Wage Types

Wage types are used to assign payments and deductions as well as to control the payroll program. You need wage types to pay employees.

In the SAP system there are two main categories:

- Primary or dialog wage types
- Secondary or technical wage types
In the standard delivered SAP HR system you can find many sample wage types both dialog (codes starting with letter eg. Mxxx) and technical ones.
Customer defined dialog wage type codes must start with digit.
You can recognize technical wage types as they have a slash (/) as the first character in the code name.
Technical wage types are not part of the employee's master data. System defines their value during payroll processing.
Wage types characteristics can be set under following SPRO path:
Personnel Management -> Personnel Administration -> Payroll data -> Basic Pay -> Wage Type
New wage type
To create new wage type you must copy existing one. SAP HR contains model wage types. If these sample wage types meet some of your company's requirements you can use the wage type copier. You then use these copies as your wage types and can modify them so that they meet your specific requirements.
REMEMBER: Customer defined dialog wage type codes must start with digit. The wage types that you create via the copy method are included in all of the wage type groups and tables as the original wage type from which you copied. You can use the log to check what was copied.

Transaction for wage types coping:  OH11 or use SPRO path:

Personnel Management -> Personnel Administration -> Payroll data -> Basic Pay -> Wage Type -> Create Wage Type Catalog
 
Permissibility for infotypes You can set up the system so that only certain wage types are permissible for infotypes. You can do this under following SPRO path or using view V_T512Z (transaction SM30):
Personnel Management -> Personnel Administration -> Payroll data -> Basic Pay -> Wage Type -> Check Wage Type Catalog -> Check entry permissibility per infotype
 
When you configure a wage type, you can determine whether it can be entered once or more than once per payroll period.

Groupings
 
Personnel subarea groupings can be used for primary wage types to define wage type permissibility. These groups can be used to determine which wage types can be entered for which employees.

There are two types of groupings:

* employee subgroup groupings
* personnel subarea grouping

Two main values for employees subgroup groupings are:
* 1 – for hourly paid employees
* 3 – for monthly paid employees

You define wage type permissibility for each personnel subarea and employee group under SPRO path or using view V_511_B:

Personnel Management -> Personnel Administration -> Payroll data -> Basic Pay -> Wage Type -> Check Wage Type Catalog -> Define Wage Type Permissibility for each PS and ESG

Wage Type Characteristics

These characteristics describe way of entering of wage types, but they do not describe how they behave in payroll.

You can define followings:

• Validity period
  
• Operation indicator
  
• Minimum and maximum wage type amount
  
• Whether or not the wage type amount should be included in the basic pay total
  
• Default units of time/measurement, minimum and maximum number
  
• Input combinations for number and amount
  
• Indirect valuation and its characteristics

You define this under SPRO path or using view V_T511:
Personnel Management -> Personnel Administration -> Payroll data -> Basic Pay -> Wage Type -> Check Wage Type Catalog -> Check Wage Type Characteristics

Default Wage Types

The system can suggest a default wage type for basic pay (IT0008), to do this appropriate wage type must be included in a wage type model. Here you define the default wage types and the sequence how they should appear in the infotype Basic Pay and whether you can overwrite the defaulted wage type or not.
Personnel Management -> Personnel Administration -> Payroll data -> Basic Pay -> Wage Type -> Revise Default Wage Types

After setting wage type model, LGMST feature need to be defined. Feature LGMST has two return values: firstly, the maximum number of enterable wage types in the Basic Pay infotype (IT0008), and secondly, the wage type model the system is to use, which was defied above.
To access feature LGMST use following SPRO path or transaction
PE03: Personnel Management -> Personnel Administration -> Payroll data -> Basic Pay -> Wage Type -> Enterprise Structure for Wage Type Model

Valuation of Wage Types

There are two valuation types:

• DIRECT - the amount used to valuate the wage type is entered in the infotype manually
  
• INDIRECT - system automatically calculates the amount of the wage type amount based on simple configuration and enters it in the infotype. You can use indirect valuation for infotypes Basic Pay (0008), Recurring Payments/Deductions (0014), Additional Payments (0015).

How to set indirect valuation

First you need to make appropriate settings in Wage Type Characteristics:
Personnel Management -> Personnel Administration -> Payroll data -> Basic Pay -> Wage Type -> Check Wage Type Catalog -> Check Wage Type Characteristics or view V_T511.
Choose the wage type for which you want to use indirect valuation. In the group box Indirect valuation choose the indirect valuation module, which specifies which valuation table is used for indirect valuation. Then specify module variant, which controls read access to the table. To get information about all modules that could be used, use Help pressing F1 on the field Indirect valuation module.
Following are most popular modules:

• TARIF - uses pay scale data from the pay scale groups and levels to sets the amount of wage type in Basic Pay (IT0008) infotype
  
• PRZNT and SUMME - system calculates certain wage types as a percentage (PRZNT) or sum (SUMME) of other wage types

For some modules you need to set how calculation should go. It can be done by simple configuration:
Personnel Management -> Personnel Administration -> Payroll data -> Basic Pay -> Wage Type -> Define Valuation of Base Wage Types

Click here to Download SAP HCM - Wage Type PDF material