How do I enter a Salary Change or a New Salary for an employee?
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Salary Changes
A salary change refers to the adjustment made to an employee's compensation within an organization. It involves modifying the amount of money an employee receives for their work, which can be an increase or a decrease in their salary.
Salary changes can occur for various reasons, such as promotions, annual performance evaluations, cost-of-living adjustments, merit increases, demotions, or changes in job roles. The purpose of a salary change is to align an employee's compensation with their job responsibilities, performance, market conditions, or organizational policies.
The process of a salary change typically involves updating employee records, adjusting payroll systems, and providing the employee with updated employment contracts or letters that reflect the new salary amount. It is an important aspect of managing employee compensation, ensuring fairness, motivating employees, and maintaining competitiveness within the job market.
On the insertion of a new employee, HR/Payroll MUST insert a Salary Change transaction record with the starting salary of the new employee.
Pre-requisites
Before entering a salary for an employee ensure that the following items have been set:
- Transaction Reasons for the Salary Change.
- Salary Change Flags are set up for each pay group. Cycle Change records will be generated in the payroll based on the criteria set via the Salary Change Flags.
- Setup the Salary Grade, Points, and Range and Link it to a Job (Optional)
Step 1: Search for the Employee for whom you are entering the Salary Change
This is a pre-search which allows you to search for the employee's record for whom you are going to enter the salary change. If there are any existing records for the employee on the database, then these will be available here for you to view.
Status: Employees can be filtered by their status. The default filter is for ''Active'' employees but if for example, you may wish to view the salary change records of an ex-employee. Simply filter by "Ex-Employee'' and the names of those persons will appear.
Company Name: Used in a multi-company setup, select the company name to first filter the employees by the company they are in.
Badge Number: Enter the employee's badge number to search for their profile.
Last Name: Enter the employee's last name to search for their profile.
First Name: Enter the employee's first name to search for their profile.
Step 2: Create New Salary Change
Step 3: Enter New Salary Change Details
COMPANY DETAILS
- Company Code: Used in a multi-company setup, select either the company code or name to first filter employees by the company they are in.
- Company Name: Used in a multi-company setup, select either the company code or name to first filter employees by the company they are in.
EMPLOYEE DETAILS
- Badge Number: Enter the employee's badge number to search for their profile.
- Last Name: Enter the employee's last name to search for their profile.
- First Name: Enter the employee's first name to search for their profile.
SALARY CHANGE DETAILS
- Transaction Reason code and Description: Select the transaction code or reason from those that would have been previously set up.
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Effective Date: This is the date from which the salary takes effect.
- The Salary Changes are automatically posted to Cycle Changes when the record is saved.
- If the cycle with the effective date is closed, the Cycle Changes will be generated in the next available open cycle. For example, if a salary change with an Effective date of January 1st 2016 was entered, but all payrolls have been archived up to June 2016, then the next available cycle would be July 2016.
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Pro-ration. If the effective date does not fall at the start of the cycle then the amounts are pro-rated – the employee is paid at the old rate for the period before the effective date and at the new rate for the period of the cycle after the effective date. The formula is:
- Amount = ((Old cycle rate x (number of days between the start of the cycle and the effective date –1)) + (new cycle rate x (number of days between the effective date and the end of the cycle)))/ total number of days in the cycle.
SALARY CHANGE DETAILS:
- These details are auto-filled here when the employee is selected, based on the salary change flag setup for their pay group. However, even though it is not recommended, this can still be changed if required by the user entering the details.
CHANGE FROM:
- If this is the first time entering a salary change for an employee, then the salary grade details here will automatically show as N/A.
- If there is an existing transaction for an employee where the salary grades are not used, then the salary grade details here will automatically show as N/A.
- If there is an existing transaction for an employee where the salary grades are used, then the salary grade details here will automatically show the employee's current salary grade details.
CHANGE TO:
Salary Grade: Select the salary grade from the grades previously setup for your organization. If not being used, simply enter the Salary/Rate for the employee.
Salary Grade Description: The description will be auto-filled based on the grade selected.
Salary Grade Point: Select the salary grade point that is entered for the employee.
Salary/Rate: The salary/rate will automatically appear here based on the grade point selected. If the salary grades and range are being used without the pay points, then manually enter the Salary Rate here AFTER selecting the grade. If the salary is outside of the normal range it will be red-circled.
If neither the salary grade nor points nor range are being used, then do not select either option and you can simply enter the salary amount or rate here.
COMMENTS:
- Enter any comments here for all who have access to the record to view.
Posted: Salary Change records do not need to be posted by the user. They are flagged as posted when the pay cycle to which they apply is run. As such, the Posted box will be checked when, on the payroll side, the pay cycle to which the salary change belongs is run.
N.B. The Salary Change Transaction automatically generates cycle changes in the payroll based on the Effective Date. To see how this is done click on the link below.
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