Assign a Deduction to an Employee Profile

Overview

You can configure deductions in your portal which can then be assigned to employees to deduct amounts from their wages. 

If you need to use deductions for ABN Contractors, you will need to tick the option to 'Enable Deductions for Suppliers' in Config > Company Management > select the entity > Payroll.

Add Deductions to an Employee Profile

To add a deduction to an employee:

1. Go to Users > Employees > select the employee > Pay Item.

2. Click +Add Deduction and select the deduction you would like to assign from the drop-down list. Inactive deductions cannot be assigned to employees and will not appear in this list. 

3. Enter the Start and Finish Dates, if these are different from the prefilled values. 

4. Enter either the percentage or dollar amount, if this is different from the prefilled value. The value requested will depend on how the deduction has been configured.

5. If the Deduction item is set up with Direct Credit Details, you must enter a Reference. This will appear on the employee pay and in the Deduction Bank File to identify items that have been withheld and paid. 

   • The Reference will truncate in the bank file to a maximum of 18 characters for AU and 12 characters for NZ.

   • If a Deduction item is not set up for Direct Credit, the Reference field is optional. 

6. Click Save.

Set the Deduction Values in an Employee Profile

When a deduction is first assigned to an employee, you can set the Start Date, Finish Date, and other values, depending on the deduction item type. The default values that have been entered in Config will appear in grey in the relevant fields, and will be applied if you do not overwrite them.

Fixed deduction items can be set up to deduct a Fixed Amount in dollars, or a Fixed Percentage. You will need to enter the Amount ($) or Percentage that should apply in the relevant field. 

Amounts will be validated by the system to ensure that they do not exceed any limits that have been set for the deduction. 

If you are entering a Percentage, you will also need to nominate whether the deduction applies this percentage to total wages or net wages only. 

Each deduction assigned to an employee will also have a Limited to value. 

• If the deduction’s Limit Type is Fixed Amount, enter the total amount that can be deducted for the employee across all pay periods. When this amount is met, the deduction will no longer be applied in the employee’s pay.
• If the deduction’s Limit Type is Fixed Pay Period, enter the total number of pay periods that the deduction should be applied to the employee. Once these pay periods have passed, the deduction will no longer apply. 
• If the deduction’s Limit Type is Unlimited, this will automatically display under Limited to. 

Each deduction assigned to an employee will also show the Total Amount Deducted. This reflects the total amount that has been deducted up until the last paid pay run. 

Deducted amounts are only included here if pay runs are in a status of Paid.

Assign a Deduction which Finishes in the Middle of a Pay Period

A deduction that finishes in the middle of a pay run will be included or excluded from a pay run on the basis of the ‘Date range applies to’ value that has been set during configuration. 

For example, a deduction is set up as below:

• Pay Period - Weekly (Mon 1 Oct - Sun 7 Oct)
• Pay Date - Tue 9 Oct 
• Deduction Finish Date - Wed 3 Oct 

In this case, if the deduction has been configured with a ‘Date range applies to’ value of ‘Pay Date’, then the pay run will not include the deduction. 

If the deduction is set with a ‘Date range applies to’ value of Pay Period, then the pay run will include the deduction.

To set or edit the ‘Date range applies to’ value, go to Config > Payroll > Deductions > select deduction > Date range applies to.

Assign a Deduction with a Future Start Date

When a deduction is assigned to an employee with a Start Date that falls in the future, the system will automatically add this deduction to the relevant pay run.

For example, a deduction is set up as below:

• Pay Period - Weekly (Mon 1 Oct - Sun 7 Oct)
• Pay Date - Tue 9 Oct 
• Deduction Start Date - 29 Oct 

In the above example, the deduction will be applied to the employee’s pay in the pay period starting Mon 29 Oct. It will not be included in any pay runs prior to this.

Assign a Deduction with a Future Finish Date

When a deduction is assigned to an employee with a Finish Date that falls in the future, the system will automatically cease including the deduction in the relevant pay run. 

The pay period that the deduction finishes will depend on whether the deduction item is configured with a ‘Date range applies to’ value of Pay Period or Pay Date.

For example, a deduction is set up as below:

• Pay Period - Weekly (Mon 1 Oct - Sun 7 Oct)
• Pay Date - Tue 9 Oct 
• Deduction Finish Date - 29 Oct

If the deduction is configured to Pay Period, then the pay run for the period Mon 29 Oct - Sun 4 Nov will be the final pay run to include the deduction.

If the deduction is configured to Pay Date, then the last pay run to include the deduction will be the period of Mon 15 - Sun 21 Oct (with pay date Tue 23 Oct). The pay run for the period Mon 29 Oct - Sun 4 Nov will not include the deduction, as the pay date will fall on Tue 6 Nov. 

Edit and Delete Employee Deductions

You can edit a Fixed Amount or Fixed Pay Period deduction that has been assigned to an employee up until the deduction is included in a pay run for that employee. After this point, all fields will be locked except for the Finish Date. 

If you need to adjust the locked deduction value, you will need to:

1. Click +Add Deduction, selecting the deduction item and setting the Start Date to the current date.

2. Enter the correct deduction amount in the new deduction.

3. Click Edit on the original deduction and enter a Finish Date to end the deduction..

4. Set the original deduction deduction as inactive by removing the tick from the ‘Active’ button.

Unlimited deductions can be updated on the employee profile after they have been included in a pay.