Understanding of Wages with Annual Cap

Compensation Payment

Select 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).

Recurring

• Select Every Month if employees will receive compensation money on a monthly basis.

• Select Based on Hire Month if employees will receive compensation based on the month they are hired. For example, perhaps employees are not eligible for certain benefits until they've been employed for 6 months.

• Select Based on Position Start Month if employees will receive compensation based on the month they started working. For example, perhaps employees are not eligible for certain benefits until they've been on the job for 6 months. This is helpful when you have delayed start dates

• Select a month as the payment month.

One Time

• Select Based on Hire Month if employees will receive a compensation based on the month they are hired. For example, a one time sign-on bonus.

• Select Based on Position Start Month if employees will receive a one-time compensation based on the month they start on the job.

• Select Based on Position End Month 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 which is paid out on the ending month for that position.

In Practice: Create a one-time expense for an item that posts to the month of hire and is based on a percentage of the ANNUAL SALARY.

This can be accomplished with a compensation payment preference setup in the Compensation items setup screen. (See the screenshot below)

Compensation Payment 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.

Percentage Value & 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 annual cap is defined.

Compensation Items for Calculating Total Wages

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