Payroll Definition

Payroll is used to calculate the remuneration for work done for each employee. SAP Payroll delivers powerful and efficient gross-to-net, net-to-gross, regular and off-
cycle payroll processing. SAPs complex Payroll process handles everything including vacation policies, compensation programs, work schedules, Holidays, overtime pay
etc.


SAPs ESS (Employee Self Service) function allows employees to view, create and maintain data anytime, anywhere, via Web-based technology and interactive voice
response functionality. ESS is an effective means for providing real-time access and data maintenance capabilities to the source or owner of the data. It has the ability
to offload much of the data entry and related customer service activities that may be typically performed in an organizations human resources, payroll, benefits and
purchasing departments.
Payroll accounting calculates the payment of work done by an employee. Payroll function does the following:
Compute employees gross salary
Make necessary deductions
Calculate Net salary
Generate Checks or direct deposits.
Payroll components include:
Payroll area - groups employees based on the frequency of their paydates. eg. Z1 for salaried staff paid monthly.
Control Record - It determines the current payroll period for a payroll area.
Period Modifier - Period in which payroll accounting is carried out. eg. 10 - for monthly pay periods.
Date Modifier - Distinguishes periods with same frequency but different date. Eg. 10 - for monthly pay period but with the pay date being 5th of every
month.
Payroll Calendar - Generating calendars for cumulating wage types to get monthly, quaterly or yearly sum totals.
Payscale type - used for segregation of employees payscales based on the type of union contracts in a company. Eg. 10 - non union workers 20 -
collective agreement for secretaries contract.
Payscale area - Differentiates payscales based on geographical area. Eg. 10 - California.
Payscale group - Differentiates employees payscales based on functionality. Eg. GR01 - grouping for junior clerks, GR02 - for senior clerks.
Payscale level - Subdivision of employees payscales. Eg. L1 - level 1 clerk, L2 - level 2 clerk.
Wage types - The payments and deductions for an employee are coded as wage types. Eg. A001 - salary payment, B001 - 401K deduction.
Payroll Infotypes: Payroll data is stored in various infotypes, which includes, 0001, 0007, 0008, 0009, 0207, 0208, 0209, 0210, 0234. These infotypes maintain
personal details, payment and deduction info, benefits data, garnishment data, tax data, etc.
Payroll Process involves:
Maintaining payroll related infotypes
Periodic payroll run
Transferring data to FI/CO
Transferring third party remittance data to Accounts Payable
Tax reporting
Standard reporting
Payroll Functionality

A D V E R T I S E M E N T


S A P - R E S O U R C E S


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Home SAP Payroll Basics Payroll Functionality

Payroll Hours Entry
Electronic Time Cards/Automated
o Start and End Time input
o Hours verification
* Reports
* Electronic notification (at time of user punch in/out)
* Timing (when should Payroll notification occur)
o Manual entry and corrections
o Real time operation
o Conversion of current bar-coded badge system
Manual Entry


o Number of screens involved and efficiency of entry
o Carry forward of information entered on one screen to the next
o Check and balances to verify entered information Reports and/or screen totals
* Employee totals
* Dept. totals
* Batch totals
Payroll Gross Wage Calculation
Compensation
o Correctly calculate wages for different shifts and salaried personnel
o Recognize and calculate shift differentials
*Different differential within the same pay period
o Calculate overtime
* Based on employees individual schedule
*Previous hours worked and type of hours during pay period
> holidays
> sick Time
> vacation
*Special double time considerations
o Track Vacation/Holiday/Sick time
* Vacation
> Automatic accrual
> Usage
> Manual adjustments
> Checks so that it can not go below zero
*Holiday
> General business holidays
> Floating personal holiday accrual
> Floating personal holiday usage tracking
*Track Sick time within the system
* Maternity/Family leave
Mass Wage Updates/Changes
o Annual percentage increases across the board
* To select groups
* All employees
o Holiday pay
Pay For Performance
o Distribution based on companys financial performance.
Deductions from Wage
Benefit Plans
o Company Contributed Benefits
* Health Insurance
*Vision Coverage
* Dental
* Life Insurance
Basic
Dependent
Optional additional coverage
Accidental death and dismemberment
* Disability Coverage
Short-term
Long-term
Optional long-term
* Flex Pay (for those that do not elect company sponsored benefits)
*Tuition reimbursement
*Parking reimbursement
o Employee Contributed Benefits and/or Reimbursement Accounts
* 401k
*Daycare Reimbursement
* Health Care Reimbursement
Garnishments Tax, Child support, Legal, Miscellaneous
o Entry process
* Automatically discontinue when fulfilled
o Tracking
o Reporting
* On screen
* Printable reports
Savings bonds
o Multiple bonds
o How payroll deducted funds are applied to the bonds
Savings/Checking
Miscellaneous
o Shoes
o Uniforms
o United Way
Tax
o State
o Federal
o County
o City
Payroll Processing
Manual Checks
o Entry
o Printing
o Controls
Normal Processing by Business Area (location)
o Timing
*When should payroll be processed
*Closing of periods when complete
o Processing payroll
* Entered by business area (location) and processed at corporate
*Steps involved
*Manual corrections if necessary
*Checks printed by location (business area) at location
By shift
By department
How to print checks
o Controls
* Reconciliation tools within process
Error/Warning Reports
o Checks over $$
o Multiple to same name
On line options
Totals Reports by
o Overall pay run
o Department
o Business Area
o Company code
Miscellaneous Reporting
Online and Hardcopy Reporting
o Employee information
* Wage information (current and termed employees)
Wage information for a set period
YTD wage information
Hours paid for and type
o Vacation
o Holiday
o Sick
o Overtime
History of pay increases
Select information by cost center
Various sort options
Quarterly Reporting
o Samples of reports and processes
Annual Reporting
o Samples of reports and processes (if different than quarterly)
o W-2s
* Processing of
*Corrections
*Printing
Human Resources
Application Entry
* Online
o Through web-based technology
o Directly into system within controlled screen
o Confirmation process/everything entered correctly
* Conversion/transfer to new employee status
* Conversion of termed employees to new hire/active.
Employee Information
* Benefit Information
o Overall Data Entry Issues
*
o
+ Number of screens involved
+ Templates to help reduce redundant entry
+ Conversion of past information from termed employees to new hire/active status
o Tax information
*
o
+ W4
# What if screens
* View results of tax information changes before committing
* Ability to convert if acceptable
o Benefit Plan Options
* Health Insurance
* Vision Coverage
* Dental
* Life Insurance
Basic
Dependent
Optional additional coverage
Accidental death and dismemberment
* Disability Coverage
Short-term
Long-term
Optional long-term
*Flex Pay (for those that do not elect company sponsored benefits)
* 401k (when eligible)
* Daycare Reimbursement
* Health Care Reimbursement
o Savings bonds
o Savings/Checking



SAP Payroll Basics - Part 1
The area most often overlooked when training people on SAP Payroll is the basic, fundamental meaning and usage of payroll schemas, rules, wagetypes and their
associated processes.
We will try to correct that. First, we will present an overview of the basic parts of the payroll process, then in subsequent articles well go into more detail on each one.
Not every possibility will be covered that would be a multi-volume hard-back series of books, not an easily read web-based article. But we will cover the basics in a way
that gives you a good understanding of SAP schemas and rules from there you can use that knowledge base to learn as much as you want about the rest of this
subject.

SCHEMAS AND FUNCTIONS
In SAP Payroll, functions provide the high-level logic for payroll calculations. Functions perform general processing such as calculating payroll taxes on a given set of
wages, reading wagetypes from specific infotypes, calculating benefits premiums, and storing the results of the payroll calculation. There are dozens of functions in SAP
payroll, some are country-specific and others are not. Each function is defined and documented via transaction PE04; you can also view the function documentation via
transaction PDSY in releases 4.5 and greater, or with report RPDSYS00 in earlier versions.
In SAP HR terms, a payroll function is not the same as an ABAP function. A payroll function does consist of ABAP code, but it is not executed in the same way an ABAP
function would be. Payroll functions are executed within a schema by the payroll driver program .

A schema is just a collection of functions executed in a specific order each one passing its results on to the next. Schemas are always created and edited via
transaction PE01, but are actually stored as a collection of rows in tables T52C0 (SAP standard schemas) and T52C1 (customer-created schemas and modified SAP-
standard schemas). The payroll driver reads the lines in T52C0/T52C1 and executes the functions one by one.
So how do we make the leap from a payroll function stored in a table to the execution of ABAP code to get the work done? In transaction PE04 you can see the ABAP
code associated with every function. The function name in the schema correlates to an ABAP form for example payroll function WPBP maps to the ABAP form
fuwpbp; function USTAX maps to form fuustax. So when the payroll driver is executing the schema, it takes the function name from the current row in schema, puts on
the beginning of the name, and then does a perform statement on it. Its a very simple and elegant design.
WAGETYPES
In a broad sense, a wagetype simply holds a piece of data a rate, number, and/or amount. But more specifically, a wagetype has dozens of attributes that control
how it is manipulated and processed. In the end though, it ends up as an object in the payroll results databasethat stores a rate, number, and/or amount.
The most typical use of a wagetype is to store the amounts of earnings, deductions and taxes in an employees paycheck. A persons base pay is stored in a
wagetype, the amount of their United Way deduction is stored in a wagetype, and their taxable wages & taxes are stored in wagetypes. Wagetypes, as the primary
data element for employee paychecks, are also mapped to FI/CO accounts to record the debits and credits resulting from the paycheck and reported on the W-2 and
other tax forms.
Wagetypes can also be used to store statistical data such as the number of hours worked in a pay period, the average weekly wages for the past six months, or the
amount of wages eligible for a profit sharing calculation. Wagetype attributes are stored in several tables, but the central table is T512W. Much more time will be spent
on various aspects of T512W.
There are three categories of wagetypes model, technical, and user. Model wagetypes are delivered by SAP for customers to use as guidelines for creating their
own wagetypes. They always start with a letter and SAP may add, delete or update them in system upgrades or HRSPs. Technical wagetypes always start with the
/ symbol, and are delivered by SAP. They are intended for very specific standard processing in payroll, and while you can modify them, SAP may also update
them during upgrades or HRSPs. So if you ever (I mean EVER) change a technical wagetype, check it after each upgrade or HRSP to make sure it still has the
attributes you want. And never delete a technical wagetype. User wagetypes always start with a number and these are wagetypes that SAP does not change during
upgrades & HRSPs. OK, SAP rarely changes them in upgrades and HRSPs. User wagetypes are for all the company-specific payroll payments and deductions.

RULES AND OPERATIONS
A long-time client of ours once created a screen-saver message that stated a Payroll Rules. Those of us who were experienced SAP Payroll analysts or consultants
immediately saw the double meaning, and corny humor, in that message. Rules contain the most basic logic used in SAP Payroll. Where a schema is a collection of
functions, a rule is a collection of operations. An operation is a very basic piece of logic that is used, mostly, to manipulate wagetypes. For example, operation MULTI
multiplies the number and rate fields of a wagetype to determine the amount to pay an employee. Operation OUTWP retrieves specific data about an employee so that
another operation can make a decision on how to process it.>
Operations can also be viewed in transactions PE04 and PDSY, and are edited with transaction PE02. Where a function ABAP equivalent form starts with a function, an
operation. ABAP form starts with operation. For example, operation MULTI would have an ABAP . Rules, like schemas, are stored in a table a rules are stored in T52C5.
The more senior SAP consultants who have been working with computer systems for many years often find similarities between payroll rules and programming
mainframe computers in Assembly language. While there is nothing fancy about operations, when used correctly together they can be very powerful.
Hopefully we have presented a good but brief overview that makes sense. In our next SAP Payroll Technical Basics article we will get into more detail on the common
functions used in SAP payroll schema.
SAP Payroll Basics - Part 2
The basic structure of schemas, rules, function and operations. Now lets take a look at the major functions in the payroll schema.Functions can have up to four
parameters, and usually the SAP documentation does a good job telling you what each parameter does. Documentation for functions and operations can be found via
transactions PDSY or PE04.
COPY This is the same as include in ABAP and other programming languages. COPY just inserts the schema contained in parameter 1 when payroll is
executed. Good programming style and good schema configuration style are basically the same - put commonly used logic in an include so that
it can be used in several places and to improve readability.
BLOCK As of release 4.0 the schema log is organized in a collapsible tree structure. BLOCK BEG starts a node and BLOCK END ends the node. Everything
between BEG and END is contained within the node. BLOCK BEG/END can be nested several levels deep. Again, place the BLOCK BEG/END
functions appropriately to make the log easy to read.
IF/ELSE/ENDIF There are two ways to specify the true/false condition for an IF function. SAP has several built-in conditions that you can use in parameter 2 (IF
NAMC in schema U000). You can also specify a custom rule in parameter 1, and in the rule perform whatever logic you want. In the rule you use
operation SCOND to set the true/false switch for the IF function.
Pxxxx The payroll driver & schema read and process data from many infotypes. The common way of doing this is with infotype-specific functions -
named as P and the four-digit infotype number. So, P0014 reads and processes data from infotype 14, P0168 processes life insurance plans
from infotype 168 and P2010 reads in additional payments from infotype 2010. Many of these functions, but not all, allow you to futher refine the
processing with a payroll rule. Schema UAP0, for example, shows that P0014 is processed futher by rule U011. Function P0168 is one of those
that does not use a rule (in some older releases it does) - you specify options in parameter 1 instead (see schema UBE1).Some infotypes are
used in payroll, but do not have a Pxxx function. Examples include infotypes 207, 208, 209 and 210 which are all read and processed in the main
tax function USTAX. Infotypes 0, 1, 7, and 8 are processed by function WPBP.
PIT PIT is an acronym for Process Input Table, and is one of the most used and most powerful functions in payroll. When wagetypes are read into
payroll by the Pxxx functions, they are stored in an internal table called IT - Input Table. PIT loops through that table and applies logic contained
in rules. So for each wagetype in the IT, it will apply the logic from a rule.The goal of PIT is to move wagetypes out of the IT and into the RT -
Results Table. Most often, the rules called by PIT will change some attributes of the wagetype and then transfer it from the IT to the RT. The
wagetype can also be left in the IT and even moved to other tables. Well cover those possibilities when we reiew how operations work. A good
example of PIT is in schema UAL0 - PIT X023. When the payroll driver gets to this point in the schema, PIT will look at each wagetype in the IT,
and rule X023 tells it to do certain things depending on the wagetypes value in processing class 20. Values 3, 4, 5, 6, 9 and B will move the
wagetype to the RT, while values 1, 7, and 8 leave it in the IT. Value 2 has no operation, essentially eliminating the wagetype from the IT.

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PRT PRT is short for Process Results Table. Although most wagetype processing happens via PIT, there are several occasions where you want to
process the wagetypes that have already been transferred to the Results Table (RT). PRT work much the same as PIT, looping through the RT
and applying logic from a rule.In schema UTX0, PRT is used to process tax wagetypes that are already in the RT. Function UTX0 (US tax function)
returns its wagetypes directly to the RT, so any processing on tax wagetypes has to be done with a PRT function.
ACTIO The ACTIO function processes a payroll rule, but it does not loop through a wagetype table. Instead it can loop over the different workplace/basic
pay records and process the rule for each one. For example, suppose the employee had two infotype 1 records for the current pay period. ACTIO
would have two records to loop through.Schema UTX0 again has a good example of ACTIO using rule UWH1 to calculate the number of working
hours in the pay period.