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OHAUA_INDEXATION_001 - Configure Wage Types to Evaluate Salary Increase

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In this Customizing activity, you determine how the system valuates an employee's salary in the current payroll period for the purpose of calculating an employee's salary increase since the previous payroll period.

If an employee's salary increase exceeds the indexation amount that the system calculates for the employee, the employee is not entitled to indexation payments.

To valuate an employee's salary in the current payroll period, you can use one of the following methods:

• Indirect valuation
  You can set up evaluation models to calculate the employee's salary based on the model wage types in the Basic Payments (0008) infotype.

• A constant
  You can use any amount, for example, the living wage, as the basis for calculating an employee's salary increase. The system regards the amount as the employee's salary in the current payroll period when it calculates an employee's salary increase.

You have entered the wage types that you use for salary indexation in the Customizing activity Specify Wage Types for Indexation.

The standard system contains sample entries for valuating an employee’s basic monthly salary and a bonus as a percentage of the monthly salary.

In this Customizing activity, you carry out the following tasks:

• You set up the system to store an employee's salary in the current payroll period in the Salary Indexation (/IXB) wage type using one of the following methods:

Indirect Valuation

If you want to use the indirect valuation method, select a model wage type and choose Indirect Valuation of Base Wage Types in the dialog structure. Carry out the following steps:

1. Specify the indirect evaluation model that you want to use to valuate the base wage types that are relevant for calculating indexation amounts.
2. In the Valuated WT field, enter the secondary wage type in which you want the system to store the result of valuating the base wage types that are relevant for calculating indexation amounts.

Note that if the employee is an hourly wage earner, the base salary is evaluated based on the average hours that you entered in the Monthly working hrs field in the Work Schedule Rule activity of the Read Planned Working Time from Work Schedule Customizing activity. The evaluated base salary is calculated by multiplying the average working hours per month by the hourly rate entered in the Basic Payments (0008) infotype.

Constant

If you want to valuate base wage types using a fixed amount, carry out the following steps:

1. Select the Use Const. (Use Constant for Salary Evaluation) checkbox for the rows that contain a salary wage type, for example, the Salary Indexation (/IXB) wage type, that you want to valuate using a constant.
   We recommend that you assign the same indexation priority to the same salary wage types that you want to valuate using a constant. For example, assume that you have two salary wage types, /IXB and /IXC, and you want to valuate both of them using a constant. We recommend that you enter one priority for all model wage types that you want to valuate with /IXB, and another priority for the model wage types that you want to valuate with /IXC.
2. Select one of the rows that contains a wage type that you want to valuate using a constant.
3. In the dialog structure, choose Constant Valuation of Base Wage Types structure.
4. Enter each of the salary wage types that you want to valuate using a constant and enter the corresponding constant.

• You define the wage types that have to be considered as monthly wage types for hourly wage earners.

In the Basic Payments (0008) infotype, you enter wage types for both hourly wage earners and salaried employees. The wage types for both categories are evaluated using the same algorithm. To ensure that the system regards a given wage type as a monthly wage type, you must enter it in this Customizing activity by choosing Salary Wage Types for Hourly Workers in the dialog structure.

For example, you enter the Add.Benefit (NDFL) (M026) wage type in the Basic Payments (0008) infotype with UAH 10,000 for an hourly wage earner. If you enter this wage type in this Customizing activity, it is regarded as a monthly wage type, else, it is regarded as an hourly rate.

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