The following example illustrates the use of the pay adjustment feature.
Rules for overtime pay
Suppose that a company's rule for overtime states that overtime will only be paid if the employee has worked a minimum of 40 hours of standard time per week.
If an employee has worked overtime in the beginning of the week, the overtime is reduced if the employee has not reached 40 hours of standard time at the end of the week and the cause for the missing hours is an absence that has no valid reason.
If the missing hours are caused by an absence that has a valid reason, no reduction is made in the overtime.
Setup of overtime payment
Suppose that company sets up the following pay types:
Pay type 
Paid for 

1201 
All standard working hours. 
1301 
The first two hours of overtime per day. 
To secure paying the correct amount of overtime, a rule for pay adjustment can be set up: Paid overtime will be reduced if the actual standard number of hours for the pay period is less than the expected standard number of hours for the pay period.
The calculation of the pay adjustment is based on the following:

The calculated expected standard time for the week.
Note 

The expected standard time for a day is the time between the planned clockin and clockout time as set up in the profile. For more information about profiles see About profiles. 

The realized paid standard time.
Note 

The realized paid standard time for a day is all the paid hours minus the overtime hours. 
The number of hours that overtime is reduced is the difference between the paid standard time and the expected standard time of the week.
The following table shows the expected clockin and out for an employee, the actual clockin and out and the calculation of overtime.
Mon 
Tue 
Wed 
Thu 
Fri 
Total 


Expected clockin time 
07:00 
07:00 
07:00 
07:00 
07:00 
N/A 
Expected clockout time 
15:00 
15:00 
15:00 
15:00 
15:00 
N/A 
Expected paid time 
8 hours 
8 hours 
8 hours 
8 hours 
8 hours 
40 hours 
Actual clockin time 
07:00 
07:00 
09:00 
07:00 
09:00 
N/A 
Actual clockout time 
18:00 
14:00 
15:00 
18:00 
15:00 
N/A 
Paid (valid) absence 
0 hours 
1 hours 
0 hours 
0 hours 
0 hours 
1 hours 
Not paid (not valid) absence 
0 hours 
0 hours 
2 hours 
0 hours 
2 hours 
4 hours 
Total paid time 
11 hours 
8 hours 
6 hours 
11 hours 
6 hours 
42 hours 
Overtime 
3 hours 
0 hours 
0 hours 
3 hours 
0 hours 
6 hours 
Specification of payroll transactions before adjustment
According to the above specified rules for paying standard time and overtime, the payroll transactions will be as follows for Monday and Thursday:
Monday 
Thursday 


Paid overtime Pay type 1301 
3 hours 
3 hours 
The total paid hours of the week is 41 of which 6 hours are overtime.
The paid standard time of the week is 40 so the overtime should only be 42  40 = 2 hours.
The 4 hours of overtime reducing absence must somehow reduce the paid overtime of the week. This is made possible by setting up a pay adjustment.
Set up pay adjustment
Specification of payroll transactions after adjustment
After pay adjustment has been set up, Microsoft Dynamics AX will make the necessary adjustments daily when approving and transferring. For more information about approving and transferring registrations, see Calculating, approving, and transferring registrations.
The corrections made to the payroll transactions will be as follows:
Monday 
Thursday 
Total 


Paid overtime before adjustment. 
+ 3 hours 
+ 3 hours 
+ 6 hours 
Adjustment pay type 1301 
 3 hours 
 1 hours 
 4 hours 
Paid overtime after adjustment 
0 hour 
+ 2 hours 
+ 2 hours. 
Note 

Even though the overtime reducing absence is on Wednesday and Friday Microsoft Dynamics AX makes the adjustments starting on the first day of the selected pay period. 