Superannuation

While computing Superannuation, the Termination Workbench :

Checks for the Continuous Years of Service entry on the Termination Payment Details screen, of the Termination transaction (PC00_M40_TERM).

Checks for the Trust ID of the employee, maintained in the Personal IDs infotype (0185).

Indirectly evaluates the Basis amount for Superannuation.

For more information on configurations for Indirect Evaluations , refer to Indirect Evaluation

Determines the Factor for Superannuation.

You can maintain the factor for Superannuation using theIMGunder Payroll India → Termination → Maintain Factor for retiral benefits

Computations

Termination transaction (PC00_M40_TERM) computes Superannuation using the formula:

Superannuation = Basis amount obtained through Indirect Evaluation

Multiplied by

Factor that is maintained in the table view Factor for retiral benefits (V_T7INZ1)

Multiplied by

Continuous Years of Service maintained in Termination Payment Details screen

Termination Workbench performs a similar set of computations for Superannuation and Gratuity. For an illustration of the computations, refer to the Computations section, under Gratuity .

Gratuity

While computing Gratuity, the Termination Workbench :

Checks for the Number of Years of service entry on the Termination Payment Details screen.

Trust ID for the employee in the Personal IDs infotype (0185).

Indirectly Evaluates the Basis amount for Gratuity.

The payment of Gratuity can be as per the Gratuity Act or not as per the Gratuity Act. The method of computing the Basis for gratuity depends on the wage type you have configured in for the Gratuity tax codes.

For example, assign the Taxation as per gratuity act tax code (SAGA) to the Gratuity wage type (MPG0). Assign the Taxation as per non gratuity act tax code (SNGA) to the Gratuity wage type (MPG1).

You can configure the tax codes for Gratuity in theIMGunder Payroll India → Tax → Tax Liability on Reimbursements, Allowances and Perks → Assign Tax Code Limits to Wage Types

Determines the Factor for Gratuity.

For configuring the calculation factor for Gratuity, refer to theIMGunder Payroll India → Termination → Maintain Calculation Factor for Retiral Benefits

Computations

The Termination transaction (PC00_M40_TERM) computes Gratuity using the formula:

Gratuity = Basis amount obtained through Indirect Evaluation

Multiplied by

Factor that is maintained in the table view Factor for retiral benefits (V_T7INZ1)

Multiplied by

Continuous Years of Service maintained in Termination Payment Details screen

For example, in your company, gratuity is computed as:

Gratuity = 15 days of gratuity per month (taken as 26 working days)

Multiplied by

Current basis salary

Multiplied by

Number of Years of service

As the Termination Workbench computes Gratuity using a combination of the Indirect Evaluation configurations for the basis wage type and the Gratuity Factor , you can set the:

Indirect valuation variant for gratuity wage type as B and the percentage for this wage type as 57.69 (15/26), in the table view Base Wage Type Valuation (V_T539J). You must set the fixed amount to zero in table view Reimbursement allowances perks - eligibility and calculation (V_T7INA9).

Factor to 100 in the table view Factor for retiral benefits (V_T7INZ1).

Leave Encashment

The Termination transaction (PC00_M40_TERM) computes the amount payable to the employee as Leave Encashment, based on the months that you specify in the Earned Leave Entitlement and Earned Leave Availed fields. The computed amount is displayed against the Leave Encashment wage type (MLE0) in the Payments / Deductions section.

You can configure the components of the basis salary for Leave Encashment in theIMGunder Payroll India → Reimbursements, Allowances & Perks → Maintain Pay Scale Groups and Levels

Notice Pay

There are two methods for computing the Notice Pay amount:

Compute the prorated Notice Pay amount separately for every month remaining in the Notice Period and then compute the total Notice Pay amount.

Prorate the Notice Pay amount for the remaining days in the Notice Period , based on the number of days in the month of leaving.

For example, an employee resigns on 31 st May. The Notice Period is three months, however, the employee decides to leave on 15 th July. According to company policy only the Basic Salary is used for computing the Notice Pay.

Method 1– Notice Pay = (Basic * Number of days of notice period not served in July / Number of days in July) + (Basic * Number of days of notice period not served in August / Number of days in August)

= (16,000 * 16/31)+ (16,000 * 1) = 24,258.06

Method 2- Notice pay = Basic * (Number of days notice period not served) / (No. Of days in month of leaving)

= 16000 * 47/31 = 24258.06

You configure the method to be used in theIMGunder Payroll India → Termination Workbench → Calculation Method for Notice Pay

Termination Workbench computes Notice Pay for the employee and displays the computed amount in the Termination Payment Details screen only when you select the Reason as Resignation in the Initial Entry screen.

Voluntary Retirement Service (VRS)

If you have specified the Reason for leaving as Voluntary Retirement in the Initial Entry screen , the Payments / Deductions section will display the VRS amount against the VRS wage type.

The system Indirectly Evaluates the VRS amount based on the default VRS amount. You can store a default VRS amount through theIMGunder Payroll India → Reimbursements, Allowances and Perks → Maintain Pay Scale Groups and Levels

Reimbursable Allowances

Termination Workbench determines the amount payable to the employee as a reimbursable allowance, based on:

Employee eligibility

Amount already claimed by the employee

The Termination transaction (PC00_M40_TERM) displays the reimbursement wage types in the Terminal Details screen, under the Payments / Deductions section.

Employee eligibility for reimbursable allowances is as per the settings Pay Scale Grouping for Allowances . For configuration details, refer to theIMGunder Payroll India → Reimbursements , Allowances and Perks.

See also:

Termination Workbench