Pay oncosts are additional costs that the agency incurs as a result of paying payees' wages that are not passed on to clients.
For example, in Nordic countries payees may be eligible for guaranteed salary, whereby payees receive a certain minimum amount of pay while employed by an agency regardless of whether they are placed in a job. When a payee is not placed in a job, there is no client to whom costs associated with employing the payee can be passed on. Therefore, an agency may factor in a pay oncost when determining their margins to ensure that they recoup money paid to a payee during periods when the payee is not placed in a job.
Within Rates and Rules, one or more pay oncosts can be linked to any pay code. Unlike bill oncosts, which are added to the amount that a client is billed by the pay-dependent bill interpretation process, pay oncosts are not added to the bill or pay amount. Instead, pay oncosts are applied for reporting purposes only.
Within Rates and Rules, pay oncosts are defined in an identical manner to bill oncosts. That is, each oncost is represented by an oncost header and one or more oncost rates.
Each oncost rate has a validity period that defines the period of time within which the rate that it defines applies.
An oncost rate must be assigned to a level of the agreement hierarchy and a hierarchy value at the selected hierarchy level. This defines to what the oncost rate is applicable. For example, an oncost rate assigned to the payee John Smith at the payee level of the agreement hierarchy will be valid only for those job orders that are filled by the payee John Smith. For each oncost, only one oncost rate can be valid, according to its validity period, for each hierarchy level/hierarchy value combination at any given time.
An oncost rate must define the applicable rate at which the oncost is applied. The following rate types are supported:
a percentage (for example, an oncost rate of 10% means that a pay oncost equal to 10% of a payee's gross pay is applicable)
a fixed monetary amount (for example, an oncost rate of $2.50 means a $2.50 oncost is applicable)
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Each oncost rate belonging to an oncost header must be assigned to a level of the agreement hierarchy and a hierarchy value. This defines what each oncost rate applies to. Where valid, applicable oncost rates exist at different levels of the agreement hierarchy, Rates and Rules applies the rate that is found at the lowest possible level of the hierarchy. For example, if there is an oncost rate defined for the payee who has filled the corresponding job order, that oncost rate will be applied instead of an oncost rate defined at the country or job order level of the agreement hierarchy.
Each pay oncost rate can be linked to one or more other pay oncost headers if calculation of the oncost includes the results of calculating another oncost. For example, if workers' compensation insurance is an oncost that is calculated based on earnings including superannuation, where superannuation is an oncost itself, the workers' compensation insurance oncost can be linked to the superannuation oncost. This is only applicable if the rate type of the oncost is percentage based.
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