Understanding Encumbrance Definitions

Encumbrance Definitions

Using the encumbrance definition functionality in the commitment accounting business process you can:

• Specify how tax and deduction encumbrances and pre-encumbrances are funded for departments (that is, for the whole department or at lower levels within the department, such as position, position pool, job code, or appointment—or any combination of these).

• Specify how the system should encumber taxes and deductions and what funding sources to use for each.

• Specify the default currency code for the encumbrance definition and maintain multiple effective-dated encumbrance definitions by department.

The encumbrance processes use the encumbrance definition information to calculate and distribute encumbered deductions and taxes, as a flat amount, and/or as a percent of encumbered earnings.

Fringe Matrix Codes

When you create an encumbrance definition, you list the combination codes to use for tax distribution and for deduction distribution. For each combination code, you indicate the percent of earnings to encumber. You can enter a fixed percent, or you can vary the percent according based on the salary for the employee or position. For example, you could encumber 10% of salary for employees who earn up to 30,000.00 and 8% of salary for employees who earn more than that.