(E&G) Administering Contract Pay

This chapter provides an overview of the Contract Pay feature and discusses how to:

Set up contract pay.
Process contract pay.
Administer contract prepay.
Adjust contract employee prepay balances.

Understanding the Contract Pay Feature

This section discusses:

Contract periods.
Interaction between PeopleSoft Human Resources and contract pay.
Taxation based on each paycheck.
Contract pay example.

Contract Periods

Employers in higher education must often process payroll and benefits over a period of time that differs from the employee's contract period. Payroll for North America addresses this need with the Contract Pay feature.

This chart illustrates the flexibility that the Contract Pay feature provides:

Defining the paid period of a contract

You can define the paid period of a contract independent of the actual contract period.

Interaction Between PeopleSoft Human Resources and Contract Pay

To pay an employee by contract, select the contract compensation frequency on the Job Data - Compensation page. The system uses the Contract Pay page to determine how to pay the employee.

Taxation Based on Each Paycheck

Payroll for North America enables you to tax an Education and Government employee based on each paycheck. In the annualization process of the U.S. tax calculation routine, the system considers the number of pay periods in the contract rather than assuming that the employee is paid the same amount for the entire year.

Contract Pay Example

The following are the details of the scenario of this example:

Contract Amt (contract amount)	12,000 CAD
Payment Begin	January 1
Payment End	December 31
Contract Begin	May 1
Contract End	August 31
Pay Frequency	Monthly

Month	Gross Pay =	Regular Pay (CRG) +	Paid Not Earned (PNE) +	Earned Not Paid (ENP)
January	1000 CAD	0	1000	0
February	1000 CAD	0	1000	0
March	1000 CAD	0	1000	0
April	1000 CAD	0	1000	0
May	1000 CAD	3000 CAD	−1000 CAD	−1000 CAD
June	1000 CAD	3000 CAD	−1000 CAD	−1000 CAD
July	1000 CAD	3000 CAD	−1000 CAD	−1000 CAD
August	1000 CAD	3000 CAD	−1000 CAD	−1000 CAD
September	1000 CAD	0	0	1000 CAD
October	1000 CAD	0	0	1000 CAD
November	1000 CAD	0	0	1000 CAD
December	1000 CAD	0	0	1000 CAD

Total	12,000 CAD	12,000 CAD	0	0

Setting Up Contract Pay

This section discusses how to:

Define contract pay types.
Enter employee contracts.
View employee contract earnings and payments.

Pages Used to Set Up Contract Pay

Page Name	Object Name	Navigation	Usage
Contract Pay Type	CONTRACT_PAY_TYPE	Set Up HRMS, Product Related, Workforce Administration, Labor Administration, Contracts / Union, Contract Pay Type CAN & USA	Define contract types of varying periods and payment terms.
Contract Pay	CONTRACT	Workforce Administration, Job Information, Contract Administration, Update Contract Pay NA, Contract Pay	Enter employee contracts for any period, including durations of less than one year.
Contract Actuals	HP_CONTRACT_ACTUAL	Workforce Administration, Job Information, Contract Administration, Update Contract Pay NA, Contract Actuals	View what an employee has earned and what they’ve been paid to date.

Defining Contract Pay Types

See Setting Up and Tracking Workforce Contracts.

Entering Employee Contracts

Access the Contract Pay page.

Payment Term

Select:

Pay Over 12 Months: Pay contracts over 12 months, starting on or before the contract begin date, and ending on or after the contract end date.

Pay Over Contract: Pay contracts over the length of the contract, as defined in the Contract Begin Date and Contract End Date fields.

Pay Over X Months: Pay contracts over a greater time period than the contract period, but less than a year.

Pay with Lump Sum: Pay contracts as a lump sum payment.

Pay Period Hours

If you require hours data for other processes (for example, leave accruals), enter the pay period hours for this contract.

Renew Contract Automatically

Select to automatically renew the contract using the Contract Renewal batch process.

Assign Hours To

If you specify pay period hours, select whether to specify the hours over only the contract period or over the entire paid period.

Contract Begin Date and Contract End Date

You can enter these dates, or the system can calculate them.

Payment Begin Date and Payment End Date

Enter begin and end dates for when to make a payment to the contractor, according to the selected payment term. The system can calculate the payment end date, based on the information that you provide. You can also enter an end date for contracts paid over X months.

Actual Start Date

Enter the date the employee actually starts work, if different from the contract begin date.

Termination Date

Enter the date the employee terminates the contract, if different from the contract end date.

Viewing Employee Contract Earnings and Payments

Access the Contract Actuals page.

Track Actual Earnings

Select to have the system track actual earnings versus paid earnings.

Use Holiday Schedule

Select to have the system use the holiday schedule when calculating days worked.

Work Days in Contract

Displays the number of work days in a contract, using the contract begin and end dates on the Contract Pay page.

Paid to Date

Displays the amount paid to the employee to date, using the total of all contract earnings paid to the employee.

Earned to Date

Displays the amount earned by the employee to date, calculated using the following formula:

total contract amount × days worked to date / work days in contract

Days Worked to Date

Displays the number of days the employee has worked since the actual start date.

Processing Contract Pay

This section provides an overview of the Batch Renewal of Pay Contracts process and discusses how to:

Run the Contract Additional Pay process.
Run the Contract Renewal process.
Update contract pay actuals.
Recalculate actual days in a contract.

Understanding the Contract Renewal Process

The Contract Renewal process completes the following tasks:

Generates a new effective-dated entry on the Contract Pay (CONTRACT_PAY) component and on the Job Data (JOB_DATA) component for the next contract period.
Decreases the number of renewals on the Contract Type Table page by one (unless 99 is specified, in which case it is left untouched).
The new data row uses the same information from the old contract to create a new contract based on the new contract dates that are supplied in the run control.

Pages Used to Process Contract Pay

Page Name	Object Name	Navigation	Usage
Create Contract Additional Pay	RUNCTL_PAYINIT3	Payroll for North America, Payroll Processing USA, Create and Load Paysheets, Create Contract Additional Pay, Create Contract Additional Pay Payroll for North America, Payroll Processing CAN, Create and Load Paysheets, Create Contract Additional Pay, Create Contract Additional Pay	Run the Contract Additional Pay process to generate Contract Pay records. Run this process before creating paysheets.
Contract Renewals	RUNCTL_CNTPAY02	Workforce Administration, Job Information, Contract Administration, Renew Pay Contracts NA, Contract Renewals	Run the Contracts Renewal process. This process enables you to automatically renew contracts that meet the criteria that you specify.
Contract Pay Actuals Update	RUNCTL_CNTPAY03	Payroll for North America, Payroll Processing USA, Produce Payroll, Update Contract Pay Actuals, Contract Pay Actuals Update Payroll for North America, Payroll Processing CAN, Produce Payroll, Update Contract Pay Actuals, Contract Pay Actuals Update	Run the Update Contract Pay Actuals Accumulators process after each pay period.
Contract Work Days	PRCSRUNCNTL	Workforce Administration, Job Information, Contract Administration, Recalc Contract Work Days NA, Contract Work Days	Run the Update Work Days/Daily Rt (update work days/daily rate) process to recalculate the actual days in a contract when you modify a holiday schedule.

Running the Contract Additional Pay Process

Access the Create Contract Additional Pay page.

Click Run to run this request.

On-Cycle Run

Pay Run ID

If you are running the process by on-cycle run, enter the pay run ID that you are processing.

Off-Cycle Pay Calendar

Company, Pay Group, and Pay End Date

If you are running the process by off-cycle pay calendar, enter the company, pay group, and pay end date of that you are processing.

Payroll Cycle

On-Cycle, Off-Cycle, and Both

Select if you are running this process for on-cycle or off-cycle payroll runs, or both.

Lump Sum Retro Payments

Separate Check

Indicate if you are running this process for a lump sum payment to be paid using a separate check.

Running the Contract Renewal Process

Access the Contract Renewals page.

Enter selection criteria.

Click Run to run this request.

Updating Contract Pay Actuals

Access the Contract Pay Actuals Update page.

Click Run to run this request.

On-Cycle Run

Pay Run ID

If you are processing an on-cycle pay period, select a pay run ID.

Off-Cycle Pay Calendar

Company, Pay Group, and Pay End Date

If you are processing an off-cycle pay period, select the company, pay group, and pay end date that you want to process.

Recalculating Actual Days in a Contract

When you modify a holiday schedule that affects contractors, you must run the Contract Work Days process to update actual number of days in the contracts.

Access the Contract Work Days page.

Click Run to run this request.

Administering Contract Prepay

This section provides an overview of contract prepay and discusses how to use the prepay option.

Understanding Contract Prepay

The Contract Prepay page enables employees who are paid only during their contract period to prepay their deductions for benefits that extend past the term of their contract. For example, if benefits coverage is 12 months and an employee has a six-month contract and is paid only during the contract period, the employee can choose to prepay the remaining six months benefits deductions during the contract (and pay) period. This prepayment option is only available to employees who are paid over the contract period and who have Pay Over Contract selected as the payment term on the Contract Pay page.

The contract prepay option functionality does not allow for gross-up checks.

Note. The contract prepay option is not recommended for employees that have multiple contracts that, taken together, span the benefits period.

The balance that is accrued with the prepayment deductions covers benefits deductions after the contract period ends. The system doesn’t take the prepay deductions to cover them if there are insufficient funds in the paycheck. The system takes all current deductions first. The following situations outline when the system takes deductions and when it uses the prepay balance to cover deductions:

If there are sufficient funds in the paycheck to take the prepay deductions, the system takes the prepay deductions, but only up to the prepay limit (a percentage of the net pay).
If there are funds in the paycheck for the prepay limit to cover some of the prepaid deduction, the system takes a partial deduction, if the prepay deduction is set up for partial deductions.
If there are insufficient funds in the paycheck to cover the prepaid deduction, the system does not take the deduction.
If there are insufficient funds to cover all of the current deduction, the system takes as much as possible of the deduction from the prepaid balance.
When the employee no longer receives a paycheck (the contract and payment period have ended), the system takes current deductions from the prepaid balance.

It is possible to prepay too much or too little in some circumstances, such as:

The deduction rates are based on age.
The deductions are based on current pay earnings, and there is a pay change.
The deduction rate changes after the contract is over.
The prepayment factor causes over payment.

If an employee prepays too much for benefits, use paysheets to make a one-time deduction refund. If an employee prepays too little, make a one-time benefits payment.

Prerequisite

You must set up the Company General Deductions page to use PREPAY as a deduction code.

Page Used to Prepay Deductions

Page Name	Object Name	Navigation	Usage
Contract Prepay	CONTRACT_PREPAY	Workforce Administration, Job Information, Contract Administration, Contract Prepay Options NA, Contract Prepay	Enable a contract employee to prepay benefits over the course of the contract and pay period when the employee’s benefits coverage extends past the term of the contract.

Using the Prepay Option

Access the Contract Prepay page.

Contract Number of Days

The default value is the length of the contract period for the contract that is effective on the prepay options effective date. You can override this field.

Prepay Limit % (prepay limit percent)

Enter the percentage of the net pay amount that you can use to prepay benefits. For example, if this value is 15, then you can use a maximum of 15 percent of the net pay amount to prepay benefits. If the prepay benefits amount exceeds 15 percent of the net pay amount, the system takes up to the 15 percent limit.

Employee Deduction Pre-Payment Options

PrePay Option

Indicate how to calculate the prepaid deductions for this benefit:

Contract: The system prorates the deductions that extend past the term of the contract across the contract pay period.

Factor: The system adds a factor of the regular deduction to each pay period that falls in the time period in the Begin Date and End Date fields.

The following are three possible prepay scenarios in the case of a 9-month contract with monthly payroll and 12-month benefits coverage. Assume the monthly benefits deductions are 60 USD:

If you select Contract, the system prorates the cost of the remaining three months of benefits deductions over the course of the contract. In our example, the total pay period benefits deductions are 80 USD, which is calculated as:

60 USD x frequency factor / number of days in contract

Use the frequency factor of the monthly frequency on the Contract Pay page.
If you select Factor, indicate the time period during which the system should apply the prepayment calculations. If you decide to pay the benefits deductions for the remaining three months of the year in the first six months of the contract, indicate the dates of those months in the Begin Date and End Date fields. Then decide the factor of the deduction to add to the regular benefits deduction for each month in the period. If you enter 0.5 in the PrePay Factor field, the system adds 30 USD (0.5 × 60 USD) to the regular monthly deductions of 60 USD for the first six months, for a total of 90 USD. For the remaining three months of the contract and pay period, the system deducts only the regular benefits deduction of 60 USD.
You can also indicate a prepay factor and a flat amount. If you indicate the middle seven months of the contract in the Begin Date and End Date fields, you might use a factor and a flat amount to spread the prepaid deductions across those seven months. If you enter 0.4 in the PrePay Factor field and 1.72 USD in the Flat Amt (flat amount) field, the system deducts 24 USD (0.4 × 60 USD) and 1.72 USD, for a total of 25.72 USD, for each of the seven months.

PrePay Factor

Enter the prepay factor of the deductions that you are prepaying. For example, if you enter 2, the system deducts twice the pay-period deduction amount, in addition to the regular pay-period deduction, for each pay period between the begin and end dates. Use this field only when you select Factor in the PrePay Option field.

Note. Using the PrePay Factor option might cause an overpayment of deductions.

Adjusting Contract Employee Prepay Balances

This section provides an overview of contract employee prepay balance adjustments and discusses how to:

Review contract prepay balances.
Review contract prepay balance adjustments.
Enter a reason for prepay balance adjustments.
Change prepay balances.

Understanding Contract Employee Prepay Balance Adjustments

The system creates a prepay balance record when the Pay Confirmation process is run, and it shows a benefits deduction prepayment. The Pay Confirmation process continues to update the prepay balance record with each run. When the prepay balance reaches zero, the system deletes the record.

You cannot make an adjustment to issue a refund for overpayment using the PrePays component (ADJ_PREPAY_BAL). Use paysheets to make a one-time deduction refund.

Note. You must set up a PREPAY deduction code on the Company General Deductions Table to use PREPAY as a deduction code.

Pages Used to Adjust Contract Prepay Balances

Page Name	Object Name	Navigation	Usage
Prepay Balances	BALANCES_PREPAY1	Payroll for North America, Periodic Payroll Events USA, Balance Reviews, PrePays, Prepay Balances Payroll for North America, Periodic Payroll Events CAN, Balance Reviews, PrePays, Prepay Balances	Review a contract employee's benefits deduction prepay balances if you use the Contract PrePay feature. Before using this page, you must set up the Contract PrePay page.
Prepay Balance Adjustments	BALANCES_PREPAY2	Payroll for North America, Periodic Payroll Events USA, Balance Reviews, PrePays, Prepay Balance Adjustments Payroll for North America, Periodic Payroll Events CAN, Balance Reviews, PrePays, Prepay Balance Adjustments	Review a contract employee's benefits deduction prepay balance and balance history if you use the Contract PrePay feature. Before using this page, you must set up the Contract PrePay page.
Adjust Prepay Balance1	ADJ_PREPAY_BAL1	Payroll for North America, Periodic Payroll Events USA, Balance Adjustments, PrePays, Adjust Prepay Balance1 Payroll for North America, Periodic Payroll Events CAN, Balance Adjustments, PrePays, Adjust Prepay Balance1	Enter a reason for adjustments to an employee's benefits prepayment balance.
Adjust Prepay Balance2	ADJ_PREPAY_BAL2	Payroll for North America, Periodic Payroll Events USA, Balance Adjustments, PrePays, Adjust Prepay Balance2 Payroll for North America, Periodic Payroll Events CAN, Balance Adjustments, PrePays, Adjust Prepay Balance2	Adjust an employee's benefits prepayment balance.

Reviewing Contract Prepay Balances

Access the Prepay Balances page.

Company	The company that issued the contract.
PrePay Balance	The employee's benefits deduction prepay balance (how much the employee has overpaid in anticipation of benefits coverage that extends past the pay period).

Reviewing Contract Prepay Balance Adjustments

Access the Prepay Balance Adjustments page.

Sequence Number

The sequence number of the adjustment reason. If more than one adjustment occurs in a day, the number in this field indicates which adjustment took place first.

Prepay Balance Adjustment

Adjustment	The amount of the prepay balance adjustment. For example, if you increase prepayments by 20 USD per month for the remaining six months of the contract period, this field displays $120.00 (20 USD × 6 months = 120 USD).
PrePay Balance, Before and After	Displays the prepay balance before and after the adjustment.

Entering a Reason for Prepay Balance Adjustments

Access the Adjust Prepay Balance1 page.

Adjustment Reason

Enter the reason for the adjustment to the benefits deduction prepayments.

Changing Prepay Balances

Access the Adjust Prepay Balance2 page.

PrePay	Enter the amount of the prepay adjustment in either positive or negative amounts.
Balance	Displays the balance of the prepaid deduction amount after taking into consideration the prepay adjustment amount.

Payment Term	Select: Pay Over 12 Months: Pay contracts over 12 months, starting on or before the contract begin date, and ending on or after the contract end date. Pay Over Contract: Pay contracts over the length of the contract, as defined in the Contract Begin Date and Contract End Date fields. Pay Over X Months: Pay contracts over a greater time period than the contract period, but less than a year. Pay with Lump Sum: Pay contracts as a lump sum payment.
Pay Period Hours	If you require hours data for other processes (for example, leave accruals), enter the pay period hours for this contract.
Renew Contract Automatically	Select to automatically renew the contract using the Contract Renewal batch process.
Assign Hours To	If you specify pay period hours, select whether to specify the hours over only the contract period or over the entire paid period.
Contract Begin Date and Contract End Date	You can enter these dates, or the system can calculate them.
Payment Begin Date and Payment End Date	Enter begin and end dates for when to make a payment to the contractor, according to the selected payment term. The system can calculate the payment end date, based on the information that you provide. You can also enter an end date for contracts paid over X months.
Actual Start Date	Enter the date the employee actually starts work, if different from the contract begin date.
Termination Date	Enter the date the employee terminates the contract, if different from the contract end date.

Track Actual Earnings	Select to have the system track actual earnings versus paid earnings.
Use Holiday Schedule	Select to have the system use the holiday schedule when calculating days worked.
Work Days in Contract	Displays the number of work days in a contract, using the contract begin and end dates on the Contract Pay page.
Paid to Date	Displays the amount paid to the employee to date, using the total of all contract earnings paid to the employee.
Earned to Date	Displays the amount earned by the employee to date, calculated using the following formula: total contract amount × days worked to date / work days in contract
Days Worked to Date	Displays the number of days the employee has worked since the actual start date.

Contract Number of Days	The default value is the length of the contract period for the contract that is effective on the prepay options effective date. You can override this field.
Prepay Limit % (prepay limit percent)	Enter the percentage of the net pay amount that you can use to prepay benefits. For example, if this value is 15, then you can use a maximum of 15 percent of the net pay amount to prepay benefits. If the prepay benefits amount exceeds 15 percent of the net pay amount, the system takes up to the 15 percent limit.