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 clock-in and clock-out 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 clock-in and -out for an employee, the actual clock-in and -out and the calculation of overtime.

Note

Default are changed from default settings so that is considered pay time.

Mon

Tue

Wed

Thu

Fri

Total

Expected clock-in time

07:00

07:00

07:00

07:00

07:00

N/A

Expected clock-out 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 clock-in time

07:00

07:00

09:00

07:00

09:00

N/A

Actual clock-out 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

Note

Whether absence is valid or not is decided by the setup of the absence group. If absence time is not considered valid, select the box in the form.

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.

1. Click > > >

2. Click for the specific pay agreement and set up the following.

1. In the field, select .

2. Leave the empty.

3. In the field, select .

4. In the field, select .

5. In the field, enter a pay period of one week.

6. In the field, select YES.

3. Click

4. Select 1301.

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

+ 3 hours

+ 3 hours

+ 6 hours

- 3 hours

- 1 hours

- 4 hours

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.