Follow this article to understand the difference between gross and net deductions and payment Pay Definitions, and how to configure these for all cases.
Overview #
By default, most Payment Pay Templates are setup as gross payments, and Deduction Pay Templates are set up as net deductions. No extra steps are needed to create and pay definitions for these typical cases.
If you need the two other cases, follow the steps below when the Pay Definition is created (added). You can also update it after, in case you forgot to make the change when you created it.
Gross Deduction #
If you need to make a gross deduction, after adding the Pay Definition, clear all outputs and then set all the Pay Definition outputs as below and click Add. It is also a good idea to change the name and description:
Net Payment #
If you need to make a net payment, clear all outputs and then set Addition to net pay and .Net pay outputs as below. It is also a good idea to change the name and description. Click Add:
Examples #
| Pay Item examples | Pay Template to select | Pay Definition Outputs | |
|---|---|---|---|
| Gross payment | Basic Pay Bonus Commission | Payment | – |
| Net deduction | Advance | Deduction | – |
| Gross deduction | Cycle to work | Deduction | Set all as above |
| Net payment | Expenses Tolls Parking Ex Gratia Payment | Payment | Clear all except Addition to net pay and .Net pay |
Negative payment values #
The above examples use conventional positive values for deductions, so for example, if you want to make a 100 deduction, you would still enter +100 into the deduction paid definition.
Sometimes you may want to use negative values instead of positive values – for example, -100 for a 100 deduction. In this case, you can use the payment pay template, but use a negative value. Therefore, the payment pay template works as a gross payment or a net payment.