Setting Up Wage Types

Objective

After completing this lesson, you will be able to set up wage types

Wage Types

Wage types are the key elements in the wage type structure, and are the most important concepts in Human Resources.

In the SAP system, you need wage types to pay employees.

You use wage types to assign payments and deductions as well as to control the payroll program. To distinguish between individual wage types, you use wage characteristics. In the SAP system, there are two main categories of wage types.

Main categories of wage types are as follows:

Primary or dialog wage types:: Each individual company defines the primary or dialog wage types to depict the company’s specific payroll requirements. The SAP system contains examples of primary or dialog wage types in a sample wage type catalog. For example, MA10 is used for standard pay. The characteristics are generally pre-defined for model wage types.
Secondary or technical wage types:: The standard system also contains secondary or technical wage types. You can recognize these as they have a slash "/" as the first character. Wage type characteristics have not been defined for technical wage types as the system defines their value during payroll processing. Technical wage types are not part of the employee’s master data.

To Set up Wage Types

The process of setting up wage types involves the following three steps:

Steps

Implementing dialog characteristics: Dialog characteristics are about behavior of wage types when they are entered into infotypes, and allow you to make modifications as per customer-specific requirements. Dialog characteristics also act as a differentiator between primary and secondary wage types.
Valuating wage types: Wage type valuation is used for processing in payroll. Like dialog characteristics, wage type valuation also allows you to carry out modifications as per the customer-specific requirements.
Processing payroll: Wage types in payroll are processed according to a set of rules assigned to the wage type valuation. The payroll driver is programmed to process the wage type based on the characteristics assigned to it.

Result

You can customize and categorize various wage structures according to your requirements.

Wage Type Groups

The wage type group concept is used to group wage types that have similar characteristics with regard to payroll.

The following are some examples of wage type groups:

0008: Basic Pay
0015: Additional Payments
2010: Employee Remuneration Information
While working with wage type groups, you should consider the following points:
- You must assign all wage types to a wage type group. This is also true for user-defined wage types.
- You have to assign wage types to wage type groups so that you can work with them in the Implementation Guide (IMG).
- You select these wage types according to the wage type group. This means that you can use the IMG to maintain only those wage types that have been assigned to wage type groups.
- In the IMG, you perform wage type maintenance only for the wage types required in that particular section of the IMG.
- If wage types have not been assigned to a wage type group, they do not appear in the wage type maintenance in the IMG.

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