Define Deduction Priorities and Arrears Handling

Security: Set Up: Payroll (Calculations - Payroll Specific)
domain in the Core Payroll functional area.

When a worker's net pay falls below the minimum defined net pay, you can define how to:

Eliminate or reduce deductions.

Track and later recoup arrears.

You can define the deduction priority when eliminating deductions and recouping arrears. For each deduction, you can also define whether to:

Take partial deductions.

Recalculate other associated deductions.

You can't stop arrears when a worker goes on leave. However, you can configure the

Worker Eligibility

section of a deduction to only process arrears when the worker's status is active. For more information, see Set Up Pay Component Eligibility. You can also configure this at the run category level on the

Nonactive (On Cycle, On Demand Replacement)

tab. For more information, see Example: Set Up Pay Run Category for Workers on Leave.

Access the

Maintain Deduction Priorities

task.

Add a row for each deduction that you want to:

Reduce or eliminate in a specific order when an employee's net pay falls below the minimum net amount.

Recover in a specific order when multiple deductions fall into arrears.

Workday:

Reduces or eliminates deductions to restore net pay in the reverse order of the rows on the grid.

Recovers arrears amounts in the same order as the rows in the grid.

For Payroll for the UK, Workday recommends that you only add customer-defined deductions, as the priorities are automatically assigned for Workday-delivered statutory deductions.

For Payroll for Australia, Workday recommends that you only add customer-defined deductions, as the priorities are automatically assinged for Workday-delivered statutory deductions.

As you complete the task, consider:

When a worker's net pay falls below the minimum amount, you want Workday to apply post-tax deductions in this order of priority: A, then B, and finally C. You also want Workday to track and recoup arrears for all of these deductions. You define these settings on the

Maintain Deduction Priorities

task.

Deduction	Track Arrears	Recoup Arrears
A	Selected	Selected
B	Selected	Selected
C	Selected	Selected

Pam's gross pay is 75. The minimum net amount is zero. She has 175 in deductions, resulting in a net pay of - 100:

A: 100

B: 50

C: 25

Pam's net pay varies depending on whether you enable partial deductions:

Do Not Take Partial Deductions	Eliminated Deductions (in order of elimination)	Final Net Pay	Calculated Arrears
Selected	C: 25 B: 50 A: 100	75	A: 100 B: 50 C: 25
Clear	C: 25 B: 50 A: 75	0	A:25 B: 50 C: 25

On the next payroll, when attempting to recover arrears, Workday processes deduction A first.

Set arrears limits for the deductions that have the

Recoup Arrears

check box selected.