Understanding of Wages with Annual Cap

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The % of Wages with Annual Cap Compensation Basis works similar to the % of Wages with an additional ability to specify an annual cap on the compensation item. The annual cap is calculated based on the budget year.

Here are the different options available once you select the % of Wages with Annual Cap compensation basis:

Compensation Payment: This option determines whether the compensation is to be issued only once (for example, employee referral bonus) or if it will be reoccurring on a regular basis (like quarterly bonuses).

The following are the options available under the Compensation Payment option:

Recurring

This option is used when employees will receive compensation money regularly. The following are different options available:

Every Month: Select this option if employees will receive compensation money on a monthly basis.
Based on Hire Month: Select this option if employees will receive compensation based on the month they are hired. For example, this can be used when employees are not eligible for certain benefits until they've been employed for 6 months.
Based on Position Start Month: Select this option when employees will receive compensation based on the month they started working. This is particularly useful when certain benefits become available only after a specific period on the job, such as 6 months, and accommodates delayed start dates.
Month: Select any of the months within the list as the payment month.

One Time

This option is used for one-time compensation payments. The following are different options available:

Based on Hire Month: Select this if employees will receive compensation based on the month they are hired. For example, a one-time sign-on bonus.
Based on Position Start Month: Select this if employees will receive a one-time compensation based on the month they start on the job.
Based on Position End Month: Select this if employees will receive a one-time compensation based on the month they end the job. For example, perhaps there is a paid time off accrual that is paid out on the ending month for that position.

Let's consider an example of creating a one-time expense for an item that is posted in the month of an employee's hire date and is based on a percentage of their ANNUAL SALARY. To achieve this, you can set up a compensation payment preference in the Compensation Items setup screen. The specific configuration for this use case is as follows:
Compensation Payment: It should be set to One Time > Based on Hire Month.
This compensation payment setup is available with various compensation basis options, such as % of Wages, % of Wages with Cap, Fixed Amount, Fixed Amount FTE, and so on to facilitate this use case.

Once you select the compensation payment, you need to select:

Value Criteria & Percentage Value

Select any of the following options for Value Criteria:

Fixed & Equal for All Employees: Enter the percentage to calculate the compensation item.
Fixed & Different for Each Employee: Select an attribute as the source value.
Varies Annually & Equal for All Employees: Enter the percentage to calculate for each effective period. For Value % you can link to a global field by selecting the checkbox.
Varies Annually & Different for Each Employee: The percentage varies annually and is different for each employee
Include Previous Year Annual Cap: If selected, the Prev. Year Annual Cap field is enabled where you can enter a value or link to a global field.
Annual Cap: Enter the annual cap amount for the current year or link to a global field where the annual cap is defined.

Compensation Items for Calculating Total Wages

Select the compensation items from the Compensation Items drop-down list to include that item in the total wages calculation, which adds up to gross pay.

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