Prorating Employee Benefits

[BBritain]

I have a modification request - If an employee has leave without pay - his/her employer paid benefits are reduced and the difference must be deducted from the employee's payroll.

The original solution was to create 5 PDBA codes for each prorated PDBA. While this solution allowed for no customizations, the maintenance was considered too high.

One possible modification is to update the work file $ amounts after Pre Payroll and then run final update.

Has anyone performed a modification like this? I have worked in the payroll system before, but not to enough depth to clearly identify where this modification should be placed.

Ben again,
ERP8.9 SP2, AS400

 

[Its not on sale]

How can you just go out deduct the amount from the work table. Don't you need to track the the pay cut and every thing with it. If it is just to reduce the amount being paid why cant you simply pay him/her less hours by week then fiddling around with numbers in the work file. Also I am not sure but i think if you reduce the numbers in the work for one pay check, on next pay check payroll calculation will recalculate his/her salary and will give the remaining as arrears(sp), if you just change the numbers and didn't put either a Deduction or lowered his/her weekly hours.

I don't understand reducing employer paid benefits. are you talking about paid leaves, 401k company contribution , over time or something else.

BBritain <[email protected]> wrote:
I have a modification request - If an employee has leave without pay - his/her employer paid benefits are reduced and the difference must be deducted from the employee's payroll.

The original solution was to create 5 PDBA codes for each prorated PDBA. While this solution allowed for no customizations, the maintenance was considered too high.

One possible modification is to update the work file $ amounts after Pre Payroll and then run final update.

Has anyone performed a modification like this? I have worked in the payroll system before, but not to enough depth to clearly identify where this modification should be placed.

Ben again,
ERP8.9 SP2, AS400

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[BBritain]

First of all, it's not a pay cut.

Suppose an employee works 80 hours and their paycheck looks like:

Post tax benefit

Employee Gross: 800.00
Employer pd Health: 300.00
Employee pd Health: 20.00

Taxes etc. 135.00
Net Pay: 645.00

OR Pre tax benefit

Employee Gross: 800.00
Employer paid Health: 300.00
Employee pd Health: 20.00

Taxes etc. 131.62
Net Pay: 648.38


The medical benefit is a fixed $320.00

Now suppose they only worked 72 hours and didn't have vacation or sick leave left. The employer would provide a medical benefit of $270 which leaves the employee to cover $50.00

Post tax benefit

Employee Gross: 720.00
Employer pd Health: 270.00
Employee pd Health: 50.00

Taxes etc. 121.50
Net Pay: 548.50

OR Pre tax benefit

Employee Gross: 720.00
Employer paid Health: 270.00
Employee pd Health: 50.00

Taxes etc. 113.06
Net Pay: 556.94

---Since the taxes are calculated right after benefits and deductions, it's more than a simple matter of changing the amounts in the work files.

As far as reducing (the dollar amount of) employer paid benefits: The employer has contracted with the employee to pay (in this example) $300.00 of health when the employee works full time, less when employee works less. Let's also make clear that vacation, sick leave, and personal days (benefit) are considered working days and do not reduce the full benefit. Only when an employee terminates, quits or runs out of leave does this situation come in to effect.

Ben again,

 

[Its not on sale]

OKay I better understand now.

How about his , create dba , set them up so they only take dollar amounts, run your prepayroll. Run a UBE that calculates the difference and put the transaction with the created DBA into Batch time entry file and run the process to get the transaction in. Run your payroll.

By doing this you have track of every thing and deduction is done properly and it also give you ability to do change numbers as you like.

How is that.

 

[Its not on sale]

okay , I thought a little more , you cannot run payroll after running your transactions. you have to rerun your prepayroll for indvidual employees, there is a flag which you can change and prepayroll will only run for individual employees. Its just like going into Payroll workbench and adjust one employee transaction and re running your prepayroll , it only run for that employee.

Here is another thought, normally health deduction is always pre-tax. So if you go check employee how much he worked and you look at the gross and you check if he is not making 100% of what his salary is so that mean you have to reduce company benefit and take the rest for his pay check. So the DBA you have for employee deduction , make it a fixed amount dba and put the difference in their. How about that. This should be before you run pre-payroll.

I have done many fixed amount dbas for life insurance premium, 401k contributions and 401k loans.

Let me know.

 

[BBritain]

Naveed,

Thanks for your input. Right now, we are looking into creating a UBE which will create One Time Override entries for those benefits and deductions which change. I think that's what you were suggesting initially. In testing, it seems to work so far.

Thanks,
Ben

 

[KSmithCPA]

Why not just do this?

You want to pro-rate an employee's benefits based on how many hours he works...

Just set the DBAs to calculate on hours worked instead of a flat dollar amount.

Example:

Employer paid benefits = $320 per 80 hours worked. That works out to $4/hour. Simply set-up a dba that calcs $4/hr instead of a flat $320 and then backing out the excess...

Hope this helps.

 

[BBritain]

Re: Why not just do this?

Ken,

Would this increase the employee's deductions? And I'm not sure what you mean by "and then backing out the excess".

Ben again

 

[KSmithCPA]

Try this....

I beleive two DBA's per deduction will be sufficient....

1. Deduction (pre or post tax as needed) for 100% of the employer paid benefit. Using previous example $320.
2. Cash Benefit of $4/hr (taxible or non as needed) which refunds employee $4 for every hour worked. Place a limit of $320/pay period to prevent over repayment.

I believe this will accomplish what you need. If employee works 40 hours, they will have a $320 deduction and a $160 refund to net them to $160 deducted from their pay check.

Hope this helps. Sorry for the delay in responding. I haven't been monitoring the board like I use to.

Cheers.