SAP Payroll Process

Prior to launching a live payroll processing run, all data affecting payroll results must be entered into the system and validated. All hours worked during the pay period must be collected or entered, all applicable HR actions complete and master data changes made. Daily pre-audit reports and nightly simulations should be run, reviewed and all errors corrected.

Payroll will be processed separately for each payroll area. Payroll areas designate the employee groups and payroll period to be processed. Each payroll area is assigned the pay period begin date, end date and pay date. Each employee will be assigned to a payroll area. Employees holding multiple assignments (concurrently employed) will be assigned to ONE payroll area at a time. Tax and garnishment transactions require earnings from all assignments to be combined prior to calculation.

Some Payroll areas examples:

Key Description Pay Period Pay Check Date
MO Monthly Payroll Period First of the month through the end of the month Last business day of the month
BW Bi-weekly Payroll Period Every two weeks Paid on Friday – 12 days after pay period ends
NP No Pay Payroll is not processed for this payroll area Payroll is not processed for this payroll area

Payroll calculations will begin once payroll has been released and started for a particular payroll area. Releasing, executing, correcting and exiting payroll are standard SAP transactions.
Transaction Function Description
Release Payroll Updates the control record status to Release. All Master and Time Data are locked for maintenance. Master Data and Time Infotypes relevant to payroll accounting cannot be maintained if these records are assigned validity dates within the payroll present and past. Master Data must be locked to ensure data integrity. Maintenance may take place on any future Master Data records.
Start Payroll Executes the payroll calculation by calling the program RPCALCU0 or RPCALCU0_CE for CE clients, the U.S. payroll driver.
Check Results Updates the control record status to Check Results. In this status, payroll is considered locked for processing and cannot be successfully executed. This status ensures that no changes can be made to the relevant Master Data while the payroll results are being checked.
Corrections Updates the control record status to Corrections. This releases the lock on Master and Time Data for all employees in the payroll area for past and present to allow correction to me made. An enhancement is planned to limit the users able to change master data to Payroll Personnel only while the control record is in correction status. When changes are made while master data is open for corrections, the correction check box on Infotype 0003 will be checked and flag the payroll driver to recalculate payroll results for that employee.
Exit Payroll Updates the control record status to Exit. The payroll period is now closed and no further runs can be performed. Prior to exiting payroll, all employee records in the payroll area must have been successfully processed. Successful simulations for Posting to Accounting, Pre-DME and 3PR must have taken place as well.

Gross pay will be calculated as instructed by logic contained in the payroll schema. All custom calculations identified as required for deferred pay will be configured within the schema.  Attendance and absences will be imported into payroll for processing from the time module. Infotype 0008 will capture basic pay for salaried employees and hourly rates for non-exempt employees and labor cost allocation. Infotypes 0014 and 0015 will capture all supplemental payments.
Cumulations will be maintained for earnings for MTD, QTD, YTD, on both a Calendar and Fiscal Year.
Third-party tax software (BSI) is used for tax calculations. Tax update bulletins (TUBS) will be regularly applied by BASIS and tested by payroll.
There will be one tax company configured for tax reporting purposes.
• The regular method of taxation will be used for regular runs and off-cycle adjustment runs.
• Taxes will be calculated “when paid” not “when earned.”
• Bonus payments will be taxed at the federal supplemental tax rate.
The following taxes will calculate through payroll:
• Federal income tax
o Will be calculated based on employees W-4 status from Infotype 0210
o Employees who claim exempt from tax withholding will re-file by February 15th of each year or else their W-4 status will be set to S-0.
o Eligibility for Federal exempt earnings for Non Resident Aliens will be determined by the information stored on IT0094 and 0556.
• Earned Income Credit
o Eligibility is indicated on employee’s W-4 Federal Infotype 0210
o Employees claiming advanced earned income credit will need to re-file at the beginning of each calendar year to maintain this status.
o A change in state on address Infotype 0006 will not trigger the dynamic action to change the resident state Infotype 0207.
• Social Security OASDI and Medicare
o Exemptions to FICA and Medicare will be maintained in Infotypes 0235 and 9235.
o Eligibility for FICA exemption for Non Resident Aliens will be determined during payroll processing by the information stored on Intotype 0048.
• Unemployment

The configuration of the wage type will determine taxability for Federal, State, City and FICA taxes. Taxes will be configured to post to FI.
For earnings and deduction taxability please refer to the Wage Type Spreadsheet.
Cumulations will be maintained for deductions for MTD, QTD, YTD, on both a Calendar and Fiscal Year. Example deductions include Parking, Rent, University Development Fund, Loan Repayments, H&FS Meal Deductions, Vision, United Way, Union Dues and various Benefit deductions not related to a Benefit Plan.
Union Dues:
Union dues will be managed by data stored on Infotype 0057.

Benefit Deductions:
Payroll will retrieve the monthly benefit costs from the benefits module.
• Flexible spending account information will be stored on Infotype 0170
• Health Plan information will be stored on Infotype 0167
• Insurance Plan information will be stored on Infotype 0168
• Retirement Savings Plans will be stored on Infotype 0169
SAP delivered garnishment processing infotypes will be used for garnishment processing.
The following delivered garnishment Infotypes will be used:
• 0194 – Garnishment document
• 0195 – Garnishment Order
• 0216 – Garnishment Adjustment
Please refer to Garnishment Master Data and Business Process Blueprint Documentation for additional more information.
Other Voluntary Deductions:
Other payroll related voluntary deductions will be created and maintained on Infotypes 0014 or 0015 as required.
Payroll Data Changes and Procedures:
Payroll data changes refer to edits of an employee’s Master Data. Changes may be initiated by the employees through ESS or by central or decentralized departmental personnel. Changes the department may initiate and/or process may come from an internal group requesting a change, a pre-defined business process, or they may come from an outside source such as a court order for garnishment of wages. Some of these changes may result in a negative retroactive payment to the employee. The negative results in most cases will be covered by the earnings for the current period. In some cases, the current earnings may not be enough to cover the total amount and in this case the employee will go into a claim situation.
As part of the payroll process, the delivered wage type reporter will be run to identify wage type /552 retroactive adjustments before exiting payroll to review the validity of these adjustments. When negative prior period adjustments are reported, they will be forwarded to a specialized payroll role for determination regarding the collection of the overpayment from the payroll in process. Some state laws require that the employee agrees to the collection of the overpayment. In certain cases, the specialized payroll role may need to intervene to prevent the negative prior period results from collecting from the current period check. The new SAP overpayment process can be used for this requirement.

Other errors such as missing Master Data information that may occur during the payroll processing cycle will be researched and corrected by a specialized role in HR.
Outside Changes:
Outside changes can consist of, but are not limited to: Garnishments, Child Support withholding orders, IRS levies, Union Dues, etc.
Departmental Changes:
Items such as new hires, transfers, etc will be initiated by the department and given final approval by the HR department. Other pre-defined processes that take place throughout the fiscal year will be initiated and processed by the HR and Payroll departments.
Basic Pay/Planned Working Time Changes:
When a pay rate or FTE change is initiated, the change will be entered into SAP by the HR department with the appropriate effective date. SAP will automatically calculate the proper pay for hourly, salaried, and salaried “equalized pay” employees, based on the effective date of the change.
If the effective date goes back to a prior pay period, any retroactive pay that is due will be calculated by the system and the payment will be included in the next regular payroll cycle.
Retroactive pay will need to be calculated and entered manually on Infotype 2010 for payments incurred prior to go-live, until such time as adequate pay history has been stored in SAP.

During payroll processing, detection of errors will be accomplished by reviewing reports. Even if a live payroll has been run and results have been written to the Results Table, errors can be corrected until the payroll had been exited. However, the entire population of a payroll area will not have to be rerun to correct errors. Only employees flagged for correction will be reprocessed. The new payroll results will write over the original results. The segregation of just those employee records marked for correction is called Match Code W.

Payroll reports will be utilized during processing to produce a complete and accurate payroll. For example, items such as total gross and net pay amounts, deduction amounts per wage type, total tax liability per jurisdiction, etc. will be compared to prior payroll periods for a reasonability check. Reports listing employees in Inactive status with pay results, employees with retroactive pay (WT/552) and employees with claim amounts (WT/561) and employees with deductions written to the arrears table will be monitored and researched (if necessary).

To manage multiple steps during the end to end payroll process, a check list will be maintained by the Payroll Manager. Each step on the list will be initialed when completed. This will be particularly helpful when both payroll areas pay on (or close to) the same paydate.

During payroll processing, the “Accounted To” date on Infotype 0003 will be updated for all employees. Payroll tables will be updated with pay detail. Prior to exiting payroll, error free simulations for the following subsequent activities must occur:
• Pre-DME
• Posting to Accounting
• 3rd Party Remittance
Once all change have been made and the simulations complete, payroll will be exited. Subequent activity processing will begin after the exit. Any changes after payroll has been exited will be processed on the next scheduled Off-Cycle processing or regular paydate.