Protected Earnings are the minimum amount paid to an employee or contractor as a net wage to cover the basic cost of living.
When a Protected Earnings limit is set, the net payable to an employee will not drop below the limit when any deductions are being applied. This may mean that only a portion of a deduction will be withheld or that some deductions will not be applied to a pay.
Configure a Protected Earnings Limit
To configure the Protected Earnings limit for a deduction item:
Go to Config > Payroll > Deduction.
Select the deduction you would like to edit.
Select whether the limit is based on Gross Wages or Net Wages.
If the ‘Pre Tax Deduction’ checkbox is ticked, the Protected Earnings limit will be based on gross wages.
If the ‘Pre Tax Deduction’ checkbox is not ticked, the Protected Earnings limit will be based on net wages.
Set the Calculation Type as a percentage or fixed value, then enter this value in the Protected Earnings Below field.
Order of Application for Protected Earnings Limits
When deductions have a Protected Earnings limit set and they are included in an employee's pay, they will apply in the following order:
- Pre-tax deductions
- Post-tax deductions