Pay Code Maintenance

Pay codes define the attributes associated with processing a payment. Each pay item is assigned to a pay code.

Pay codes are used in the configuration of pay agreements and pay-dependent bill agreements. In pay agreements, pay codes are used within pay code rules, which allocate hours or units against a specific pay code if the conditions stipulated within the rule are met. In pay-dependent bill agreements, pay codes are used in the configuration of bill rates.

Pay codes can also be used as manual items. Manual items represent allowances or reimbursements that payees can claim under the conditions of the pay agreement under which they are covered. If a pay code is used by a manual condition of a pay code rule within a pay agreement, the pay code appears as a selectable manual item on timesheets for the job order to which the pay agreement applies.

Before pay agreements and pay-dependent bill agreements can be created, the relevant pay codes need to be created within Rates and Rules.

Creating a pay code within Rates and Rules involves the following:

• defining the pay code type

• defining the unit type

• defining the sort order

• linking the pay code to one or more oncosts (optional).

Each of these attributes are described below.

Pay Code Type

The pay code type determines the type of pay item to which a pay code corresponds. It is used as a means by which to group similar pay codes. The pay code type can be one of the following:

• ordinary – groups pay codes corresponding to regular pay items

• overtime – groups pay codes corresponding to overtime pay items

• allowance – groups pay codes corresponding to allowance/manual items

• leave - groups pay codes corresponding to leave items

• reimbursement (for Australia and New Zealand only) - groups pay codes used to reimburse out of pocket expenses.

Unit Type

The unit type determines whether the pay items assigned to the pay code are counted in terms of hours or units. For example, pay items that correspond to hours worked by a payee are counted in hours. Pay items that represent allowances/manual items claimed by a payee are counted in terms of units (for example: taxi fare x 4).

Sort Order

The sort order of a pay code determines the following:

• the order in which pay codes are listed in any picklist field from which a pay code can be selected on various screens within FastTrack360

• the order in which pay codes are listed in the rates matrix on an agreement rates job order in the recruitment Manager module.

The sort order is defined by a numeric value, which does not need to be unique and can be a negative value. The lower the value the higher up in the order the pay code will appear. For example, any pay code with a sort order value of -1 will be listed before any pay code with a sort order value of 0 and so on. If multiple pay codes have the same sort order value, they are sorted by alphabetical pay code name.

The following should be taken into consideration when assigning a sort order to a pay code:

• Generally, pay codes that are used more frequently should be assigned a lower sort order value so that they appear higher up within pay code lists. That will reduce the amount of scrolling through lists that users will need to do to find and select frequently used pay codes.

• For agreement job rates, the pay rate of one pay code can be based on a calculation on top of the pay rate of another pay code. For example, a pay code that is used to pay overtime could be based on 1.5 times the pay rate for a pay code that is used to pay ordinary time earnings. Where that is the case, the pay code that defines the base rate (i.e. the pay code that is used in the calculation of the pay rate for another pay code) should be assigned a lower sort order value so that it is sorted higher than any other pay codes that reference it.

Oncosts

Each pay code can be linked to one or more bill and pay oncosts. Oncosts are additional costs incurred by the agency as a result of employing and hiring out a payee to a client. Examples of oncosts include superannuation and insurance costs. Some oncosts may be passed onto the client while other oncosts may be factored into the agency’s costs.

Bill oncosts are applicable to pay-dependent bill agreements only and represent costs that are passed onto the client. One or more bill oncosts can be linked to each pay code. When the pay interpretation process allocates time or units against a specific pay code, the pay code is passed onto the bill agreement interpretation process so that the applicable bill rate for that pay code can be identified and therefore the bill amount can be calculated. If the pay code that is passed to the bill agreement interpretation process is linked to one or more bill oncosts, the relevant oncosts are included in the bill calculation. That is, the final bill amount includes any associated oncosts.

Pay oncosts are oncosts that are associated with paying payees’ wages, such as payroll tax, that are not passed onto clients. Pay oncosts are not used in the billing process calculations; they are used to report on pay-related oncosts only.

The relevant bill and pay oncosts must be created within Rates and Rules before a pay code can be linked to any oncosts. Since it is not mandatory for a pay code to be linked to a bill or pay oncost, pay codes can be created before the relevant bill or pay oncosts have been created. The pay codes can then be linked to the relevant oncosts at a later stage, once the oncosts have been created. Alternatively, you may choose to create the bill and pay oncosts before you create the pay codes.

Supplementary Oncost Calculation Pay Codes

A pay code can be linked to another pay code, known as a supplementary pay code, to allow the pay rate of the supplementary pay code to be used in pay and bill oncost calculations instead of the pay rate of the pay code itself.

To calculate the bill oncost that applies to a pay item the system normally multiplies the pay rate of the pay code, against which the pay item has been paid, by the pay quantity. The result of this calculation is then multiplied by the bill oncost rate to which the pay code is linked. Therefore, if the applicable pay rate is $25.00, the pay quantity is 2 hours and the bill oncost rate is 10%, the bill oncost amount would be calculated thusly:

(25 x 2) x 10% = $5.00

However, if the pay code is linked to a supplementary pay code, the pay rate that applies to the supplementary pay code is used in the oncost calculation instead. For example, your business may have an agreement with a client that whenever overtime has been paid, the oncost amount must be calculated using the normal time rate instead. Therefore, if the ordinary time rate was $20.00 the bill oncost calculation shown above would instead be calculated thusly:

(20 x 2) x 10% = $4.00

The supplementary oncost method of calculating oncosts is used only where all the following conditions apply:

• the pay code that was paid is linked to a supplementary pay code on the end date of the timesheet to which the pay item is linked and that supplementary pay code exists in the rates matrix for the corresponding job order

• if the job order being paid is subject to agreement rates, the Use Supplementary Rates for Oncosts flag is ticked on in the agreement header or, if the job order is subject to standard rates, the Use Supplementary Rates for Pay/Bill Oncosts flags are ticked on in the standard rates matrix on the job order

• the Use Supplementary Rates for Oncosts flag is enabled on the oncost rate that was applied to calculate the oncost for the pay code.

A pay code can be linked to different supplementary pay codes for different validity periods and the system uses the timesheet end date to determine which supplementary pay code is valid when a timesheet is paid and billed. A pay code can be linked to multiple supplementary pay codes during a given validity period so that where one supplementary pay code does not exist in the rates matrix for a job order, the pay rate of another supplementary pay code can be used in oncost calculations, if that supplementary pay code does exist in the rates matrix. A priority is assigned to each supplementary pay code so that were multiple supplementary pay codes exist in the rates matrix, the system will use to the highest priority supplementary pay code.

If none of the supplementary pay codes exist in the rates matrix, the standard method of calculating oncosts will be used. That is, the pay rate of the pay code that was paid will be used in the oncost calculation.

Workers Comp/Other Payments Option (for Australia only)

A Work Comp/Other Payments option is available on pay codes to identify a pay code as being used to pay workers’ compensation payments. That is, payments that a payee is receiving, via payroll, from an insurer due to a workplace related injury.

For the purposes of Single Touch Payroll (STP) reporting, payments made using a pay code that is flagged for workers compensation will be reported as a Lump Sum E payment where all the following conditions apply:

• the payee is an Individual Non Business payee

• the payment amount meets the Lump Sum E payment threshold ($1200 at time of writing)

• the payment relates to a period in a prior tax year (i.e. it is an adjustment/backpay for a period or periods in a prior financial year).

Include in Job Rate Estimate Option

An Include in Job Rate Estimate option is available on pay codes that, when enabled, indicates that if there is a pay and bill rate defined in the agreement or standard rates for a job order, the applicable rates for that pay code will be included in the estimated job rates that are displayed on the Job Order or job template in the Recruitment Manager module.

The estimated rates can then be used by front office consultants to:

• quote estimated bill rates to clients

• quote estimated pay rates to candidates

• view an indication of the expected sales margin.

Include at Leave Payments Stage Option

An Include at Leave Payments Stage option is available on pay codes that, when enabled, indicates that payments made against that pay code via a leave deduction rule for leave taken or payout will be included at the Leave Payments pay batch stage. That means it is possible to see the payment and adjust its payment rate and quantity at the Leave Payments pay batch stage. This allows, for example, leave loadings that are not paid against a Leave pay code to still be manually adjusted at the Leave Payments pay batch stage if necessary.

Bonus/Commission Payments Option

If a pay code is used to pay bonuses and commissions a Bonus/Commission Payments option can be enabled on the pay code to identify that that is the purpose of the pay code.

For Australia, payments made against a pay code that has the Bonus/Commission Payments flag enabled are reported in Single Touch Payroll (STP), when paid to an Individual Non Business payee, as a separate, disaggregated year-to-date Bonus/commission amount. However, the flag is available for pay codes irrespective of the country to which the pay code is assigned so that such payments can be identified separately to other earnings if necessary.

The ability to flag a pay code as being used to pay bonuses and commissions is unavailable for the following pay code types:

• Overtime

• Leave

• Reimbursement

Return to Work Payments Option (for Australia only)

A pay code can be flagged as being used for paying Return to Work Payments (RWPs). RWPs are one-off, lump sum payments made to entice individuals to either:

• cease industrial action or;

• remain in their current job if they have accepted a job offer from another employer.

When a RWP is paid to an Individual Non Business payee, it is reported as a Lump Sum W amount in Single Touch Payroll (STP) reporting.

The ability to flag a pay code as being used to pay RWPs is not available if:

• the pay code type is Overtime, Allowance, Reimbursement or Leave

• the pay code is flagged as being used for Work Comp/Other Payments.

STP Paid Leave Type (for Australia only)

For pay codes with a pay code type of Leave it is possible to select the paid leave type category so that if a leave payment has no link to a leave type, and therefore the paid leave type category for Single Touch Payroll (STP) reporting cannot be determined from the header of the corresponding Leave Type record, FastTrack360 will refer to the paid leave type category that is selected on the leave pay code itself to determine how the leave payment must be reported via STP.

Note that a leave payment will not have a link to a leave type if:

• It is paid as a manual pay item that is added to an interpreted timesheet in the Interpreter Review module, including a manual adjustment to a leave payment, or it is added as is added as a manual pay item to a pay batch in the Payroll module.

• It originates from an absence item on a timesheet but the absence item is not linked to a leave type.

• It originates from a leave request but the absence type of the leave request is not linked to a leave type.

The STP Paid Leave Type can be set one of the following options:

• Paid Parental Leave (P) - select this option if the pay code is used to pay paid parental leave including Government Paid Parental Leave (GPPL) payments from Services Australia that are paid to the payee through payroll or parental leave that is paid directly by the employer.

• Workers' Compensation (W) - select this option if the pay code is used to pay Workers' Compensation leave.

• Ancillary (A) - select this option if the pay code is used to pay ancillary leave such as leave taken for Australian Defense Force service, jury service, eligible community service, emergency service.

• Other Paid Leave (O) - select this option if the pay code is used to pay annual leave/annual leave loading, personal leave, rostered day off (RDO) leave, time off in lieu (TOIL), compassionate/bereavement leave, study leave or any other type of paid leave covered by the ruling SGR 2009/2 S32, 33.

• Cash Out of Leave in Service (C) - select this option if the pay code is used to pay or adjustment payments relating to chasing out the unused balance of the following types of leave while a payee is employed:

  • annual leave

  • annual leave loading (except where the applicable award/pay agreement stipulates that the leave loading is paid in compensation for loss of ability to work overtime)

  • rostered day off (RDO)

  • long service leave

  • personal/carers' leave (only under certain awards).

• Unused Leave on Termination (U) - select this option if the pay code is used to pay or adjustment payments relating to chasing out the unused balance of the following types of leave on termination of a payee’s employment as a gross payment (i.e. not when paid as part of a Lump Sum A or B payment):

  • annual leave

  • annual leave loading

  • long service leave.