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How to Set Up Employee Contract Gratuity for Payment

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Personnel>>Personnel>>Transactions>>Gratuity

Contract Gratuity

Gratuity is a lump-sum payment provided to contract employees at the end of their employment term, often as a form of appreciation or reward for service. It is typically calculated as a percentage of the employee’s basic salary, based on the length of the contract or tenure with the organization. Gratuity is commonly seen in contracts as a benefit to retain employees until the end of their contract and may be structured differently depending on company policies or country-specific labour laws.

Employee Contract Gratuity is paid as Other Income, based on a Percentage or set Cash value and allows the user to validate, then post the record to a selected Pay Year and Cycle.

How does it work?

There are several steps to set up an employee's contract gratuity as outlined below.

  1. Step 1: Set up Transaction-Payroll Link.
  2. Step 2: Set up Contract Gratuity.
  3. Step 3: Enter Gratuity Transaction .
  4. Step 4: Post Gratuity.
  5. Step 5: Process Payroll.

Personnel>>Personnel>>Transactions>>Transactions-Payroll Linkages>>Transaction Linkages

Step 2: Set up Contract Gratuity

Personnel>>Personnel>>Employees>>[Select Employee]>>Contract>>Gratuity Setup

  1. Has Gratuity?: Select 'Yes' if the contract has a gratuity to be paid.
  2. Gratuity Option: Select whether the gratuity is to be paid as a percentage, cash or an advanced.
    • If Percentage is selected -
      • Gratuity is % of: Select the Pay Type for the gratuity.
        • Pay Rate: The amount paid per unit of work, such as an hourly wage or annual salary.
        • Salary: The fixed regular payment made to an employee.
        • Straight Time: The hourly wage paid to non-salaried employees based on the actual hours worked.
    • If Advanced is selected, click Advanced Setup hyperlink:
      • Period Start: Enter the start date for the advanced gratuity.
      • Period End: Enter the end date for the advanced gratuity.
      • Pay Year: Enter the Year the gratuity would be paid in.
      • Pay Cycle: Enter the Pay Cycle the gratuity would be paid in.
      • Gratuity Option: Select whether the advance payment is a Percentage or Cash value.
      • Gratuity % or $ Amount?: Enter the gratuity Percentage or Cash value.
      • Comments: Enter comments about the gratuity.
  3. Gratuity % or $ Amount?: Enter the percentage or cash value of the gratuity.

Step 3: Enter Gratuity Transaction

Personnel>>Personnel>>Transactions>>Gratuity

Company: Select the company of the employee being paid gratuity.

Pay Group/Name: Select the Pay Group the employee belongs to.

Badge Number/First Name/Last Name: Select the employee being paid the gratuity.

Contract Id: Select the Contract for which the gratuity is being paid.

Year Applied To: Enter the Year the gratuity is being paid in.

Cycle Applied To: Enter the Pay Cycle the gratuity is being paid in.

Contract From/To: The dates for the selected contract auto-fills and cannot be updated.

Gratuity Option: Percentage or cash will be auto-selected based on the selection in the gratuity setup.

Gratuity Amount: Enter the value of the gratuity based on the selected Gratuity Option.

Step 4: Post Gratuity

Step 5: Process Gratuity Payment in the Payroll

Payroll>>Process Payroll>>Cycle Changes>>[Select Group]>>[Select Pay Year]>>[Select Cycle No]

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