Compensation Basis Examples

Wage Type Example

Wage Type Without Reviews Example

Direct Data Input Example

Fixed Amount Based on Employee Attribute Example

Fixed Amount per FTE Example

Fixed Amount Example

% of Wages Example

% of Wages with Annual Cap Example

Tiers on Employee Attribute – Value in % Wages Example

Tiers on Employee Attribute – Value in % Wages with Annual Cap Example

Tiers on Employee Attribute – Value in Hours per Month Example

Tiers on Employee Attribute – Value in Hours per Month with Annual Cap Example

Tiers on Employee Attribute – Value in Amount Example

Rate x Hours Example

Wage Type Example

The Wage Type compensation item is used for calculating salary compensation items and includes the capability to provide mid-period salary review dates.

Wage Type calculation basis uses the following data to calculate employee compensation amounts in 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)

Wage Type Without Reviews Example

The Wage Type without Reviews compensation item 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

Direct Data Input Example

The Direct Data Input type Compensation item allows you to directly enter the relevant budget amounts for the compensation item.

Illustration of Use

Employee: Jonas Williams

In the above example, this Budget manager directly budgeted for a bonus of $1000 in Aug 2019 and another bonus of $500 in Jan 2020 for Jonas Williams.

Fixed Amount Based on Employee Attribute Example

Fixed Amount Based on Employee Attribute is typically used for fixed dollar compensation payment based on the employee attribute.

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 Example

Fixed Amount per FTE is typically used for fixed dollar compensation payment based on the FTE of the employee.

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

Fixed Amount Example

The Fixed Amount basis opens the same compensation amount for all periods and all employee types that use this basis.

Illustration of Use

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

% of Wages Example

The % of Wages type compensation item opens the Workforce Administrator to enforce a calculation such as % of Gross Pay. This calculation would involve two steps:

• Identifying the compensation items that add up to Gross Pay

• Entering a % for calculating the compensation item

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 Example

% 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.

Illustration of Use

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

Tiers on Employee Attribute – Value in % Wages Example

Tiers on Employee Attribute – Value in % Wages can be used to build a tier structure of an employee benefit plan and to specify the compensation value as a % of Wages.

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)

Tiers on Employee Attribute – Value in % Wages with Annual Cap Example

Tiers on Employee Attribute – Value in % Wages with Annual Cap works the same as the above but with an annual cap.

Illustration of Use

In the above example, assume that 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:

Tiers on Employee Attribute – Value in Hours per Month Example

Tiers on Employee Attribute – Value in Hours per Month works similar to the above but compensation value is specified in Hours per Month instead of % of Wages.

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.)  

Tiers on Employee Attribute – Value in Hours per Month with Annual Cap Example

Tiers on Employee Attribute – Value in Hours per Month with Annual Cap works similar to the above but with an annual cap.

Illustration of Use

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

Tiers on Employee Attribute – Value in Amount Example

Tiers on Employee Attribute – Value in Amount 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)

Rate x Hours Example

The Rate x Hours type compensation item would use the following data to calculate employee compensation amounts in Workforce Budget:

• Rate per Hour in $ (not wage rate – for wage calculations, wage type calculation basis is recommended)

• Hours per Month

• Compensation Amount = Rate per Hour x Hours per Month

Illustration of Use

Example 1

Employee: Jonas Williams (Full time Employee)

Over Time Compensation

Rate per Hour: $40 per Hour

Budgeted Overtime Hours: 10 Hours per month

Budgeted Overtime Compensation per month: $400 per month

Example 2

Employee: Janitorial Staff (Hourly Worker)

Rate per Hour: $10 per Hour

No of hours per month: 20 Hours

Monthly Pay: $200 per month

Profit Sharing Setup Example with Multiple Caps And Different Percentages

Lets say you need to setup an item or items in Workforce Planning that would calculate a different percentage of wages based on a salary threshold AND you need it to be delayed for the first two years of employment.

Here are the details for profit sharing:

• You want the employee to get 0% for the first 2 years of employment

• After the first 2 years, the employee gets 5% of the first $118,000 of wages earned

• For the wages earned above $118,000, the employee gets 10% up to a max of $256,000 in wages

Example Solution

1. Set up 3 compensation items as follows:

Comp Item #1
· % of Wages with Annual Cap
· % = 5
· Annual Cap = $5,900
· Account = Stat #1
· Wages = Appropriate Wage Items
Comp Item #2
· % of Wages with Annual Cap
· % = 10
· Annual Cap = $25,600
· Account = Stat #2
· Wages = Appropriate Wage Items
Comp Item #3
· % of Wages with Annual Cap
· % = 10
· Annual Cap = $11,800
· Account = Stat #3
· Wages = Appropriate Wage Items

2. Next, address the employment length requirement. To do this, create 3 more comp items, which will reference the statistical account value posted from the first 3 comp items.

Comp Item #4
· Tiers on Employee Attribute - Value in % of Wages
· Account = Profit Sharing GL Account
· Attribute = Derived Years mentioned above
· # tiers = 2
· Tier 1 = From 0 To 2 = 0%
· Tier 2 = From 2 To 99 = 100%
· Wages = Comp Item #1 Stat Account
Comp Item #5
· Tiers on Employee Attribute - Value in % of Wages
· Account = Profit Sharing GL Account
· Attribute = Derived Years mentioned above
· # tiers = 2
· Tier 1 = From 0 To 2 = 0%
· Tier 2 = From 2 To 99 = 100%
· Wages = Comp Item #2 Stat Account
Comp Item #6
· Tiers on Employee Attribute - Value in % of Wages
· Account = Profit Sharing GL Account
· Attribute = Derived Years mentioned above
· # tiers = 2
· Tier 1 = From 0 To 2 = 0%
· Tier 2 = From 2 To 99 = -100%
· Wages = Comp Item #3 Stat Account

This will post the proper net amounts.