Protected Earnings, Rate Type & Deduction Rate on Deduction Headers (AU Only)

Description

It is now possible to define the following attributes, which previously could only be defined at the payee deduction level, on a deduction header from this release on:

a protected rate type and protected rate value (for child support deduction headers only)
a default deduction rate and rate type.

To facilitate this, new fields have been added to the Portal > Pay > Maintenance > Deduction Header > Deduction Header Maintenance > Deduction Header Entry > Deduction Settings screen, as highlighted in the example below.

The protected rate type determines whether a percentage or a fixed amount of payees' net earnings must be left over in a pay batch after a child support deduction is deducted from earnings. The protected rate value determines the percentage or fixed amount of net earnings that is to be protected. A child support deduction will not be deducted from a payee's earnings in a pay period if doing so would result in their earnings falling below the protected rate.

The default rate type determines if the deduction is based on a fixed amount or a percentage of payees' earnings for a pay period. The default rate value determines the fixed amount or percentage of earnings that are to be deducted per pay period.

Benefits

This enhancement reduces deduction configuration overheads by allowing deduction rates and deduction protection rates to be configured and maintained centrally at the deduction header level rather than on individual payee records. For example, if there is a mandated change to the rate of a deduction the rate change needs to be made only in the deduction header and will automatically flow though to all payee deductions linked to that deduction header.

Configuration

Deduction headers are configured under Portal > Pay > Maintenance > Deduction Header > Deduction Header Maintenance. Child support protected earnings and default deduction rate settings can be defined for different validity periods by clicking the Edit button next to the relevant validity period on the Deduction Header Entry screen, as highlighted below.

Clicking the Edit button displays the Deduction Settings screen, which now features additional fields as highlighted in the first screenshot above. These fields are listed and described in the table below.

Field	Description
Protected Rate Type	Identifies if payees’ net earnings for a pay period are to be protected based on a percentage of earnings for a pay period or based on a fixed amount per pay period period. This field is enabled only if the deduction type selected on the deduction header is Child Support, in which case it is mandatory to select an option in this field. Note that the protected rate type selected in this field will apply to all payee child support deductions that are linked to the deduction header.
Protected Rate Value	Identifies the minimum percentage or fixed amount of payees’ net earnings that must be left over after the deduction is taken from their earnings, otherwise the deduction will not occur. For example, if the Protected Rate Type field is set to Percentage, this field defines the percentage of total net earnings that must remain after the deduction. This field is enabled only if the deduction type selected on the deduction header is Child Support, in which case it is mandatory to key in a value in this field. Note that the protected rate value specified in this field will apply to all payee child support deductions that are linked to the deduction header.
Default Rate	If ticked, indicates that there is one default rate of deduction which is defined by the deduction header and therefore payee deductions that are linked to the deduction header do not define their own individual deduction rates. If un-ticked, the deduction rate is identified on the payee deductions that are linked to the deduction header and therefore each linked payee deduction can have a different rate. Do not tick this option if payee deductions that are linked to the deduction header are to each have a different deduction rate.
Rate Type	Identifies if the deduction rate is a fixed amount per pay period or a percentage of earnings per pay period. Note that the rate type selected in this field will apply to all payee deductions that are linked to the deduction header. This field is available only if the Default Rate field is ticked, in which case it is mandatory to select an option in this field.
Rate Value	Identifies the fixed amount or percentage of earnings per pay period that are to be deducted. Note that the rate value specified in this field will apply to all payee deductions that are linked to the deduction header. This field is available only if the Default Rate field is ticked, in which case it is mandatory to key on a value in this field.
Calculate On	Determines if the deduction amount is a percentage of net or gross earnings for a pay period. This field is available only if the Default Rate field is ticked and the Percentage option is selected in the Rate Type field, in which case it is mandatory to select an option in this field.

If the protected rate type is Fixed, the protected rate value that you specify must be relative the pay frequency of a pay group. For example, if the protected rate value is set to $850.00 and a payee is paid weekly, the payee will have to earn more than $850.00 net per week before child support will be deducted. By contrast, if the payee's pay cycle is fortnightly, the payee will need to earn more than $850.00 net per fortnight before child support will be deducted.

Therefore, if a fixed protected rate type is used, different deduction headers may need to be configured to cater for different pay frequencies.

The same principle applies where a fixed default rate of deduction applies. That is, if a fixed default deduction rate of $200.00 is defined, $200.00 will be deducted from payees' earnings once each pay cycle. Therefore, if a payee's pay frequency is fortnightly,$200.00 will be deducted each fortnight.

Percentage based protected rates and default deduction rates do not need to factor in the respective pay frequencies of payees' pay groups and therefore, if the protected rate and optional default rate of deduction are percentage based, a single deduction header can be created and used to cater for payees irrespective of their pay frequencies.