Step-by-Step Guide: Creating Wage Type in SAP HCM

How To Create Wage Type In Sap Hcm

The steps are as follows: Go to transaction PA30, select an employee. Type 0014 in the infotype field, 1511 in the subtype field. Click on Create.

Wage Concepts

To gain a clearer comprehension of wage types, it is helpful to briefly explore some fundamental ideas. Here are a few key concepts:

The three components of a wage type, mentioned below, collaborate with each other.

Categories of Wage Types

There are two types of wage categories in SAP HCM: primary and secondary/technical. Primary wage types can be further divided into two groups.

Dialog wage types are commonly utilized by infotypes to input information, such as rates per hour or deductions for benefits. These figures can represent either earnings or deductions.

When time evaluation is executed, time wage types are generated. Unlike infotypes, these wage types are managed in dedicated tables.

Secondary wage types in SAP HCM are automatically generated by the system and do not require manual maintenance through infotypes. Instead, these wage types are created on-the-fly during the payroll processing.

SAP provides technical wage types that begin with a forward slash (/), such as total gross wages (/101) or net pay (/559). While most of these wage types are pre-set, you also have the option to create your own technical wage types, like one for tracking total hours worked.

Creating Wage Types in SAP HCM: Key Features

In order to create new wage types in SAP HCM, it is necessary to duplicate existing wage types or use model wage types as a basis. Afterward, the attributes of the newly created wage type should be verified and modified according to the specific needs of your business. During this process, various parameters will need to be configured.

– Deduction wage type: Choose this option to specify whether the wage type should be considered as a deduction or an earning.

– Amount or number: Determine if the wage type stores a dollar amount or a numerical value.

– Minimum or maximum values allowed: If necessary, set the minimum and maximum permissible values for the wage type.

– Indirect valuation allowed: Enable this feature if dynamic calculations are applicable for this particular wage type.

– Priority: Establish the sequence in which deductions should be taken into account.

– Arrears: This setting determines how payroll processing will proceed when deductions exceed net pay.

The Lifecycle

The diagram presented below illustrates the complete process of creating a dialog wage type and its journey through payroll. This visual representation will serve as a framework for our exploration of wage types and their role in the payroll system.

The process begins by documenting the necessary requirements and then duplicating a wage type. Depending on the specific needs, either standard processing or modifying a schema or rule is done. The outcome of payroll processing is a wage type that gets recorded in the payroll results table. This wage type can be utilized for paystubs, reports, or transmitted to external systems or vendors as needed.

You might be interested:  Understanding the Posting Key in SAP

Creating a time wage type in SAP HR: A step-by-step guide for India

Rule groups are created by combining multiple individual rules in T510S. This allows for the consolidation of corporate regulations pertaining to employee groupings. Each individual rule specifies the time wage type that should be chosen. During time wage type selection, all the individual rules within a rule group are executed.

For instance, suppose there is a rule group called “Production Workers” which includes individual rules specifying overtime rates and night shift allowances for this particular employee category. When processing payroll or calculating wages for production workers, the system will automatically run all the rules within this rule group to determine their appropriate compensation based on their work hours and shifts worked.

By utilizing rule groups in T510S, companies can streamline their payroll processes and ensure accurate application of corporate regulations across various employee groupings. It simplifies compliance with labor laws and reduces manual effort required for managing complex wage structures.

Processing Classes

The processing classes in SAP HCM determine the way wage types are handled during payroll runs. There are predefined processing classes numbered from 1 to 89, which can be assigned to each wage type. However, it is also possible to create custom processing classes between numbers 90 and 99.

Each processing class has specific guidelines that outline the necessary actions for handling a wage type. The following diagram illustrates processing class 68 (Payment Type for Tax Calculation), which determines how earnings should be managed during tax processing, such as regular payments or supplemental income. By assigning this processing class to all earnings, the payroll processor can ensure accurate taxation of each earning category.

One way to access the processing classes assigned to a wage type is by using Transaction SE16 and viewing V_512W_D. This report allows you to also see the relevant cumulations and evaluation classes.

There may be instances where it becomes necessary to generate a personalized processing class. In such cases, it is important to create one within the range of 90 to 99.

Once you have chosen “New Entries,” specify the processing class number and description. Afterward, save your changes. In our given illustration, we have established processing class 99 to represent the total hours worked.

Choose the desired processing class specifications and processing class, then click on “New Entries.” At this point, you can set up the necessary specifications for the newly created processing class. In our given example illustrated in the following diagram, our recently established processing class consists of two specifications: one for recording regular working hours and another for tracking overtime hours worked.

Now, the processing class can be utilized for wage types that constitute the overall hours worked.

Adding a wage type to my payslip in SAP: How can I do it?

To create a wage type in SAP HCM, you need to follow these steps. First, go to the transaction code PE51. In the input field for Form Name, enter a name for your form (for example, ZPAX). Then select the radio button labeled “Window.”

Next, navigate to the Window Overview section on the application toolbar. Here you will see different windows where you can display your wage types. Choose the window where you want your new wage type to be shown by clicking on it.

Once you have selected the window, double click on it. A dialog box will appear where you can enter details for your wage types. Provide names and other necessary information for each of them.

You might be interested:  Comparison of SAP ECC and SAP S4 HANA

Cumulations

SAP offers the feature of cumulation, which allows for the aggregation of multiple wage types into a single wage type. Cumulation wage types are designated as technical and begin with a /1. An example is provided below, illustrating the cumulation of an earning wage type that should be included in the total gross (/101), 401k wages (/102), and base wage for Business Software Incorporated (BSI) wage types (/114).

A frequently used wage type in SAP HCM is /101, which represents the total gross wages. To ensure that all wage types contributing to the total gross wages are included, they need to have a processing class 1 check. During payroll processing, the system generates /101 by summing up all wage types with this particular check. This calculated value can then be utilized for various purposes such as calculations within schemas or rules, generating reports, or interfacing with other systems.

Assigning GL to Wage Type in SAP: A Step-by-Step Guide for India

To assign symbolic accounts to the wage types, follow these steps:

1. Go to Activities in the HR System.

2. Select Maintain Wage Types.

3. Choose Define Posting Characteristics of Wage Types.

How to Generate a Wage Type in SAP HCM

To establish wage types, it is necessary to carry out this task for each project and adapt accordingly as the business evolves. In previous discussions, we explored various elements related to wage types. Now, let us proceed with the actual process of creating a wage type.

In the following illustration, we can see an instance where wage type 0010 (Regular Pay – Salary) is being utilized as a template to create a new wage type (0045). This newly created wage type will be assigned to a distinct group.

If necessary, you have the option to modify attributes, processing classes, and permissibility as required. However, it is recommended to locate a similar wage type that closely matches your requirements in order to minimize the number of updates needed.

Creating a new wage type: A step-by-step guide

1.1. Look at the existing wage types.

– 1.2. Copy the selected Wage type.

– 1.3. Map Symbolic Account for the new Wage Type.

– 1.4. Test the new Wage Type.

– 1.5. Deleting a Wage Type.

– 1.6. Points to Remember.

Documentation and Numbering

As previously stated, wage types play a crucial role in payroll calculations and it is important to have a well-designed and documented system to ensure consistency and accuracy. Many companies have numerous custom wage types tailored to their specific needs. Therefore, it is essential to define and create comprehensive documentation for the successful implementation and continued upkeep of your Employee Central Payroll system.

To begin with, it is important to establish appropriate number ranges when creating wage types in SAP HCM. While it may not always be advisable to assign meaningful numbers to codes, defining clear ranges can enhance understanding. Prior to initiating the process of configuring or creating wage types, it is essential to define the number ranges for your specific wage types.

Commonly utilized ranges include the subsequent ones.

  • 1*** for earnings
  • 2*** for employee deductions
  • 3*** for employer contributions
  • 8*** for loans and balances
  • 9*** for system generated or internal wage types

The following table provides an illustration of how number ranges for wage types can be defined.

You might be interested:  Understanding the Chart of Accounts in SAP FICO for Efficient Financial Management

The wage type catalog is an important documentation that offers a comprehensive overview of the created wage types, their usage, and construction details. A well-structured catalog should include certain attributes.

– Wage type identification, brief description, and detailed description

– Characteristics (processing category, evaluation category, accumulation, priority, arrears calculation, deduction indicator, minimum/maximum limits for amount or quantity)

– Last modification date

– Permissibility in infotype records

Tax wage types are defined by SAP and delivered with a specific structure and format, /XYY, as follows:

The /X designation indicates the type of tax wage type. Some commonly used types include:

– /3XX represents taxable gross (TG), which includes all wages eligible for that specific tax and authority.

– /6XX represents taxable base (TB), which is calculated by subtracting pretax deductions from TG.

– /7XX represents reportable earnings (RD), which is TB with applicable limits applied.

– /4XX represents tax (TX), indicating the actual amount of tax to be paid.

– /QXX represents taxable but not taxed (TNTD) wages, meaning they are eligible for taxation but have not been taxed yet.

YY provides a description of the tax in a specific format. This includes codes such as 01 for withholding, 02 for employee Social Security, 04 for employer Social Security, and 10 for unemployment.

Editor’s note : This post has been adapted from a section of the book SAP SuccessFactors Employee Central Payroll by Deepankar Maitra and Stacy Wilkins.

The meaning of wage type in SAP HCM

A wage type in SAP HCM is a crucial element used to determine the monetary amount that an employee should receive as payment or that should be withheld from their salary. It serves as a means to accumulate various amounts for statistical evaluation purposes. Additionally, wage types can be utilized by the system during payroll processing to temporarily store interim results and facilitate smooth transitions between different steps.

Creating a payslip in SAP HCM: What is the process?

To create a wage type in SAP HCM, you can follow these steps. First, go to the transaction HRFORMS. This will take you to the HR Forms: Overview screen. In this screen, locate the column labeled “HR Form Name” and select one of the options available.

If you choose to execute a print program icon, click on it and proceed with generating the pay slip. Alternatively, if you prefer to specify person ID, payroll area, and period for which you want to generate the pay slip, enter these details accordingly. Once done, click on “Program Execute” to run the report.

The meaning of wage type statement in SAP

Wage types are a way to categorize different types of payments or deductions in the SAP HCM system. They help provide an overview of the various wage components in a specific time period. The system analyzes payroll results from tables RT and CRT to determine the original payroll result and any retroactive accounting results for that period.

To create a wage type in SAP HCM, follow these steps:

1. Access transaction code SM30 to maintain table V_T512W_D (or use customizing path SPRO > Personnel Management > Payroll Data > Basic Settings > Wage Types).

2. Click on “New Entries” and enter the desired wage type.

3. Fill in relevant details such as description, processing class, valuation basis, etc.

4. Save your entries.

Once you have created a new wage type, it can be used for various purposes like salary calculations, bonuses, overtime payments, tax deductions, and more within the SAP HCM system.