Seniority Interest Calculation 

Objective

The objective of this process is to calculate the annual and monthly interest on seniority.

Requirements

Before executing this process you must maintain the Interest Rates.

Process

You perform the VEAIN function for ordinary and off-cycle payroll runs, to calculate the interest on seniority that corresponds to employee. Depending on the payroll run conditions, the process is as follows:

For ordinary payroll runs:

Monthly Calculation:

You perform the calculation if the last day of the month is within the current payroll run period. In this case, you generate a new record in the INT_EVAL table with monthly interest provision for accounting (/723), the cumulated amount of capital plus interest and the indicator that specifies whether the rate used for interest calculation is actual. If the rate is not actual, the indicator takes value ‘X’.

Information on rate type (active and passive rate average) to use for interest calculation is in the Severance Payment infotype (IT0401) and their percentages are in table T7VEIN. The seniority records that you use as a base to generate the amount of interest are available in table SEN_EVAL.

Annual Calculation:

You perform the calculation if the anniversary of employee in the company is within the current payroll period. Then you calculate the monthly interest up to day of anniversary to generate a new record in table INT_EVAL with the monthly interest (/723), the cumulated amount of capital plus interest and the indicator.

Later, you add together all the records from INT_EVAL to obtain the total amount of interest up to the current date. When the employee does not capitalize on interest, you generate wage type /725 that contains amount corresponding to estimated interest payment. You also generate /7I2 if you calculate one of the interest amounts from period payable with a rate that is not actual.

Both for monthly interest calculation and for annual interest calculation you carry out the interest adjustment that consists in checking if there are records in table INT_EVAL that you calculated with a rate that is not actual . If you have maintained rate T7VEIN, the function recalculates the interest with the correct rate, for the month and for the following months.

For each monthly adjustment you calculate the difference between current amount and previous amount, generating wage type /723 to adjust the accounting provision. You also include adjustment for wage type /725.

For off-cycle payroll:

You carry out the adjustment process described in previous note and you check if wage type /7I2 exists. In this case you cannot perform the interest payment as there are rates that you have not yet maintained. If wage type /7I2 does not exist, you generate wage type /727 with the annual interest payment amount.

In an Employment Contract Termination Process:

If employee leaves company in current payroll run period, the function generates the following wage types:

Finally, for any of the situations described above, you store the results in table INT_EVAL.