SAP HCM Payroll Concept

Reference by guru99
 Payroll Concepts:
• Overview of Payroll Process
• Executing Payroll
• Checking Payroll Process

Payroll Accounting:
• Payroll accounting calculates the payment of work done by an employee. Payroll
function does the following:
• Compute employee’s gross salary
• Make necessary deductions
• Calculate Net salary
• Generate Checks or direct deposits.
• Payroll Process in system
• Maintaining payroll related infotypes
• Periodic payroll run
• Transferring data to FI/CO
• Transferring third party remittance data to Accounts Payable
• Tax reporting
• Standard reporting.
Terms use in Payroll:
Payroll Area:
Pay frequency an employee is called payroll. ABKRS-T549A OR Payroll area is used to group
employees who have the same cycle and frequency of payment date. E.g. monthly, semi-monthly, bi-
weekly, or weekly basis.
The following information is provided for payroll through the payroll area:
Number of employees for whom a payroll run is to be run.
Specific payroll dates
The specific dates for which the payroll is run are determined as follows:
The general payroll period is stored as a period modifier for each payroll area.

Payroll Period:
Frequency of begin and end date. PABRP-T549Q. It determines the period for which a payroll is run
and for which the results are created. Payroll periods must be generated for each combination of
Period Parameters and Date Modifiers assigned to a payroll area. The payroll period includes a “start
date”, an “end date”.
E.g. When generating payroll periods, the period number depends on the period parameter (semi-
monthly, monthly, etc.) and the start of the fiscal year. For example, for countries for which the
financial year starts in April, payroll period “01 2010″ represents the payroll period for April 2010.
Payroll Year: PABRJ-T549Q

Pay Day:
It’s the date the salary is credited to bank account of the employee. Pay Day differ from
organizations to organizations. Some pay on the last working way of the month. Some companies
pay last month’s salary on the 10th of the current month.

Pay scale Structure:

- Pay scale area TRFGB: Location of employment
E.g. metro / non metro city
-Pay scale type TRFAR: Employee skill set
E.g. sap / Java
-pay scale group TRFGR & level TRFST: Employee position
E.g. developer / manager.
Payscale level
Payscale Type:
A. The pay scale type is the area of economic activity for which a collective agreement is valid.
E.g.
· 10 - nonunion workers
· 20 - collective agreement for secretaries’ contract.
The pay scale types are described by a four-character alphanumeric identifier per country
grouping and are defined in Customizing for Personnel Administration.

Pay scale group:

Pay scale groups and pay scale levels are the criteria used to classify data for job evaluations and
indirect valuations. E.g. GR01 - grouping for junior clerks, GR02 - for senior clerks.

Pay scale level:

Subdivision of employee’s pay scales. E.g. L1 - level 1 clerk, L2 - level 2 clerk

Period Parameter:
It determines how frequently the payroll would be run, i.e. monthly, biweekly, weekly etc. Usually
it is depicted by a two digit no, say, 01 for monthly, 02 for weekly, and so on.
Date Modifier:
Used to determine different paydays for different employees for whom payroll is run with the
same periodicity.
Ex: Payroll is run monthly in your enterprise. The payday is the 15th of the month for industrial
employees and the 25th for salaried employees.

Control Record:
It determines the current payroll period for a payroll area. It locks the SAP-HR Master Data
against changes during a payroll run, which applies for the payroll past and payroll present. T-
code PA03.

The Payroll Control Record screen is divided into 4 sections:

Payroll Area: This section indicates the payroll area for which the payroll control record is
applicable for. For each payroll area, only ONE Payroll Control Record can exist at a time.

Payroll Status: This section indicates, with a green tick, at what stage a payroll run is currently
in. It also defines the current payroll period with exact dates and indicates how many times a
payroll has been run.
Earliest Retro Acctg Period: This section indicates the greatest earliest payroll period for
retroactive accounting.

Last Change to Personnel Control Record: This section indicates who triggered a change to
the Payroll Control Record, when, and what change occurred.
In the Payroll Control Record screen, you can use the following button:

Incorrect Pers. No’s: Click this button to get a list of employees in SAP HR , rejected during the last
payroll run.
List Personnel Numbers: Click this button to get a list of employees included in the payroll area.

Locked Pers. No’s: Click this button to obtain a list of employees , in SAP HR locked out of payroll in
infotype 0003 (Payroll Status), hence stopping the ability to execute a payroll run for them.

Match code W:
The system has stored the employee rejected during the payroll run in something.

Payroll Calendar:
Generating calendars for cumulating wage types to get monthly, quarterly or yearly sum totals.
Overview of Payroll Process in SAP:
The following flow chart gives depiction of the SAP HR payroll process along with the status of
the control record during each phase.

Released Payroll:
At this stage, the Payroll Control Record is set to "Release for Payroll".
Past and present HR Master Data is locked for those particular employees. However, future
dated changes in master data are permitted in your SAP system.
If the payroll is released from the "Exit" stage, the system rolls into the next payroll period,
increases the payroll area period number by 1 in the Payroll Control Record (for example, from
period 01/2008 to 02/2008).

Start Payroll:
You execute the payroll run for one payroll area, for the payroll period defined in the Payroll
Control Record.
If errors occur, you will get a list of employees rejected during the payroll run.
Corrections:
At this stage, the Payroll Control Record is set to "Released for Correction".
Past and present HR Master Data for those particular employees is now unlocked for corrections.
You should make appropriate corrections to fix the payroll errors.
Once you have made the appropriate corrections, you need to Release Payroll and Start
Payroll using Match code W, which will only select the employees that were rejected during the
previous payroll run.
You can cycle between the "Corrections" and "Released Payroll" stages as many times as
necessary.

Exit Payroll:
At this stage, the Payroll Control Record is set to Exit Payroll.
Past and present HR Master Data for those particular employees is now unlocked in your SAP
system.
The payroll run is closed off for the particular period. You cannot go backwards in respect to
payroll results.
Wage Type:

Wage types are unique id to identify the employee wage components like basic pay, hra. T512T-
LGART.

Different categories of wage types in SAP:

There are 2 prime categories of wage types in SAP

1. Primary/Master Wage types

2. Secondary/Technical Wage types
Primary Wage types are again divided into
a. Dialog Wage types

b. Time Wage types.

MB10- Basic pay

Dialog Wage Type:
These are wagetypes that you can enter online while maintaining Master Data in your SAP
system. Also called as custom wage types.
For Ex. Basic Pay (IT0008) , Additional Payments (IT0015) , Recurring Payments/Deductions
(IT0014)
Time Wage Type:
Time wage types are created by the system once time evaluation is completed. They can not be
maintained online and are system generated. Also called as Ex: Paid Leave 75%
Secondary Wage Type:
Secondary wagetypes are system generated and can not be maintained online. They are
created during payrollrun. Secondary wagetypes are also used as a container to accumulate
several other wagetypes or to store wagetype information on a temporary basis. The technical
names of the secondary wagetypes begin with "/"
Ex: /559 Bank Transfer
What is Wage Type reporter:
The Wagetype Reporter is a comprehensive flexible SAP reporting tool that reports on wagetypes
held in the RT(Results Table). It can be run to produce values that were paid for a date range or for
values that were paid in a particular period. It can also be used to run comparisons
between payroll periods and also for additional payroll results. It can be run on a YTD basis. It is the
main Standard SAP Payroll Report and should always be run and used as verification of your payroll.

In the SAP command prompt, enter transaction PC00_M99_CWTR

In the next SAP screen under section SELECTION

Enter the Personnel Number, if you wish to evaluate a specific employee.

Enter the Payroll area.
Enter any other selection criteria defining the group of employees you wish to evaluate
Click Payroll Period.

Select the Regular Payroll Run radio button.

Enter the Payroll area and Payroll period.
If you want to compare payroll results from different payroll periods, flag the Payroll
Comparison checkbox. Then, enter the appropriate payroll area and payroll period to use
as comparison.
Under Period determination, select the In-view payroll periods radio button.
Under Other selections, you can enter specific wage types you wish to display in the report.
Use the Object selection function to select objects to be displayed as columns in the list.
In the Output section, tick the appropriate output type.
If applicable, next to the output type, select a pre-defined layout.
Click Execute
Check the results of the wage type report.
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