Entering Employee Contract Pay Settings

Page Name

Definition Name

Usage

Contract Pay Type Page

CONTRACT

(E&G) Define contract pay for an employee.

Contract Pay Options Page

HP_CONTRACT_ACTUAL

(E&G) Define pay annualization and funding options for contract pay.

ChartField Detail Page

HMCF_HRZNTL_CFLD

(E&G) Identify the ChartField Combo Codes to use for Paid Not Earned and Earned Not Paid contract pay.

Contract Change Prorate Options Page

JOB_CNT_CHG_SEC

(E&G) Choose how to prorate contract pay when there is a change to the contract amount.

(E&G) Use the Contract Pay page (CONTRACT) to define contract pay for an employee.

Navigation:

Workforce Administration > Job Information > Contract Administration > Update Contract Pay NA > Contract Pay

This example illustrates the fields and controls on the Contract Pay page.

Contract Pay page

Field or Control

Description

Contract ID

Displays an automatically-generated number that is unique for the employee and record number. This contract ID is not connected to a contract number from the Update Contracts component.

When you renew a contract for another term, create a new contract ID. The system then creates a new set of projections for the new contract ID.

When you change the terms of an existing contract (for example, by adjusting the contract begin date if the employee starts late), use a new effective dated row for the current contract ID. The resulting calculation then supersedes the existing calculation, and rolls up any actuals that are associated with the previous effective-date.

Recalculate Contract

Select this button to flag the contract for recalculation when you next run the Contract Projected Payment process.

This button is unavailable if the system has already flagged the contract for recalculation. The system flags the contract for recalculation when you make certain contract pay changes or job data changes.

Contract Information

Field or Control

Description

Effective Date

The contract effective date must be within the contract payment term (between the Payment Begin Date and the Payment End Date).

Contract Pay Type

Select a contract type to populate the contract with default settings from the selected contract type. Using a contract type helps you enter data quickly and consistently, but it does not force you to accept any of the associated settings; you can override values that come from the contract type.

Selecting a contract type overrides existing data on the Contract Pay page.

Payment Term

Choose the payment term for the contract. Contract pay is always levelled over the payment term you select. For example, consider a contract for 36,000 USD with a contract term of 9 months. If the payment frequency is monthly and the payment term is the same as the contract, you pay 4,000 USD per month for nine months. If you choose a 12 month payment term, you pay 3,000 USD per month for 12 months.

Select from the these payment term options:

  • Pay Over 12 Months: Pay the contract amount over 12 months, starting on or before the contract begin date. Because the maximum contract term is 12 months, the payment term cannot extend beyond the contract end date.

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

  • Pay Over X Months: Pay the contract amount over a period of time longer than the contract term, but no more than one year.

  • Pay with Lump Sum: Pay the entire contract amount in one lump sum.

Monthly Frequency

Select a monthly payment frequency to be used when calculating the monthly pay rate for the contract. Typically, you select the delivered frequency M (monthly), but you can choose any frequency definition with whose frequency type is Monthly.

Note: This is not the employee's pay frequency. Pay frequency is established in the employee's pay group.

Calculation Method

Select a method for calculating worked earnings. This information is necessary so that you can properly calculate final pay if the person does not complete the contract.

These are the available calculation methods:

  • Prorate: Worked earnings are prorated across pay periods from the contract start date to the contract end date.

    For example, a contract gives an employee 36,000 USD over a nine month contract term and a 12 month payment term. Although the employee is paid 3,000 USD per month during the payment term, the employee's worked earnings are 4,000 USD per month during the contract term.

  • Actual: Worked earnings are based on a daily rate that the system calculates by dividing the contract amount by the number of work days during the contract term.

    For example, a contract gives an employee 34,000 USD over a 9 month contract term and a 9 month payment term that begin the same day. The contract term includes 170 work days, resulting in a daily rate of 200 USD. Even though the contract term and the payment term are the same, the fact that there are a different number of work days each month means that at any point in time before the final payment, the worked earnings might be either more or less than actual pay.

See Understanding Contract Earnings, Contract Pay Calculation Examples.

Pay Period Hours

If you require hours data for other processes such as leave accruals, enter the number of hours per pay period. When the system loads contract pay to the paysheet, it loads the hours into the payline.

Daily Hours

Enter the number of hours worked per day. The system uses this to calculate an hourly pay rate for the contract.

Assign Hours To

If you enter pay period hours, use the Assign Hours To field to indicate how to assign hours to contract earnings codes:

  • Select Not Applicable if you do not distribute hours to contract earnings codes.

  • Select Contract Earnings Only to assign all hours to the contract regular earnings code.

  • Select All Earnings (Contract+PNE+ENP) to assign the full number of hours to all three types of contract earnings codes.

Contract Begin Date and Contract End Date

The maximum length for a contract is 12 months.

Payment Begin Date and Payment End Date

The payment term must begin on or before the contract begin date and must end on or after the contract end date.

Follow these guidelines for defining the begin and end dates for the different types of payment terms:

  • Pay Over 12 Months: Enter the payment begin date; the system calculates the end date and makes it read-only.

  • Pay Over Contract: The system enters the contract dates in both payment date fields and makes them read-only.

  • Pay Over X Months: Enter both a payment begin date and a payment end date.

  • Pay with Lump Sum: Enter the lump sum payment date in the Payment Begin Date field. The system hides the Payment End Date field.

Note: If an employee has more than one contract, the payment terms can not overlap.

Actual Start Date

Enter the date the employee actually starts work. The default is the contract begin date. The usual reason for changing this default is if the employee starts working later than originally contracted.

Termination Date

Enter the date the employee terminates the contract, if different from the contract end date. The usual reason for entering a date here is if the employee stops working earlier than originally contracted.

Last Payment Date

To set up a balloon payment, enter the date of the payment here. All payments after the last payment date are rolled up and paid on the last payment date.

A common use of this option is if you pay contract employees as though they were paid over 12 months, except that the summer pay is paid as a balloon payment at the end of the school year.

School Schedule

Select the school schedule to use when calculating actual work days. The schedule lists the school break periods; break days are not counted as work days.

Exclude Holiday Schedule

Select this check box to exclude holidays from the count of actual work days in the contract term (that is, if holidays are considered unpaid leave rather than paid leave).

Work Days in Contract

Displays the number of work days in the contract term. The system calculates work days based on the employee's work schedule, the school schedule, and the holiday schedule. Holidays counts as work days unless the Exclude Holiday Schedule check box is selected.

Prorate Hrs in Partial Period (prorate hours in partial period)

If you enter pay period hours so that hours can be loaded to paysheets, you can select this check box to prorate the pay period hours during partial periods.

If you allocate hours to contract earnings, partial periods occur when the contract term begins or ends in the middle of the pay period.

If you allocate hours to all earnings (contract regular, paid not earned, and earned no paid), partial periods occur when the payment term begins or ends in the middle of the pay period.

The proration calculation depends on the calculation method you are using:

  • If the calculation method is Prorate, the system prorates the pay period hours based on the number of contract days in the pay period.

  • If the calculation method is Actual, the number of hours for the partial period is the number of daily hours multiplied by the number of work days in the pay period.

Renew Contract Automatically

Select to allow the Contracts Renewal process to renew this contract.

Nbr of Renewals (number of renewals)

Enter the maximum number of automatic renewals for the contract. If the contract can be renewed indefinitely, enter 99.

(E&G) Use the Contract Pay Options page (HP_CONTRACT_ACTUAL) to define pay annualization and funding options for contract pay.

Navigation:

Workforce Administration > Job Information > Contract Administration > Update Contract Pay NA > Contract Pay Options

This example illustrates the fields and controls on the Contract Pay Options page.

Contract Pay Options page

Annualization Options

Select an annualization option for taxable gross and for imputed income calculations for contract pay employees who are paid over less than a full year.

Field or Control

Description

Annualize Over 12 Months,

The earnings are annualized over 12 months, regardless of the length of the payment term.

Annualize Over Payment Periods

The earnings are annualized over the number of pay periods in the payment term.

User Specified and Annualization Factor

The system uses the annualization factor that you enter.

Funding Options

Field or Control

Description

Same as Contract Regular

Select this check box to use the contract regular earnings funding source for the Paid Not Earned and Earned Not Paid earnings as well. When you select this check box, the system hides the other page elements in this group box.

Combo Code for Paid Not Earned and Combo Code for Earned Not Paid

If the Same as Contract Regular check box is not selected, these fields show the Combo Codes that you use for Paid Not Earned and Earned Not Paid earnings.

See Editing ChartField Combinations in HCM Transactions.

Edit ChartFields

Select to access the ChartField Detail page, where you select Combo Codes for Paid Not Earned and Earned Not Paid earnings.

(E&G) Use the Contract Change Prorate Options page (JOB_CNT_CHG_SEC) to choose how to prorate contract pay when there is a change to the contract amount.

Navigation:

Workforce Administration > Job Information > Job Data > Compensation

Select the Contract Change Prorate Option link on the Compensation page.

This example illustrates the fields and controls on the Contract Change Prorate Options page.

Contract Change Prorate Options page

When an employee's contract pay changes, the settings on this page control how the new pay rate is to be applied.

Field or Control

Description

No Proration of Change Amt. (no proration of change amount)

Select if you do not want to prorate the change; the person receives the entire amount of the increase.

For example, if a contract amount increases by 4,000 USD, the employee receives all 4,000 USD, regardless of the effective date of the increase.

Prorate Over Contract Period

Select to prorate the change over the number of pay periods in the contract term (determined by the contract start and end dates).

For example, if the contract term is ten months, and the contract amount increases by 4,000 USD after five months (with five months remaining in the contract term), the employee receives half of the increase, or 2,000 USD more than the original contract amount.

Prorate Over Payment Period

Select to prorate the change over the payment term (determined by the payment start and end dates).

For example, if the contract term is ten months, the payment term is twelve months, and the contract and payment terms start at the same time, and the contract amount increases by 4,000 USD after five months (with seven months remaining in the payment term), the employee receives 7/12 of the increase, or 2,333.33 USD more than the original contract amount.

Prorate Using Effective Date

Note: This option is only applicable if the calculation method is Actual.

Select to prorate the compensation change over the number of work days in the contract term.

For example, if the contract term includes 150 work days, and the contract amount increases by 3,000 USD effective the 51st day (so the change is effective for 100 days), the employee receives two thirds of the increase, or 1,000 USD more than the original contract amount.

Select Lump Sum Retro Payment (lump sum retroactive payment)

Choose whether to issue a lump sum retro payment for salary increases. The amount of the increase is determined by the proration option that you choose; this check box controls only whether the increase is paid over the remainder of the payment term or whether it is allocated across all months in the payment term, with retro pay for completed months.

  • When this check box is selected, the system allocates the increase across the entire payment term, then issues a lump sum retro payment for the pay periods that have already been paid.

    For example, if the payment term is twelve months, and the increase occurs after five months (with seven months remaining in the payment term), the increase is allocated across the twelve months of the payment term, and the system makes a lump sum payment for the amount allocated to the first five months.

  • If this check box is not selected, the system adjusts the payment amount over the remainder of the payment term.

    For example, if the payment term is twelve months, and the increase is effective after five months, the increase is paid over the remaining pay periods in the payment term, or seven months.

Regardless of whether the increase is allocated to the entire payment term or only the remaining pay periods, the exact amount allocated to each pay period depends whether your contract pay calculation method is Prorate, which in our example would mean that 1/12 of the increase is paid each month, or Actual, which allocates the amount based on the number of work days in each month.

Note: This setting is relevant only for salary increases, not for reductions in salary.