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 the typical cases. For each of these, you enter a usual positive value, and the payment will make the payment and the deduction will make the deduction based on the positive value. Therefore, 500 will make a 500 gross payment, and 100 will make a 100 net deduction.
If you need the two other cases, there are 2 options:
- Use a negative value (easy!)
- Setup a new Pay Definition to support positive values (in setup)
Easy Gross Deduction and Net Payment #
Simply enter a negative value in Payment Pay Item; or a negative value in Deduction Pay Item. Therefore, -500 will make a 500 gross deduction, and -100 will make a 100 net payment.
Follow the steps below when the Pay Definition is created (added) to create named Pay Definitions, or where you prefer to enter positive values (rather than negative values). You can also update them 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, 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 |
Deduction Negative #
Sometimes you may want to use negative values instead of positive values – for example, -100 for a 100 deduction. In this case, use the Deduction Negative Pay Template.