Vacation Payments

Purpose

This process describes the computation of vacation payments in Payroll Finland. Vacation payments include Vacation Pay and Vacation Bonus.

Finnish Vacation Payments are made using an off-cycle payroll. The system the uses the results of the off-cycle payroll in the standard payroll run, to correct any adjustments to the Vacation Pay and Vacation Bonus.

Off-Cycle Payroll

You can make the vacation payments using the Off-Cycle Payroll Run for Vacation Payment (HFICVAC0).

As vacation payments often require the information from several payroll periods, which are not available in a standard payroll run, you process the vacation payments using an off cycle payroll.

You can process the vacation payments for an employee prior to the start of the vacation. As the system needs to compute the payroll results for future periods, you typically make the vacation payments through off-cycle as the payroll.

Note Note

A vacation bonus comprises two parts: one that is paid to an employee before the start of the vacation, and the other that you pay when the employee is back in the payroll period after the vacation. The system computes Bonus I during the off-cycle payroll and Bonus II in the standard payroll run at the end of the vacation.

End of the note.
Regular Payroll

During an off-cycle payroll, the vacation is evaluated in advance. As the off-cycle run only accesses the master data valid as on the payroll run date, the evaluation results may not be entirely accurate. These payroll results are adjusted in the standard payroll run. The second part of the vacation bonus is also paid through a regular payroll run.

Prerequisites

  • You have configured the required information for the valuation of vacation payments in the Customizing under Payroll Finland → Absences → Valuation of Absences.

  • The employees have accrued vacation days.

Process Flow

Off-cycle Payroll

The execution Off-Cycle Payroll Run for Vacation Payment (HFICVACO) triggers off-cycle payroll for the selected employees. This report makes use of the Process Vacation Payment Finland subschema (FIV0), in the Payroll accounting schema for Finnish payroll program (HFICALC0) schema (FI00), for the computation of vacation payments.

The schema obtains information on absence days and quota deduction days from the Absences infotype (2001) and the Absence Quotas infotype (2006).

Computation methods differ based on the whether the employee is a salaried employee or an hourly wage earner. For salaried employees, the salary comprises the fixed and the variable part. It obtains the absence information for the fixed part of the salary is from future periods while the information for the variable salary is provided from the leave accrual year.

Salaried Employees

Fixed Component

The system computes the vacation pay using the Provide relation between working days in period and absence days operation FIVWD and Absence days (off-cyc.) wage type (/VF1). It makes use of Deduction days (off-cyc.) wage type (/VF4) for computing the bonus. It generates the Fixed vacation pay wage type (MV10) and Fix vacation bonus 1 wage type (MV15).

Variable Component

The system computes the vacation pay and bonus on the variable salary component using the following features:

  • Provide value for Finnish Vacation Payment Adjustment operation (FIVEP)

  • Deduction days (off-cyc.) wage type (/VF4).

It generates the Variable vacation pay wage type (MV13) and the Var. vacation bonus 1 wage type (MV18).

For more information, see Calculating Vacation Pay for Salaried Employees.

Hourly Workers

The system computes the vacation pay and bonus for hourly employees using the following features:

  • Provide value for Finnish Vacation Payment Adjustment operation (FIVEP)

  • Data stored in the Deduction days (off-cyc.) wage type (/VF4)

  • Work time adjustments obtained from Time Management

Average hourly salary

For the payroll period in which the vacation ends, the Absence valuation (international part) payroll function (PAB) generates the Absence days (bonus 2) wage type (/VF3).

Standard Payroll Run

The system makes use of the Read offcycle and/or regular payroll results for vacation evaluation operation (FIVAC) to read the results of the off-cycle payroll results for payroll evaluation. Any corrections to vacation pay due to salary changes are adjusted in the standard payroll run. If the Absence days (bonus 2) wage type (/VF3) exists, the system generates the Bonus II for the employee.

More Information

Vacation Handling

Vacation Accrual Process