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Pay Group
In the context of payroll administration, a pay group refers to a grouping or classification of employees who share common payroll characteristics or parameters. It is a way to organize and manage employee payroll information based on certain criteria or requirements specific to the group.
The criteria for creating pay groups can vary depending on the organization's structure, policies, and payroll system capabilities. Here are some examples of common factors that may be used to define pay groups:
- Payroll frequency: Employees who are paid on the same schedule, such as weekly, biweekly, semimonthly, or monthly, may be grouped together in a pay group. Each group would have its own payroll cycle and processing timelines.
- Location or department: Employees working in the same geographical location or within the same department may be grouped together for payroll purposes. This can help streamline payroll administration for a particular location or department, as they may have specific payroll rules or requirements.
- Union affiliation: In organizations with unionized employees, pay groups can be created based on union affiliations. Different union groups may have unique payroll agreements or specific deductions related to union dues.
- Employee classification: Pay groups can be established based on employee classifications, such as full-time, part-time, temporary, or contract employees. Each classification may have different payroll parameters, such as benefits eligibility or overtime rules.
- Collective bargaining agreements: In industries or organizations with collective bargaining agreements, pay groups may be defined based on the terms negotiated within those agreements. Each group would have its own payroll rules and provisions.
By organizing employees into pay groups, payroll administrators can more efficiently manage and process payroll-related tasks, including calculating wages, deductions, and benefits specific to each group. It also allows for better control and reporting of payroll data, as various reports can be generated at the group level for analysis and compliance purposes.
It's important to note that the specific use and implementation of pay groups may vary between organizations. Payroll systems or software often provide the flexibility to configure and define pay groups based on an organization's unique requirements.
What are the steps to setup a new pay group?
- Create a new record and enter the pay group details.
- Grant the relevant users access to the pay group.
Step 1: Create a New Record and Enter the pay Group details
Pay Group : Enter a unique and user defined code which represents your pay group. This field accepts a Minimum of 3 and a Maximum of 5 alphanumeric characters. CAPS are required and special characters are Not accepted.
Pay Group Name : The paygroup name should describe the pay period and the group of employees it represents. E.g. Monthly Executives. This field accepts a Minimum of 1 and a Maximum of 40 alphanumeric and special characters.
Pay Period: This describes the frequency in which persons are paid in that paygroup. Select from the available options. i.e. Monthly, Bi-Monthly, Fortnightly, Weekly, Quaterly.
Fixed Grade: If this pay group is paid strictly paid via a fixed grade, then select 'Yes'. Otherwise select No.
Salary Grade Type: If the fixed grade was set to 'Yes', then indicate if the salary grade setup is based on a point or ratio system. Otherwise, select Point as the Salary Grade Type.
Hours in Cycle: The total working hours in each pay cycle/period is entered here. e.g. 35 or 40 hours for a weekly cycle, 80 h ours for a bi-weekly/fortnightly, 173.33 for Monthly, etc. This is used in calculating the hourly rate of pay on the employee's pay profile.
- Example Calculation 1: The calculation may be 52 * 40/12 = 173.33. 52 is the number of weeks in the year; 40 is the number of hours in the work week, assuming five 8-hour days (8*5); 12 is the number of calendar months.
- Example Calculation 2: 52 * 37.5/12 = 162.50 where 52 is the number of weeks in the year; 37.5 is the number of hours in the work week, assuming 7.5-hour days (7.5*5)); 12 is the number of calendar months.
Currency : Select the currency from the drop down list. The employees will be paid in this currency.
Active Year : Enter the active year based on the first cycle that you will run on HRplus for that pay group.
Tax Method: There are several Tax Methods from which you can choose, each of which will determine how the taxes are calculated. Below is a brief description of what how each rule is applied. Follow the links provided for more details on each tax method. For more details and worked spreadsheets see Payroll Manual.
- Smoothing Formula: This is designed for Employees who work regularly all year round, excluding vacation periods, and taxes, therefore, are evenly distributed throughout the year. For these employees, the pay cycle rate is a good prediction of what regular pay an employee will actually make in a cycle. Additional Notes on Smoothing Formula
- Non-Smoothing: The method takes no account of YTD figures for gross pay or tax deducted and does not consider what part of the current cycle pay is regular or irregular. How does the Non-Smoothing Formula work?
- Semi-Smoothing TT only: This Tax calculation method takes into account the YTD taxable gross pay and YTD tax deducted. It does not consider what part of the current cycle pay is regular or irregular. It is currently available for Trinidad and Tobago only . How does the Semi-Smoothing Formula work?
- Smoothing Formula 2 TT only: How is tax calculated using Smoothing Formula 2
Cost Codes: The cost center codes to which the Net Pay. Tax, NIS (National Insurance) and HS (Health Surcharge) will be charged should be entered here. These fields are linked to the GL Accounts interface and are only used if these fields are used as cost centers.
- Net Pay Cost Code: Enter N/A
- Tax Cost Code: Enter N/A
- NIS Cost Code: Enter N/A
- HS Cost Code: Enter N/A
Tax Table: Select the Tax Table that will be used in processing tax for the selected pay group.
Pay Group Access
Once a pay group has been created, access must then be granted to the relevant users via the security module. Follow the link below for a guide on:
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