From our last blog about the new Holiday pay ruling, hopefully you now have an idea of what you are going to pay your employees for their uplifted holiday pay. Now, how do we configure SAP Payroll?
While there is no out-of-the-box solution for the new UK holiday pay out there in SAP payroll, there are standard SAP functions that might provide the answer; alternatively, custom functionality could be the best way forward for you.
First, how do you want to calculate your averages for payment? There are two SAP payroll functions which can do this, AVERA and MEANV. Both functions calculate averages, MEANV being the ‘old’ processing of averages and AVERA being the ‘new’ processing. SAP recommend using AVERA, it can use partial periods if you want to calculate the averages for the 84 days before the absences and deal with change in pay periodicity and off-cycle payrolls. Sounds like a solid option right? But using the AVERA function is going to need a retro to build the averages bases. Running such a retro in your payroll could cause problems of its own and wouldn’t be something we would necessarily recommend. On the other hand, MEANV is not going to be as flexible as using AVERA, but it can access the relevant Wage Types directly without cumulations and so it is not going to need that retro that AVERA would. This still might not work for all your scenarios, or back you into a corner in terms of configuration if there were further changes to the legislation or your company’s policy on the matter, so a custom function or operation (see below) might be your choice to keep all options open.
Second, which days will you pay the uplifted holiday pay on, and do these need to be differentiated from other holidays? If so, you’ll need a different Absence Type and therefore probably a different absence quota to apply the different rates of pay. The rulings stated that the uplift had to be paid for the first 20 days of holiday in that year. Many companies will be looking to pay the uplift on all holidays, which makes the configuration a little easier and calculations a bit more transparent.
You might need to head down the custom function road. No matter how and what the averages you need calculated, or the absence days this should be applied to, this can all be coded to meet your needs However, doing so is going to require a developer, who really understands SAP payroll – better: a SAP payroll specialist, who’s good at ABAP. And you should make sure that you test, test and test again across all your possible holiday pay scenarios.
Finally, once you have the values and the days to pay for, you’ll need to think about how to clearly show this on a payslip. A Wage Type on the payslip with the number of hours and the uplifted rate should be enough for employees to see when and how much the uplift has been paid for. If you chose a custom function route, remember to document extensively, and create Wage Types for interim results along the calculations steps where you can. When employees can clearly see what has been calculated and paid, you also then need to be able to explain any questions for them!
Whichever SAP payroll configuration or development road you need to head down for your holiday pay solution, each comes with its own merits, and its own downsides. Contact us today to discuss your solution requirements and we can guide you down the right configuration path.