Seniority Interest Calculation
Purpose
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 run the VEINT function in ordinary and off-cycle payroll runs, to calculate the interest on employee seniority.
Monthly Calculation:
You generate a new record in the INT_EVAL table with the interest generated in the corresponding month, the cumulated amount of capital and the indicator that specifies whether the rate used for interest calculation is actual. If the rate is not actual, the indicator has the value ‘X’.
The cumulated capital can include the interest generated or not, depending on the settings of the VEINT function: if parameter 2 has the value ‘FMES’, the interest generated is added to the cumulated capital at the end of each month.
Wage type /723 is generated in each payroll run with the information necessary for maintaining the interest provision in accounting. The sum of all the wage types /723 generated is equal to the amount of interest generated to date.
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 date of the employee’s anniversary in the company falls within the current payroll period. The monthly interest up to the anniversary date is then calculated, generating a new record in the INT_EVAL table.
When the employee does not capitalize on interest, you generate wage type /725 that contains amount corresponding to estimated interest payment. You also generate wage type /7I2 if any of the interest amounts from the period payable have been calculated 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 the interest rate, the function recalculates the interest with the correct rate, for the current month and for the following months. It also calculates the necessary adjustments for the accounting provision and for wage type /725.
Wage type /727 is generated in Off-Cycle Interest Payment Payrolls (INT0) with the amount of the current interest payment.
In a Termination Process the procedure is as follows:
If the employee leaves the company in the current payroll period, the following compensations settle the seniority balance and interests (wage types /580 and /728) and the final seniority adjustment (wage type /794):