Automating Tuition Reimbursement in SAP Payroll
- by Imran Sajid, Senior Education Consultant, SAP
- April 20, 2015
Learn how to automate the calculation of tuition reimbursements within SAP Payroll using wage types and schema rules called during the payroll run. Using payroll wage types, constant values, and payroll personnel calculation rules, you can customize this functionality with percentages and plan maximums. Learn how to differentiate between employees in the logic so that different employee groups behave differently based on the company’s requirements. Step through an example scenario that walks you through the process of automating the tuition-reimbursement process.
By reading this article, you will learn how to:
- Create new tuition reimbursement wage types
- Create new constant entries to be referenced during SAP payroll runs
- Create a new schema rule to automate calculations to:
- Create different logic for different employee groups (union or non-union)
- Call the newly-created constant during the run to check percentages and maximums
- Insert a new schema run into your main payroll schema or sub-schema
SAP Payroll wage types – These payroll wage types store the attributes such as taxation, retro-activity, and proration, as well as the total amount to be paid to the employee. SAP Payroll constant table – This is a standard SAP table that can be called in SAP Payroll processing to make decisions within payroll rules. SAP Payroll schema rules – These Personnel Calculation Rules (PCRs) in the SAP Payroll schema build the logic of processing in order to decide what wage types should be paid out to the employee and in what amount.
By creating and implementing an automatic tuition reimbursement within SAP Payroll, you gain a tremendous amount of flexibility in how you can pay the tuition reimbursement to your employees so that is it automatically calculated and paid out within SAP Payroll. This automated process also ensures data accuracy because manual calculations are taken out of the process.
If you do not implement this functionality, then your payroll department
would have to manually enter two separate amounts for anything over
this limit and do manual calculations in order to determine the amount
for each, which results in greater chances for errors to be entered.
Although this article focuses on an implementation in the US, the
fundamental logic is applicable globally.
For example, if your company policy is to pay 75 percent of a tuition reimbursement amount to one group of employees and 100 percent to another group of employees, then the current process likely involves your payroll staff manually calculating the amounts and entering them into the SAP system to be paid out during the Payroll run via additional payments on infotype 15. This type of process opens you up to errors such as someone accidentally entering a 100 percent amount for someone who should only get 75 percent or vice versa. (These amount differences are company-specific and can be predicated on seniority, the hourly or salaried status of employees, if an employee is an executive or non-executive, or anything else depending on the organization’s requirements.)
Implementing this functionality also ensures that you are following the IRS regulatory guidelines by automatically withholding taxes for amounts greater than the maximum threshold. As of the date of this article (February 2015) that amount is set to $5,250. Per the IRS regulations, “If your employer pays more than $5,250 in educational assistance benefits for you during the year, you must generally pay tax on the amount over $5,250. Your employer should include in your wages (Form W-2, box 1) the amount that you must include in income.”
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