Deductions from employees’ pay can be processed automatically by the R/3 Payroll component. For example, you can use Payroll to processing priorities and arrears automatically, and to set limits on deductions. By deductions we mean union dues, insurance contributions, charitable donations and so on; tax and garnishment deductions are processed.
A wage type represents each deduction. Individual wage types have characteristics that determine their processing by the payroll. For deductions processing, these characteristics can include the amount to be deducted, the moments and the frequency at which the deduction should be taken, as well as arrears processing and limits on deductions. These details will have been set up using the Payroll Implementation Guide, Environment for Maintaining Wage Types section.
Number and Unit
For deductions of non-monetary objects the payroll will use a predefined formula to make the appropriate monetary deduction from the employee’s pay. This formula is part of the characteristics of the particular wage type (see above).
First Payments and Intervals
You may determine the payroll period in which the first deduction is made by entering either of two details:
The payroll will make the first deduction in the payroll period that contains the date specified.
Further deductions can be made in intervals of payroll periods or days/weeks/ months/years.
Alternatively, a payment model may have been assigned as a default to a particular wage type. This will have been set up using the Payroll Implementation Guide, Deduction Frequencies chapter. The payment model will appear automatically when you enter the wage type. In this case you do not have to enter the payment intervals, as they are predefined. At this stage, you can also change the payment model.
The processing of deductions from employee pay integrates master data and payroll functionality. In R/3, the Payroll component processes deductions from employees’ pay using data from their Recurring Payments and Deductions (Infotype 0014) records.