Payroll Relationships

Karishma Updated by Karishma

Introduction

There are especially reserved employee record fields used by Payroll for carrying out specific, built-in functions. These are described as system fields. Other fields, such as the ones you can define yourself, are not regarded in any special way by Payroll. This means that you can set up your own fields. However, a problem exists. For example, if the user defines a numeric field called BONUS, this will not automatically add any bonus values to gross pay when the employee is paid. It simply creates a place for a numeric value to be stored. In order for it to be treated as an element of pay you need to set up a 'payroll relationship'.

Payroll relationships define how the employee record fields are to be treated during the payroll cycle (e.g. for a BONUS field you will need to set up an 'addition' relationship so that any bonus values are added to gross pay). There are several different types of payroll relationships that you can define. These are as follows:

Addition: any field to be included in gross pay. You can define whether the amount is taxable or subject to National Insurance. It is possible to define whether the amount is to be included in the total pay for the employee's pension calculation.

Deduction: these are subtracted from gross pay after the calculation of tax and National Insurance. A deduction that is to be made before tax and National Insurance are calculated, should be defined as an 'addition' but given a negative value. You can label deductions as pension payments, which means they are subject to tax relief.

Deduction from gross: items subtracted from gross pay such as a salary sacrifice pension.

Expenses: these are added to net pay. They are not counted for tax and National Insurance purposes.

Benefit in kind: this is a value used in calculating tax and National Insurance but which is not actually added to the employee's pay. This field is treated as if it were both an addition and a deduction.

Loan: this allows an amount of money (the outstanding balance) to be paid by means of regular payments. A loan field can be decreased or increased as required. You can also specify whether or not the balance is allowed to go negative. Loans are really a way of maintaining a balance (e.g. holiday pay remaining) and have no effect on pay unless linked with another relationship, such as an addition.

Rate of pay: this type of field allows you to multiply two fields together and put the result into a third employee record field. This gives the facility for a number of rate of pay type calculations (e.g. hours worked multiplied by rate of pay).

To-date: these allow totals of fields to be calculated over several pay periods. They can be set to zero at the end of the tax year or as required at the end of any user defined period. An example of a period-to-date field would be a savings scheme.

Warning levels: these allow a monetary 'limit' to be placed on the calculated value of a field. The system does not actually limit the value, but warns you when this limit is exceeded.

Many of the basic relationships required in Payroll will have been set up previously. However, there are facilities to extend and customise these relationships to match your own requirements.

Each relationship type has its own article, so you can simply search the knowledge base in order to find this

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Employee fields (including elements of pay)

Addition Relationship

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