixed Amount of Lunch Allowance per FTE: $250 per month/FTE

This compensation basis can be used to build a tier structure of an employee benefit plan and to specify the compensation value as a % of Wages. Click here to learn more about this option.

Illustration of Use

Compensation Item: Contribution to Employee Retirement Plan
Basis: Years of Service of the Employee

• 0 < Employee Years of Service <= 5 Years : 5% of Wages
• 5 < Employee Years of Service <= 10 Years : 6% of Wages
• 10 < Employee Years of Service : 7% of Wages

Employee: Jonas Williams

Date of Hire: 1-Aug-2014

(Notice that Years of service for this employee crosses 5 in September 2019)

This compensation basis works the same as the above but with an annual cap.

Illustration of Use

In the above example, assume that the annual cap for Employers Match of Retirement Plan has an annual limit of $200 per year. In this case, the above calculation would be as follows:

This compensation basis works similar to the above but compensation value is specified in Hours per Month instead of % of Wages.

So the following are the options you see on selecting this compensation item:

• Value Criteria: Select whether the compensation basis is fixed or if it will change from year to year.
• Employee Attributes: Select an employee attribute defined using the Workforce Attributes page. Refer to system-defined attributes here.

Illustration of Use

Compensation Item: Accrued Vacation

Basis: Years of Service of the Employee

• 0 < Employee Years of Service <= 5 Years : 10 Hours/Month
• 5 < Employee Years of Service <= 10 Years : 12 Hours/Month
• 10 < Employee Years of Service : 14 Hours/Month

Employee: Jonas Williams

Date of Hire: 1-Aug-2014

(Notice that Years of Service for this employee crosses 5 in the September 2019 and Rate per Hour also changes in the same month.)  

• Include Previous Year Annual Cap: Select to include the annual cap, rate, for the previous year in the calculation.
• Employee Attributes: Select an employee attribute defined using the Workforce Attributes page. Refer to system-defined attributes here.
• Annual Cap: Enter the annual cap amount for the current year.
• Compensation Items for Calculating Total Wages: Select the compensation items from the Compensation Items drop-down to include that item in the total wages calculation, which adds up to gross pay.
  

This compensation basis works similar to the above but with an annual cap.

So the following are the options you see on selecting this compensation item:

• Value Criteria: Select whether the compensation basis is fixed or if it will change from year to year.
• Employee Attributes: Select an employee attribute defined using the Workforce Attributes page. Refer to system-defined attributes here.
• Annual Cap: Enter the annual cap amount for the current year.

Illustration of Use

Using the case above, place a $400 restriction on maximum accrued vacation cost per year.

This compensation basis works similar to the above with one difference; the compensation amount is fixed.

Illustration of Use

Compensation Item: Car parking allowance

Basis: Age of the employee

(i.e. Aged employees need to have access to premium parking slots)

• Employee Age <= 45 Years : $50/Month

• 45 < Employee Age <= 60 Years : $75/Month

• 60 < Employee Age : $150/Month

Employee: Jonas Williams

(Notice that Years of service for this employee age crosses 45 in Dec 19)

This compensation basis is used for calculating salary compensation items and includes the capability to provide mid-period salary review dates.

The Wage Type calculation basis uses the following data to calculate employee compensation amounts in the Workforce Budget:

• Employee hours per month
• Current wage rate in $ / hour (wage rate at the time of Workforce Data upload)
• Current year review - wage review date and review % (review date after budget setup date & before budget year start date)
• Budget year review - wage review date and review % (review date between budget period start date and end date)

Illustration of Use

Wage-type calculation is typically used for calculating the budgeted salaries of employees. For example; full time Salary for an employee named Jonas Williams.

• Employee : Jonas Williams
• Date of Hire : 15-May-2010
• Budget Setup Date: 1-Feb-2017
• Budget Period : 1-July-2017 to 30-June-2018
• Current Salary Rate as on 1-Feb-2017: $30/hour
• Salary Review Current Year
• Review Date: 15-May-2017
• Review Percentage: 10% (i.e. $30x1.10 = $33/Hour effective from 15-May-2017)
• Salary review during Budget Period:
• Review Date: 15-May-2018
• Review Percentage: 5% (i.e. $33x1.05=$34.65/Hour effective from 15-May-2018)

This compensation basis is used for calculating the base salary compensation item, but does not include the capability to provide mid-period salary review dates.

• Employee hours per month
• Wage rate in $ / hour

Illustration of Use

• Employee: William Magor
• Employee Type: Intern
• Wage Rate: $15 per hour
• Number of hours per month: 20 hours