Process documentation Retroactive Employee State Insurance Calculation Locate the document in its SAP Library structure

Purpose

This process describes how the SAP R/3 System computes Employee State Insurance (ESI) during a retroactive payroll run.

The system calculates ESI retrospectively in the following cases:

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       1.      Retrospective change in salary of the employee

       2.      Retrospective creation/change in Other Statutory Deductions Infotype (0588) Subtype ESI (0001) record.

       3.      Retrospective deletion of Other Statutory Deductions Infotype (0588) Subtype ESI (0001) record.

Process Flow

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       1.      Retrospective change in salary of the employee

In the retrospective payroll runs, the system stores the differences in values of Actual ESI Basis Wage Type (/3EA) for the retrospective runs and the previous payroll runs, in the CF ESI basis Wage Type (/AEA). The amounts in all the CF ESI basis Wage Types (/AEA) are cumulated in BF ESI basis Wage Type (/ZEA) and brought  forward to the current period.

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                            a.      If the value of BF ESI basis Wage Type (/ZEA) is positive - The amount in BF ESI basis Wage Type (/ZEA) is added to the current period Actual ESI Basis Wage Type (/3EA). If the employee is eligible for ESI in the current period, the system calculates employee and employer contributions on the total amount.

                            b.      If the value of BF ESI basis Wage Type (/ZEA) is negative - The amount in BF ESI basis Wage Type (/ZEA) is not added to the current period Actual ESI Basis Wage Type (/3EA). If the employee is eligible for ESI in the current period, the system calculates employee and employer contributions only on current period ESI basis.

       2.      Retrospective creation/change in Other Statutory Deductions Infotype (0588) Subtype ESI (0001) record

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                            a.      If the current payroll period exceeds the last_retro_period - The system brings forward only the arrears of the periods which fall in the same contribution period in which the current payroll period falls, to the current period.

                            b.      If the current payroll period does not exceed the last_retro_period - The system brings forward all arrears to the current payroll period.

Note

·         The system treats the positive and negative arrears in the same way as arrears arising due to a salary change.

·         For the contribution period April to September, last_retro_period is the following December. For the contribution period October to March, last_retro_period is the following June. If the For Period is between YYYY01 and YYYY06, last_retro_period is YYYY09. If For Period is between YYYY07 and YYYY12, last_retro_period is (YYYY+1)03.

       3.      Retrospective deletion of Other Statutory Deductions Infotype (0588) Subtype ESI (0001) record

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                            a.      By default

                                                  i.       If the retrospective period falls in the contribution period in which the current payroll period falls - The system refunds to the employee in the current period, the ESI contributions made by the employee in the retrospective periods.

                                                ii.       If the retrospective period does not fall in the contribution period in which the current payroll period falls - The system does not refund the ESI contributions to the employee.

For example, the Other Statutory Deductions Infotype (0588) Subtype ESI (0001) record is deleted in Period 6 with effect from Period 1. In this case, in the retrospective payroll runs, ESI employee contributions made in Periods 1 - 5 are stored in Ee ESI Refund - Monthly Wage Type (/AER) for the respective periods. In Period 6, the values of all Ee ESI Refund - Monthly Wage Types (/AER) are cumulated into Ee ESI Refund - Total Wage Type (/ZER). The cumulated amount is refunded to the employee in Period 6.

                            b.      If you do not want to refund the ESI contributions made in the retrospective periods, you can configure the Business Add-In (Add-In) HR_IN_ESI_REFUND to return the value N. To configure the Add-In, go to the IMG under Payroll India -> Statutory Social Contribution -> Employees' State Insurance -> Add-In: Ignore ESI Refund during Retrospective Payroll Run.

See also:

Employee State Insurance

 

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