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Partner Boot Camp - Fusion

HCM Global HR
Define Legal Entities for HCM

Instructor Guide

August 8, 2013
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CONTENTS
Lesson 1: Define Legal Entities for HCM ......................................1
Lesson Objectives ................................................................................... 1
Legal Entities Overview ............................................................................ 2
Legal Entity Role ..................................................................................... 3
Legal Entity Considerations ....................................................................... 4
Demonstration: Managing Legal Entity HCM Information ................................ 5
Legal Entity and its Relationship to Divisions ................................................ 7
Instructor Note: Legal Entities and Divisions ................................................ 8
Legal Entity and its Relationship to Worker Assignments and Legal Employer..... 9
Legal Entity and Payroll Reporting ............................................................ 10
Legal Entity and Legal Reporting Units ...................................................... 11
Instructor Note: Storage Tables ............................................................... 12
Legal Reporting Units Overview ............................................................... 13
Define Legal Entities for HCM Review Question 1 ........................................ 14
Define Legal Entities for HCM Review Question 2 ........................................ 15
Define Legal Entities for HCM All Questions and Answers .............................. 16
Lesson Highlights .................................................................................. 17

i
Lesson 1: Define Legal Entities for HCM

Lesson 1: Define Legal Entities for HCM


Lesson Objectives
After completing this lesson, you should be able to:

Define legal entities for HCM

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Lesson 1: Define Legal Entities for HCM

Legal Entities Overview


Define a legal entity for each registered company or other entity recognized in law for
which you want to record assets, liabilities, expenses and income, pay transaction
taxes, or perform intercompany trading.

A legal entity has a separate legal identity and therefore conducts aspects of your
business for the following reasons:

Facilitating local compliance


Complying with corporate taxation within local jurisdictions
Preparing for acquisitions or disposals of parts of the enterprise
Isolating one area of the business from risks in another area. For example, your
enterprise develops property and also leases properties. You could operate the
property development business as a separate legal entity to limit risk to your
leasing business.

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Lesson 1: Define Legal Entities for HCM

Legal Entity Role


Role of your Legal Entity
The contracting party on any transaction is always the legal entity.

Individual legal entities:

Own the assets of the enterprise


Record sales and pay taxes on those sales
Make purchases and incur expenses
Perform other transactions

Legal entities must comply with the regulations of jurisdictions in which they register. To
support local reporting require ments, legal reporting units are created and registered.

The following screenshot is the Legal Entity page for InFusion Corp USA1.

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Lesson 1: Define Legal Entities for HCM

Legal Entity Considerations


Oracle Fusion Applications support the modeling of your legal entities. If you make
purchases from or sell to other legal entities, define these other legal entities in your
customer and supplier registers, which are part of the Oracle Fusion Trading
Community Architecture.

Legal entities can be identified as legal employers and therefore, are available for use in
Oracle Fusion Human Capital Management (HCM) applications.

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Lesson 1: Define Legal Entities for HCM

Demonstration: Managing Legal Entity HCM


Information
Demonstration Background

Review the HCM information for your legal entity.

Demonstration Scope

Review key fields in the HCM information for the InFusion Corp USA1 legal entity.
Demonstration Steps

Sign in is hcm_impl or hcm_impl1.

Start Here
Setup and Maintenance work area

1. In the Search region, in the Name field, enter Manage Legal Entity HCM
Information.

2. Click the Search button.

3. In the Manage Legal Entity HCM Information task row, click Go to Task.

Location: Manage Legal Entity HCM Information page

4. In the Legal Entity Name field, select InFusion Corp USA1.

5. Click Search.

6. In the Search Results region, click on the name InFusion Corp USA1.

Location: Legal Entity: InFusionCorp USA1 page

7. Use the Work Day Information section to define the standard working hours for
each worker assignment in the legal entity.

Note: You can also enter work day information at the enterprise,
department, and position level.

8. In the Legal Employer Information section, use the Salary Level field to select
the level at which salary can be specified, for example Assigment or employment

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Lesson 1: Define Legal Entities for HCM

terms.

9. Use the Worker Number Generation field to specify whether the application
generates a number for each worker.

Note: By default, worker numbers are not used. If you enable worker numbers
for the enterprise, then only you can specify worker numbers for the legal
employer.

10. In the Allow Employment Terms Override at Assignment field, specify


whether to allow override or not.

11. Use the People Group Flexfield Structure field to select the flexfield that
enables you to record people group information and assign people to specific
groups such as unions or working groups.

12. Use the Employment Model field to select either a 2-tier or 3-tier model for the
legal entity.

13. Click Done.

You have demonstrated how to manage legal entity HCM information.

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Lesson 1: Define Legal Entities for HCM

Legal Entity and its Relationship to Divisions

The division is an area of management responsibility that can correspond to a


collection of legal entities.
You can aggregate the results for divisions by legal entity or by combining parts
of other legal entities.
Define date-effective hierarchies for the cost center or legal entity segment in the
chart of accounts to facilitate the aggregation and reporting by division.

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Lesson 1: Define Legal Entities for HCM

Instructor Note: Legal Entities and Divisions


How can I link a legal entity to a division without using the ESC tool?

You can use the Manage Legal Entity task in FSM to associate a legal entity with a
division.

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Lesson 1: Define Legal Entities for HCM

Legal Entity and its Relationship to Worker


Assignments and Legal Employer

Legal entities that employ people are called legal employers in the Oracle Fusion
Legal Entity Configurator.
You must enter legal employers on worker assignments in Oracle Fusion Human
Capital Management.

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Lesson 1: Define Legal Entities for HCM

Legal Entity and Payroll Reporting

Your legal entities are required to pay payroll tax and social insurance such as social
security on your payroll.

You can register payroll statutory units (PSUs) to pay and report on payroll tax and
social insurance on behalf of many of your legal entities. For example, if you are a
multinational, multicompany enterprise, then you register a payroll statutory unit in each
country where you employ and pay people. You associate a legislative data group
(LDG) with a payroll statutory unit to provide the correct payroll information for workers.

As the legal employer, you might be required to pay payroll tax, not only at the national
level, but also at the local level.

You meet this obligation by establishing your legal entity as a place of work
within the jurisdiction of a local authority.
Set up legal reporting units to represent the part of your enterprise with a specific
legal reporting obligation.
You can also mark these legal reporting units as tax reporting units, if the legal
entity must pay taxes as a result of establishing a place of business within the
jurisdiction.

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Lesson 1: Define Legal Entities for HCM

Legal Entity and Legal Reporting Units

Create and register legal reporting units to support local reporting requirements. When
you first create a legal entity, the Oracle Fusion Legal Entity Configurator automatically
creates one legal reporting unit for that legal entity with a registration.

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Lesson 1: Define Legal Entities for HCM

Instructor Note: Storage Tables


A HRW table represents a template configuration object. The actual table that stores all
our setup is spread around in multiple product tables. For example Legal Entities are
parented in XLE_ENTITY_PROFILES and have a lot of HCM specific detail stored in
other tables like HR_ALL_ORGANIZATION_UNITS. We typically present a simplified
view called PER_LEGAL_EMPLOYERS that helps us get an HCM specific view of the
legal employers.

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Lesson 1: Define Legal Entities for HCM

Legal Reporting Units Overview


A legal reporting unit is the lowest level component of a legal structure that requires
registrations. You use it to group workers for the purpose of tax and social insurance
reporting or represent a part of your enterprise with a specific statutory or tax reporting
obligation.

Define legal reporting units by:

Physical location, such as a sales office.

Logical unit, such as:

Groups of employees subject to different reporting requirements.


Human Capital Management (HCM) system where you use your legal reporting
units to model your tax reporting units. A tax reporting unit can be used to group
workers for the purpose of tax reporting.

Plan and define your legal reporting units at both the local and national levels if you
operate within the administrative boundaries of a jurisdiction that is more granular than
country.

For example:

If the legal entity establishes operations requirements for each local area in a
country that requires reporting of employment and sales taxes locally as well as
nationally.
If you need more than one legally registered location to meet this legal entity's
reporting requirements in each local area.
Legal entities in Europe operate across national boundaries, and require you to
set up legal reporting units for the purposes of local registration in each country.

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Lesson 1: Define Legal Entities for HCM

Define Legal Entities for HCM Review Question 1


Your legal entities can be identified as legal employers and therefore, are available for
use in Human Capital Management (HCM) applications.

1. True
2. False

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Lesson 1: Define Legal Entities for HCM

Define Legal Entities for HCM Review Question 2


You must enter legal employers on worker assignments in Oracle Fusion Human
Capital Management.

1. True
2. False

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Lesson 1: Define Legal Entities for HCM

Define Legal Entities for HCM All Questions and


Answers
1. Your legal entities can be identified as legal employers and therefore, are
available for use in Human Capital Management (HCM) applications.

True

2. You must enter legal employers on worker assignments in Oracle Fusion HCM.

True

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Lesson 1: Define Legal Entities for HCM

Lesson Highlights
You should have learned how to:

Define legal entities for HCM

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