Processing Hourly Payments Based on Union Agreements or Positions

  • by Narasimha Rao Ghanta , Associate Manager, SAP Human Capital Management Group, Accenture
  • April 26, 2013
Learn how to calculate the hourly rate based on union agreements, positions, or premiums with the extra-pay indicator functionality in SAP payroll. See how these various options can be used and customized in SAP payroll to calculate and process the hourly payments of the employees based on client requirements.
Key Concept

There are three primary ways to calculate how to pay hourly employees: union agreements, position-based differential payments, and premium rates. Hourly employees are paid at a rate based either on a fixed hourly rate as per a union agreement (pay scales) or at an hourly rate that is set by a particular position. In certain situations hourly employees are also paid a premium (an extra amount or bonus) in addition to the regular hourly rate (this extra payment is either based on company policy or the nature of the work done).

Many companies have hourly employees in addition to salaried employees. I describe some useful methods for companies and users who pay their hourly employees according to union agreements, position-based differential payments, or premium rates to follow. These methods allow the users to pay the employees accurately, efficiently, and promptly with little or no manual intervention.

Employees’ hourly payment rates are usually based on three parameters: union agreements, premium rates, and position-based differential payments. There is also one other method, albeit used infrequently, for processing employees’ differential payments: using extra-pay indicators. I show you how to calculate hourly rates based on union agreements, premiums, or positions, and with the extra-pay indicator functionality in SAP payroll. Learning how to customize these options and use them to calculate these payments is very useful for payroll and business users alike.

Narasimha Rao Ghanta

Narasimha Rao Ghanta is part of Accenture’s SAP Human Capital Management group. He has 10 years of experience in SAP ERP HCM’s various sub-modules, including Payroll (US, the UK, Norway, and The Netherlands), Benefits, Time and Attendance with Cross Application Timesheet (CATS), Employee and Manager Self-Services, LMS, PMS, PA, and OM. He also has expertise in SAP Travel Management. Narasimha’s project experience includes implementations, upgrades, and support, and his industry experience includes retail, public utilities, oil and gas, natural resources, consumer goods, and hospitality. He has worked as a solution architect on a variety of SAP ERP HCM projects.

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