Payroll

1. What is Oracle Payroll?

Oracle Payroll is a module in Oracle HRMS, which manages the payroll processing and reporting
need of an enterprise. It encapsulates the entire process of Payments, such as capturing the Salary
information and other earnings, Calculating deductions and taxes, processing the Payroll, Writing
checks, Making Bank account money transfers, Costing the payroll cost into the related ledger,
Printing pay slips, tax forms (W2, F16) etc. These are just a foretaste of different actions that Oracle
Payroll can do; there is a lot more to it. To summarize its a complete solution for the management of
Payroll for an enterprise.

2. What are Fast Formulas?

Oracle is an ERP, and it is used by a various set of enterprises, with very different types of
requirements all over the world. Hence it is highly configurable. So Oracle gives you the handle to
tweak the business rues based on your requirements. Those handles are called codes. However there
will be cases, that your business rules does not fit any of the code that are seeded by Oracle, and you
are unable to fit in your business logic into the software. For cases like that, Oracle has a proprietary
language called Fast Formula. You can write your business logic in the fast formula, and use it in
place of the codes. The Fast formula is and English like language, and is very easy to learn.
3. What are Elements?
They say Elements are the building block of Payroll. Whatever!! Lets take a more comprehendible
approach. Elements are like small boxes, in which you are going to put some numbers, and when the
Payroll runs, its going to pick those numbers from the boxes and calculate the Net Pay.
Lets take an example; your salary has a lot of things associated with it, right? Like, Basic Salary,
House rent allowance, Travel allowance, special allowance etc. those are the earnings. Similarly, you
also have deductions, like the taxes, the insurance premiums/rates, Provident fund etc. Lets make
boxes for each kind of earnings and deductions we have. Now, while I calculate the payroll, the
system is going to pick the numbers from each of the earning boxes, and then going to pick numbers
from all the deduction boxes and finally do the entire calculation to give you the final results. So the
boxes are the Elements.
Here, in this example, we have used an example of a box, where only one number was getting stored.
However in reality, the element is going to store the details about a particular earning, and it can
store as much numbers as possible. For an example, Mr. Joe is an hourly employee; he gets paid by
the hour. So his Basic Salary element will contain two numbers, one for the hourly rate lets say $50,
and another with the number of hours worked, lets say 172 hours. But both the numbers are getting
stored in the same element. Those numbers are called in Input Values.
4. Whats a Link?
There will be situations, where you would like an element to be associated with a certain type of your
employees. For an example, you want the Car allowance to be given only to employees in Sales
department. To cater these kinds of requirement, Oracle gives you another layer of entity called, the
Element links. Employees are lined to the elements using element links. One element can have one
or more links associated with it.
You can set up eligibility rules on an element link; so that the element link can be attached to an
employee, only if s/he passes the eligibility criteria. Setting up eligibility is not mandatory; however
its still a configurable option. You can make an element link standard, if you do so; the system will
attach the element link to each and every active employee, who passes the related eligibility criteria if
any. Element links can also be used to assign costing related information. The other important thing
about the links is the Input Value configuration. Usually the Elements input value configuration gets
copied to the element links; however you can change few things at element links level.
But whats the use? OK, if you have two different links for a particular element; one for Sales
department, and the other for the manufacturing department. If you wish to, you can have different
Input value defaults for different links. Similarly for costing, the cost centre information might be
different for two departments. Thats the reason why, the Costing information and Input value
Configuration stuff can be overridden at the links level.
5. What are input values?
We discussed about the elements, with an example of boxes. So here, we are going to take that
example a little further. The Elements are used to store values, however in most cases you will need
to store more than one type of data for an element. For an example, the Salary of an hourly paid
employee; we need to store the hours worked and hourly salary, finally to store the total payable
amount for the pay period should get calculated and stored as well. So in this case the element will
have to store three different values. Hence the Box is holding three different cups to hold three
different values. Those cups are known as the Input Values.
One element can have up to 15 input values, and each of them can be of one of these types: Number,
Character, Date, Day, Integer, Time, Hours and Money. Oracle payroll does not include all input
values to do the final calculations. It pulls the input value for final calculation only if, the name is
Pay Value. All the input values are there, to help calculate the Pay Value OR to do some value
addition. Confusing?
Lets try it this way, the Hourly Salary of the employee is calculated using this formula (Hours
Worked X Hourly Rate). Now, in the hourly salary element, you might put three Input Values, One to
capture the hours worked, one to capture the Hourly rate and the third one with name Pay Value, to
store the actual amount to be paid. So Payroll engine is going to pick only Pay Value to do the final
payroll calculation. And the other two will help the system to reach to the Pay Value amount. We can
also have other Input values to store a message, a text or may be the currency, which will be used by
some other program. Now, those additional input values are doing the value addition tasks.
We can validate the Input values in many ways; we can use a Lookup, a value set or may be a min
and max value to limit the Input value to a particular range. We can assign defaults, create DBI
(Database Items) so that it can be used in Payroll fast formulas, Mark it as user enterable so that the
Input value can be directly fed in by the user etc.
6. What are recurring / non recurring elements?
Elements can be divided as two types, based on the processing type, namely Recurring and Non
Recurring. A recurring element, once attached to a person, gets added once for each pay period
automatically. However a non recurring element, once attached to a person continues for the related
pay period only, and expires (gets end dated) after that period.
7. What is Cost Allocation KFF used for?
Cost allocation KFF is used in HRMS to track the costs incurred against the payroll of an enterprise.
For an example, your enterprise has 15 departments, and you want to pay the salary of the employees
to be billed to respective departments. Now each and every billable department will have a cot centre
code. In that case the cost allocation KFF comes handy, where you can assign a cost centre code to
employees profile, which links the payroll of the employee to the Department. The KFF is made in
HRMS keeping the Oracle Finance owned accounts KFF in mind. Once a Payroll is run, the monetary
data is transferred from the Cost allocation KFF to the accounts KFF via a process called, Transfer to
GL. That way the cost is added to the GL accounts of the respective departments.
The cost allocation KFF can be updated at five places.
Payroll Level
Element Links Level
Organization Level
Assignment level
Element Entries level
The KFF details in one level can be overridden by the details entered in another level, based on the
precedence. If you look at the levels again, the precedence is exactly in the same chronological order.
If cost details are entered at Payroll level, all employees attached to the payroll will be assigned to the
same cost centre. However that can be overridden at the Organization level. So in that case, even if
an employee is linked to a particular Payroll, his cost will be attached to the cost details in the
organization level. If cost detail is entered at the element entries level, then it is the final one, as it
has got the highest precedence.
8. What is a Balancing Segment?
In the fiscal world, balancing is a very basic functionality. Usually, a particular account is considered
on which all the debits and credits will be balanced. To explain in other words, this is the account
against which all the calculation will be done, to arrive at a decision on the amount of money spent.
So in HRMS, we can store that balancing account, in balancing segments. This was a raw
explanation, however to discuss it further, lets imagine a situation, where my cost allocation KFF
holds five segments, like Org, company, department, section, office. Now, I want to balance my costs
on the basic of companies. So the balancing segment here will be the Company.
9. What are the KFFs used in Payroll?
There are six mandatory KFFs in a successful HRMS/ Payroll Implementation. Those are:
Job
Position
Grade
Competency
People Group
Cost Allocation
Out of the six, the last two are the mandatory ones for Payroll; whereas the other four are specific to
the Core HR. Now, there are four more KFFs that are not mandatory ones; however they can be
opted for based on business needs.
Bank Details
Personal Analysis
Collective Agreement/ CAGR
Soft Coded KFF
Lets discuss more about the ones related to Payroll. Cost Allocation KFF holds the const centre
details, and helps the system to identify the Cost centers to which the payroll/ elements will be billed.
People Group is just another classification of people; however it is helpful, as it is one of the criteria
that are used, to determine eligibility in element links. Hence if you want a set of elements to be
available to a group of people, you might want to put them in People Group; if other criteria do not
suffice. Bank details KFF holds the bank related information. Each and every bank branch is
identified by a set of segments like, Name, Branch code, location etc.
10. What is a Balance?
Drafting.
11. What is a payment method?
The enterprise pays salaries to its employees. The Salaries can be paid in many forms, like a check
(cheque) or a Bank account or by cash. These are the payment methods. Oracle HRMS gives you the
liberty to create as many payment methods as you want, and then divide the salary into the different
methods. For an example, Mr Joe, gets $5000 as the monthly salary. He can have his preferences
like this:
1. Put $2000 into my Savings account
2. Put $800 into my Checking account
3. Put 10% in to the third party payment (Court Order) to support my divorced ex-wife
4. And the rest of the amount as a check to me.
So in this case, all the accounts, Checks are called the payment methods. Each payroll has a set of
valid payment methods and a default payment method. If any employee is found without any valid
payment method, he gets paid by the default one.
12. What are Pre Payments?
Pre-Payments is a process with which, the payroll system allots the payroll money in to the different
personal payment methods of each employee. This process is run as part of the post payroll process.
If one wishes, then he can run the prepayments with an override payment method. For an example,
one can do this; the payroll of month of August will be paid to all employees by check, irrespective of
their personal payment methods.
13. What are the different Formulas used in Payroll?
There can be many different types of formulas in Payroll. Lets discuss them one by one.
Accrual Formulae
Accrual
Accrual Carryover
Accrual Ineligibility
Accrual Sub Formula
Oracle Payroll
Element Skip
Element Input Validation
Element Type and Input Value determination
Payroll Run Proration
14. What are the Indirect Results?
Once a Payroll FF is evaluated, it can have multiple return values. The Pay value is the direct result.
However the other return values can be passed on to the other Elements for further calculations. For
an example, the bonus element needs the base salary of the employee and a bonus percentage. So the
Bonus percentage and the base salary can be the return types of the FF attached to the salary
element; and then it can be fed to the bonus element as an indirect result. Later when the Bonus FF
gets fired, it takes those values received by indirect results and then do the calculation to get the final
bonus amount. Here the receiving element must have a higher priority number than the seeding
element in order to use the functionality. So the Bonus element must have a higher priority number
than the Salary element. The passing of results are set up in the Formula Results Screen.
15. How do I link a Payroll Calculation Formula with an element?
A Payroll calculation fast formula can be attached to the element in the Formula Results Screen.
Total Compensation -> Basic -> Fast Formula -> Formula Results
Query for the Element you want to attach it to; and click on find
In the processing rules, Put the name as Standard and add the formula
In the results, add the different return values, the type as Direct / indirect based on the usage
Put the name of the element that is going to be fed with the return type
And add the input value of the receiving element that is going to store the returned value
16. What are PTO Accruals?
PTO stands for paid time off. And accrual holds the normal meaning of accrual. So with PTO accrual,
the system allows the employees to accrue their leaves. Usually, enterprises allow their employees to
accrue a particular amount of days as Paid leave, every month. So the system keeps an account of
total number of available leaves and number of leaves taken. The system can also tell you, what the
available number of leaves will be on a certain date in future.
17. What is SOE? Whats its significance in Payroll?
SOE stands for Statement of Earning. Its more like a Pay slip with all the earnings, deductions and
balances in it. It is used in payroll to validate the payroll run results, with a quick pay. SOE comes in
handy for test cases in Payroll.

18. How do I calculate taxes?

Use a calculator. OK, I was kidding.
Depends on which country you are implementing it for. There are few localizations in which the tax
calculation comes in seeded, with Tax Patch; so in those cases, there is nothing much to do on your
side. However if your country needs extra calculation on taxes, you need to create Tax elements (with
Tax Deductions as the classification), based on the requirements you have. Then treat them as the
normal element. Like add Payroll calculation formulas use the other earning elements to feed in the
Earnings to your element as indirect results; calculate the tax and update the pay value. Then the
system takes care of the rest. This was just a vague idea about taxing; there are a lot of other things
that can be done on taxing.
19. Why should I adjust balances? And how do I do it?
Working on it.
20. What are the different Date offsets in Payroll screen?
The date offsets are defined on the Payroll screen. These are the numbers, can be +ve or ve. The
offset numbers are added to the Pay period end date and the dates are calculated from that. The
offsets are:
Check: This is the date on or after which the checks are available to be processed/ claimed.
Scheduled Run: This is the date on which the regular Payroll is run
Cut Off: All the changes related to the payroll, should be complete on or before this date. Any
changes after this date will not be taken in to consideration for the pay period
Pay slip: This one is not a mandatory one. The online pay slips will be visible to the
employees only after this date.
For example, if the Pay period end date is 06-JAN-1990; and the Pay slip offset is +1, then the pays
lips can be visible on or after 7th Jan.
21. What are classifications? Whats the use?
Classification is a mechanism to group similar Payroll elements. Classifications are of two types,
Primary Classifications, that are seeded ones; and then secondary classifications that you can create
and use for your own convenience. The primary classification tells the system about the type of the
element, an Earning / deduction / Involuntary Deductions / PTO Accruals etc. It also sets the
Priority range, with a default. Again tells if an element is costable or distributable. The secondary
classifications are subsets of the primary classification. The secondary classifications along with
primary classifications can be used in feeding balances.
22. How do I calculate Salary of an Employee?
The salary of an employee can be calculated by using three tables. Per_all_assignments_f,
Per_pay_bases, per_pay_proposals. The proposed_salary_n column stores the actual salary. The
approved column tells you, whether the salary row is approved or not. Hence to get the Salary of an
employee, we must look for the proposed_salary_n column, with approved flag set to Y, and check if
the effective date is between the changed_date and date_to.
However the proposed_salary_n stores the salary amount for the salary basis. For example, for an
hourly paid employee, the column will store the annual salary. For a salaried employee, the column
stores the annual salary. So how do we get the annual salary for all employees? This is where the
per_pay_bases is going to be used. The per_pay_bases stores the factor of the annual salary in
pay_basis. So for an hourly employee the factor is : 8 hrs a day X 5 days a week X 52 weeks a year =
2080. So finally the script will look something like this.
select proposed_salary_n
, pay_annualization_factor
, proposed_salary_n * pay_annualization_factor Annual_salary
from Per_pay_proposals ppp
, per_all_assignments_f paaf
, per_pay_bases ppb
where ppp.assignment_id = paaf.assignment_id
and ppb.pay_basis_id = paaf.pay_basis_id
 and paaf.person_id = 222109
and paaf.business_group_id = 101
and trunc(sysdate) between change_date and date_to
and trunc(sysdate) between paaf.effective_start_date and
paaf.effective_end_date
and approved = Y
23. Whats a Consolidation Set?
A Consolidation set is a collection of payrolls. You can group payrolls using these sets. It helps in
processing multiple payrolls at once. If you wish to run three different payrolls on a particular date,
you can just run the payroll process on the consolidation set having those three payrolls.