Adding Deductions (Payroll UK)

A payee may request, or may be obligated, to have deductions taken from their gross or net pay. Where this is the case, the relevant deductions must be added to the Payee record so that the relevant deduction amounts will be automatically deducted from the payee’s earnings at the Gross Deductions and/or Net Deductions stages of a pay batch.

A payee's deductions can be added, viewed and modified via the  Payroll > Payee > Payee Maintenance > Payee Entry > Deductions screen.

Deductions cannot be added, edited or deleted while a payee is included in an open pay batch. However, if you need to add a deduction while the payee is included in an open pay batch you can add an ad-hoc deduction to the payee's pay details within the pay batch.

Deductions that have already been used in a pay batch cannot be deleted because the system needs to retain a history of what affected a payee's pay for each pay period. Similarly, a deduction cannot be edited once it has been used in a pay batch except for its validity end date, which can be set or changed to determine when the deduction is to cease.

When adding a payee deduction, you must specify the following:

• the deduction header to which the deduction is linked

• the validity period of the deduction

• an optional end date on which the deduction is to cease being applied

• the applicable rate type

• the rate value

• whether the deduction is taken from gross or net earnings (depending on whether this is permitted against the payee's deduction or controlled at the deduction header)

• whether the deduction is a rolling deduction

• an optional payee account reference.

Deduction Headers

The deduction header to which a deduction is linked determines a number of attributes of the deduction such as the deduction type, whether the deduction can be taken at gross or net earnings at the payee level and the bank account into which the deduction is to be paid.

When you add a deduction to a Payee record you must link the deduction to a deduction header. The deduction header defines certain attributes of the deduction such as the deduction type whether the deduction can be taken at gross or net earnings at the payee level and the bank account into which the deduction is to be paid. Therefore, it is important to ensure that you link a payee deduction to the correct deduction header.

Deduction Validity Period

A deduction must have a validity period that determines when the deduction is applicable. The validity period is defined by a mandatory start date and an optional end date. If an end date is not defined the deduction will be applied indefinitely from the start date onwards. An end date can be set at any time after the deduction is created except while a payee is included in an open pay batch.

A deduction is automatically applied in a pay batch if it is valid on the end date of the pay period to which the pay batch corresponds. That is, the pay period end date of the pay batch must fall within the validity start and end dates of the deduction. 

Rate Type & Rate Value

The rate type determines whether the deduction is to be deducted as

• A fixed amount (for example: £100.00 per pay period)

• or a percentage of the payee's earnings (for example: 5% of earnings per pay period).

• or is based on a rate table. The rate table refers to Attachment of Earnings where the amount deducted is based on a range of earnings and different percentages for that range. Where the rate type is based on a rate table, the rate value field is disabled.

Because a payee can be included in multiple pay batches for the same pay period, the system takes into account any prior deductions made during the same pay period. For example, if a payee requires £100 to be deducted from their pay each pay period and the entire £100 deduction is applied in the first pay batch that is processed for a given pay period, that deduction is not applied again if the payee is included in another pay batch for the same pay period. However, if the deduction was based on 2% of earnings (gross or net) rather than a fixed amount, the deduction will be applied each time the payee has any earnings in a pay batch so that the total amount deducted during a given pay period will equal 2% of the payee’s total earnings for the pay period.

Rolling Deductions

A deduction must be flagged as a rolling deduction if the deduction is to cease once a specified total amount has been deducted from the payee's pay.

Rolling deductions are useful in situations where a payee is required to repay an amount and the repayment is made in a series of instalments. The deduction is applied to automatically to deduct the relevant instalment amount each pay period and once the total amount is reached the rolling deduction ceases automatically.

Payee Account Reference

Bank account details that are specified on the deduction header to which a deduction is linked identify the bank account into which a deduction is paid if payment is facilitated via electronic funds transfer (EFT).

These bank account details can include a generic account reference that identifies the source of the payment. It is also possible to define an account reference on an individual payee deduction if a deduction payment needs to be identifiable down to the individual payee level. For example, if a payee has union fees deducted from their pay it may be necessary to include a unique payee ID in the account reference to identify the individual payee on whose behalf a payment is made when the deducted money is transferred to the union’s bank account.

It is not mandatory to define an account reference on a payee deduction and if not defined, the generic account reference that is defined on the linked deduction header is used to identify the source of deduction payments instead.

Bank Details

If the deduction header to which a payee deduction is linked specifies that payment of the deduction is facilitated via BACS/electronic funds transfer (EFT), the deduction header may define the account details of the bank account into which the deduction is to be paid. Alternatively, if the deduction type that the linked deduction header represents must be paid into individual accounts for each payee as opposed to a centralised account, the Apply Bank Details on Payee Deduction option will be enabled on the deduction header in which case it is mandatory to define, at the payee deduction level, the details of the bank account into which the deduction is to be paid. Where that is the case, a Bank Details tab is enabled on the payee deduction and it is mandatory to specify the following information on the payee deduction:

• name of the bank account into which the deduction is to be paid

• the account number that uniquely identifies the target bank account

• sort code that identifies the financial institution branch where the bank account is held

• the name of the company or organisation to which the deduction is to be paid.

How to Add a Deduction

To add a deduction to a payee, follow the procedure below.

 How to Configure a Rolling Deduction

To configure a rolling deduction, follow the procedure below.

How to View or Edit an Existing Deduction

To view or Edit a payee's existing deduction, follow the procedure below.

How to View or Edit an Existing Deduction
	If you do not have the relevant payee record open on in the Payee Entry screen, use the Payroll > Payee > Payee Maintenance screen to search for and open the relevant payee record.
2.	On the Payee Entry screen, scroll down to the Deductions section or click on the Quick Link.
3.	In the list of deductions, click the Edit button against the deduction you need to view or modify.  The Deduction Details screen opens, showing the details of the deduction you selected.	Open
4.	If you need to modify the deduction, update the relevant fields on the Deduction Details screen as required.
5.	Click Save.  The Deduction Details screen closes and any changes you made to the deduction are saved.

How to Delete an Existing Deduction

To delete an existing deduction, follow the procedure below.

How to Delete an Existing Deduction
	If you do not have the relevant payee record open on in the Payee Entry screen, use the Payroll > Payee > Payee Maintenance screen to search for and open the relevant payee record.
2.	In the Payee Details section of the Payee Entry screen, scroll down to the Deductions section or click on the Quick Link.  The Deductions tab is activated and lists any of the payee's existing allowances.
3.	In the list of deductions, click the Delete button against deduction to be deleted.  A confirmation message opens, prompting you to confirm the deleting of the selected deduction.	Open
4.	Click Delete. The confirmation message closes and the selected deduction is deleted.