Oracle White Paper—Configuring Elements for Compensation

An Oracle White Paper

Updated December 2016

Configuring Payroll Elements for Use in

Oracle Compensation Cloud

Effective as of Release 12.1

 Oracle White Paper—Configuring Elements for Compensation

Disclaimer
The following is intended to outline our general product direction. It is intended for information
purposes only, and may not be incorporated into any contract. It is not a commitment to deliver
any material, code, or functionality, and should not be relied upon in making purchasing
decisions. The development, release, and timing of any features or functionality described for
Oracle’s products remains at the sole discretion of Oracle.
 Oracle White Paper—Configuring Elements for Compensation

Introduction ....................................................................................... 4
How Payroll Elements Are Used in Compensation ............................ 4
Prerequisites to Using Payroll Elements ............................................ 4
Configuring Payroll Elements for Compensation................................ 5
Configuring Input Values ................................................................. 10
Defining Element Eligibility .......................................................... 11
 Oracle White Paper—Configuring Elements for Compensation

Introduction

Oracle Compensation Cloud and Oracle Total Compensation Statement customers use payroll elements to
capture compensation in the application, transfer compensation to payroll providers, and to store custom
worker-level data.

This document describes how payroll elements are used and how the elements should be configured for
specific usages. This document does not describe how to set up any prerequisite payroll objects required to
use payroll elements in the ways described. It also does not describe how to set up related compensation
objects. Please refer to the implementation guides for setup help.

How Payroll Elements Are Used in Compensation

You link payroll elements to salary bases, individual and workforce compensation plans, and total
compensation statements.

• The element linked to a salary basis is used to create element entries that pass salary amounts to
payroll.

• The defined input value for the element linked to the individual compensation plan option is used to
capture the award amounts as well as display any related details during the award process. The
elements you use also determine costing.

• The element linked to a non-salary workforce compensation component is used to create element
entries, such as for lump sum awards. You can pass stock awards to element entries or post them
to the compensation stock table directly. The Transfer Data to HR process creates element entries
for each worker who received an amount for the component linked to the element.

• The actual compensation displayed in total compensation statements is configured as

compensation items. Payroll elements are one source that can be mapped to these items.

You can also use payroll elements to store custom worker-level data. You create an information element
with multiple input values that hold data referenced or used in a calculation during a compensation cycle. Y
ou use a fast formula to display the element entries values inWorkforce Compensation columns .

Prerequisites to Using Payroll Elements

All compensation customers with or without an Oracle Global Payroll Interface or Oracle Global Payroll
license must define payroll statutory units using the Manage Legal Entities task. You must also associate a

4
 Oracle White Paper—Configuring Elements for Compensation

legislative data group with each payroll statutory unit using the Manage Legal Entity HCM Information task.
Performing these tasks ensures that the application creates payroll relationship records automatically when
you hire workers. Workers must have a payroll relationship so that you can create element entries for them.

Payroll Definitions

The payroll definition supplies each worker’s pay period frequency and end dates. Even when using a third-
party payroll provider, you must define a payroll if any of the following conditions apply.

• You want to use nonrecurring elements. However, we recommend that you assign payrolls to all
workers even when using recurring elements only.

• You are implementing total compensation statements.

• You use recurring elements and you want total compensation statements to prorate salary element
entries when you hire or terminate a worker within a payroll period.

• You want to enable workers to drill into total compensation statement details to see payroll period
amounts.

• You license Oracle Global Payroll Interface.

If you don’t use payroll you can use recurring elements to avoid having to setup and assign payrolls. If you
choose to do so and you use Compensation History, all compensation awards appear under the recurring
payment section of compensation history as end-of-the-year amounts.

Consolidation Groups

If you create payroll definitions, you must also define Consolidation Groups. There must be at least one
consolidation group for each legislative data group for which you are defining elements.

Configuring Payroll Elements for Compensation

How you configure your payroll elements affects if and how the application uses the element in
compensation business processes. This section only discusses payroll element configuration that affects
your ability to use the element in compensation.

Primary Classification

When creating a payroll element, you first select the legislative data group (LDG). The LDG determines the
list of Primary Classifications from which you can choose.

5
 Oracle White Paper—Configuring Elements for Compensation

Figure 1. Create Element Dialog Window

Note: The following guidance is based on a US LDG and is a suggestion only. You are not restricted from
using different primary classifications.

• For elements linked to salary bases, select Standard Earnings.

• For bonus or lump sum elements linked to individual or workforce compensation plans, select
Supplemental Earnings.

• For worker savings and contribution deductions linked to individual compensation plans, select
Voluntary Deductions or Pretax Deductions as appropriate.

• For elements used to store custom worker data, select Information. Also use this classification for
stock awards.

The Secondary Classification is optional

Currency

When linked to a salary basis, the input currency determines each worker’s local salary currency.

When you configure workforce compensation components that represent salary adjustments, set the
component local currency determination code to Salary Basis Currency. Then, the currency set in the
element linked to the worker’s salary basis determines each worker’s local currency. For non-salary
components, you can derive the local currency from the element input currency.

When linked to an individual compensation plan, the element input currency determines the currency in
which you enter and display the award amount.

6
 Oracle White Paper—Configuring Elements for Compensation

Durations

For salary elements, answer No to the question Should every employee eligible for the element
automatically receive it? If you answer Yes, the application automatically creates salary element entries for
every assignment. This creates overlapping entries when you load salary using data loaders. It also
prevents you from allowing multiple entries in the same payroll period, which is required if you link the same
salary element to multiple salary bases.

Last Entry Date

The Last Entry Date determines when an element entry is end-dated as a result of the assignment ending
due to termination, global transfer, or some other action, or when the person is transferred to another
payroll. The salary record ends on the same date as the salary element entry.

If the payroll element last entry date is:

• Last Standard Earnings Date, the element entry is end-dated as of the assignment end date (i.e.
termination date).

• Last Standard Process Date, the element entry is end-dated as of the last day of the pay period in
which the assignment ends.

• Final Close, element entry is not end-dated. It is left open until the end of time or until it is manually
end-dated.

Standard Rules

Employment Level

For salary elements, the employment level at which you define the element must match the salary level
defined for the legal employer. Starting in release 12.1, the 3-tier employment model will no longer be
supported for new customers, so you must define all elements used for compensation processing at the
assignment level.

Recurring or Nonrecurring

You must set up and assign each worker to a payroll to use non-recurring elements. Define the payrolls
with valid time periods to create non-recurring element entries. Without valid time periods, the application is
unable to find the payroll period for the effective date of the element entries. To avoid having to set up
payrolls, you can also use recurring elements, although this is not the recommended approach.

Always set up salary elements as recurring.

7
 Oracle White Paper—Configuring Elements for Compensation

Set up bonus and lump sum elements mapped to individual and workforce compensation plans as
nonrecurring if the amounts are one-time payments. Though you may use recurring elements, if you include
these recurring elements in compensation history, the award amounts appear under the Recurring
Payments section as end-of-year amounts, which might mislead workers.

Allow Multiple Entries

You can link the same salary element to multiple salary bases if you configure the element to enable
multiple entries. To do this, answer Yes to the question Can a person have more than one entry of this
element in a payroll period? You must use the same currency for all salary bases that use the same payroll
element.

Likewise, you can link the same bonus or lump sum element to multiple individual compensation plans and
workforce compensation plans if you set multiple entries to Yes.

Figure 2. Create Element: Basic Information

8
 Oracle White Paper—Configuring Elements for Compensation

Calculation Rules

Calculation Rule

The calculation rule for salary elements and elements linked to workforce compensation Compensation
Amount columns must be Flat Amount. For percentages in individual compensation plans, the calculation
rule should be Factor.

Default Periodicity

The default periodicity must match the salary basis frequency, or the frequency that a compensation award
represents. For example, if the salary basis frequency is Annually, the element periodicity must be Annually.
If the individual compensation award is a recurring monthly amount value, the element periodicity should be
Monthly.

Periodicity Conversion Rule

Non-payroll customers should select Standard Rate Annualized. Global payroll customers should select the
conversion rule that is appropriate for them.

Figure 2. Create Element: Additional Details

9
 Oracle White Paper—Configuring Elements for Compensation

Configuring Input Values

Based on the calculation rule of the payroll element, the application creates some input values
automatically. The following table shows the calculation rules and the input values they create.

Calculation Rule Input Value Created

Flat Amount Amount, Periodicity, Full-Time Equivalent

Percentage Percentage

Factor Factor

Salary Elements

An Amount and Periodicity input value are required when used in a salary basis. If you use a primary
classification of Standard Earnings, the application automatically creates the periodicity input value. If you
use a primary classification of Information, you must create the Periodicity input value manually.

Bonus or Lump Sum Elements

The Amount input value is created automatically, identified as the primary input value, and allows user
entry. You can attach this element to workforce compensation plan component or an individual
compensation plan option without additional configuration.

If you do not use the Amount input value, then you must mark whichever input value you link to your plan
option as the primary input value in the Special Purpose field and should allow for user entry. The
application creates element entries for the primary input value only. The value of the Special Purpose input
value is also displayed in Other Compensation table when you submit an individual compensation award
and in compensation history.

You must define separate payroll elements for each workforce compensation component and each
individual compensation plan option. It is not possible to link the same element with different input values to
different components or options within the same plan.

10
 Oracle White Paper—Configuring Elements for Compensation

Figure 3. Element Summary: Amount Input Value

Individual Compensation Plan Input Values

For individual compensation plans only, you can define a minimum and maximum amount for the award,
which is enforced when awarding individual compensation to workers.

You can also define and display additional input values that contain supporting or extra information required
to make informed compensation decisions. This additional detail is displayed in the details region of the
allocation window.

Defining Element Eligibility

You must define element eligibility for all elements used in compensation. This determines which
employees can receive the element entry.

Figure 4. Element Summary: Create Element Eligibility

11
 Oracle White Paper—Configuring Elements for Compensation

Always create open eligibility, which does not define eligibility criteria on the element. Just enter a name for
the element eligibility and submit it. The salary basis or compensation plan to which the element is linked
determines compensation eligibility. Only workers who are given a salary basis with the element linked to it,
or who are eligible for the compensation plan or option to which the element is mapped are eligible to
receive compensation.

Also, ensure that the effective date of the element eligibility record for the salary element is the same as the
effective date of the element and that the Automatic entry checkbox is left clear. If you select this option,
the application automatically creates salary element entries for every assignment, which creates
overlapping entries when you try to load salary using data loaders.

Figure 5. Create Element Eligibility: General Information

12
 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. This document is provided for information purposes only and the
contents hereof are subject to change without notice. This document is not warranted to be error-free, nor subject to any other
Updated December 2017 warranties or conditions, whether expressed orally or implied in law, including implied warranties and conditions of merchantability or
fitness for a particular purpose. We specifically disclaim any liability with respect to this document and no contractual obligations are
Oracle Corporation formed either directly or indirectly by this document. This document may not be reproduced or transmitted in any form or by any
World Headquarters means, electronic or mechanical, for any purpose, without our prior written permission.
500 Oracle Parkway
Redwood Shores, CA 94065 Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective
U.S.A. owners.

Worldwide Inquiries: AMD, Opteron, the AMD logo, and the AMD Opteron logo are trademarks or registered trademarks of Advanced Micro Devices. Intel
Phone: +1.650.506.7000 and Intel Xeon are trademarks or registered trademarks of Intel Corporation. All SPARC trademarks are used under license and are
Fax: +1.650.506.7200 trademarks or registered trademarks of SPARC International, Inc. UNIX is a registered trademark licensed through X/Open
oracle.com Company, Ltd. 0110