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Administrator Guide
Last Updated: 2025-05-02
Create Allowance Plans

Create Allowance Plans

  • Set up compensation components and grades.
  • Security:
    Set Up: Base and Plan
     domain in the Core Compensation functional area.
You can create allowance plans for employees as part of their regular paycheck using the pay calculation process.
Examples:
  • A cell phone allowance for a flat amount of 150 USD per month.
  • An off-site reimbursement allowance of 10 percent of an employee's base pay salary per month to offset temporary relocation.
  • A car allowance of 300 miles per week paid at 3 USD per mile.
You can link allowance plans to expense items and pay out to employees using the settlement process. Example: A tuition reimbursement program for a flat amount of 2,500 USD, or a specific number of units per quarter.
You must select a currency to validate values with decimal points. Example: Select
USD
 to enter an
Amount
 value of 150.50.
  1. Access the
    Create Allowance Plan
     task.
  2. Select:
    Option Description
    Reimbursable
    Select this option to link the allowance plan with an expense item.
    The expense item for reimbursement accounts must have an
    Expense Item Amount Type
     of
    Based on Allowance Plan
    . See: Steps: Manage Reimbursable Allowance Plans
    If selected, you can't:
    • Add a compensation element to this plan.
    • Update the
      Percent Based Plan
       options.
    You can access the
    View Reimbursable Allowance Plan Activity
     report and configure it to display on the
    View Worker
    ,
    Worker Profile
    , and
    Talent Profile
    .
    Amount Based Plan
    Targets for the plan are based on a fixed monetary amount.
    Percent Based Plan
    Targets for the plan are based on a percentage of salary.
    This option isn't available if you selected the
    Reimbursable
     option.
    Unit Based Plan
    Targets for the plan are based on a number of units.
  3. In the
    Details
     section, consider:
    Option Description
    Inactive
    Select this check box if the plan isn't available for use. Processes already using this plan complete as normal.
    Expense Item
    Available if you select the
    Reimbursable
     option.
    To be part of a settlement process, the plan must be linked to the
    Expense Item
    .
    Expense Accumulator
    Available if you select the
    Reimbursable
     option.
    Workday Expenses provides these options:
    • Month to Date
    • Month with Custom Start Date
    • Year to Date
    • Year with Custom Start Date
    Allow Overage
    Displays if you select the
    Reimbursable
     option.
  4. In the
    FTE
     section, consider:
    Option Description
    Apply FTE%
    Select this check box to prorate the compensation for employees assigned to this plan based on their full-time equivalent hours percentage.
    You can enable
    Paid FTE
     in the Staffing section on the
    Maintain Localization Settings
     task. If enabled, Workday prorates using paid FTE on compensation plans. Otherwise, Workday calculates FTE by dividing
    Scheduled Weekly Hours / Default Weekly Hours
     when proposing compensation during these business processes:
    • Offer
    • Employment Agreement
    • Hire
    • Change Job
    • Edit Position
    Use Assigned Value in 100% Calculations
    For amount or unit-based plans only. This option doesn't apply to workers Managed by Basis Total (MBT).
    If selected, Workday uses the assigned amount on the plan as the fixed proration value and the 100% value in calculations.
    If not selected, Workday divides the assigned amount by the employee's FTE for 100% FTE calculations.
    Example: You assign a worker with 50% FTE amount-based Bonus Plan A for 1,000 and amount-based Allowance Plan B for 1,000. You select the
    Use Assigned Value in 100% Calculations
     for Bonus Plan A and
    None of the above
     for Allowance Plan B.
    The 100% FTE value calculated for Bonus Plan A is the assigned amount of 1,000. Workday doesn't divide this amount by the worker's FTE. The 100% FTE value calculated for Allowance Plan B is 2,000, which equals the assigned amount (1000) divided by the employee's 50% FTE (0.5): (1000/0.5 = 2000).
    None of the Above
    Workday doesn't apply FTE% and doesn't use the assigned plan value in 100% calculations.
  5. In the
    Allowance Defaults
     section, consider:
    Option Description
    Compensation Basis
    Available if you select the
    Percent Based
    Plan
     option.
    Select the compensation basis Workday uses to determine the target amount (if the worker isn't managed by a compensation basis) for this plan. If the worker is managed by a compensation basis, Workday doesn't exclude this plan when calculating the target amount.
    If you select a compensation basis that includes this plan, Workday excludes this plan when calculating the employee's target amount.
    If you select a subtractive compensation basis, Workday subtracts the subtractive basis amount from the worker's Primary Compensation Basis before calculating percentage-based target amount.
    Compensation Element
    Unavailable if you select the
    Reimbursable
     option.
    Compensation elements store the earnings associated with compensation.
    If you select a compensation element designated as base pay, Workday includes the plan's compensation in the employee's base pay calculation.
    Amount
    Displays if you select the
    Amount Based Plan
     option.
    Enter the flat amount to be paid to the employee.
    Percent
    Displays if you select the
    Percent Based Plan
     option.
    Enter the percent to use to determine the amount to be paid to the employee:
    Allowance = (percent) X (base pay)
    Number of Units
    Displays if you select the
    Unit Based Plan
     option.
    The number of units to be paid to the employee.
    Unit
    Displays if you select the
    Unit Based Plan
     option.
    The measurement in which the employee is paid.
    Per Unit Amount
    Displays if you select the
    Unit Based Plan
     option.
    The monetary value associated with each unit.
    Currency
    Displays if you select the
    Amount Based Plan
     or
    Unit Based Plan
     options.
    The currency in which the allowance is paid.
    Frequency
    Identifies how often you want the allowance to be paid.
    No Override
    To prevent the override of these values for employees assigned to the plan, select this check box.
    • Amount
    • Percent
    • Number of Units
    • Per Unit Amount
    • Currency
    Rounding Rule
    Displays only when you've selected a
    Percent Based Allowance Plan
    .
    For MBT workers with prorated compensation, Workday ignores any rounding rule on the allowance plan.
    Workday uses the pay range frequency to calculate the rounded compensation amount in Workday and payroll calculations.
  6. (Optional) Configure a ceiling for a percent-based allowance plan.
    Enter a
    Ceiling Amount
     and a
    Ceiling Currency
     to place an upper limit on the allowance plan.
  7. You can associate rounding rules with allowance, salary, merit, bonus, or stock plans, or with compensation bases managed by a compensation basis total.
    Security:
    Set Up: Merit and Bonus
     domain in the Advanced Compensation functional area.
  8. In the
    Plan Eligibility
     section, select 1 or more eligibility rules.
    You can't use an eligibility rule more than once in a plan.
    Eligibility rules determine which employees are eligible for this plan. Employees are eligible if they meet the qualifications of any 1 rule. If you select multiple eligibility rules, Workday evaluates each rule independently to determine employee eligibility for the plan.
  9. If you selected an Amount Based or Percent Based plan option, select
    Exclude from Merit
     if you don't want this plan available when you initiate a compensation review process.
  10. In the
    Allowance Plan Profiles
     section, configure these:
    Option Description
    For amount-based plans
    Amount
    ,
    Currency
    , and
    Eligibility Rule
    .
    For percent-based plans
    Percent,
    Eligibility Rule
    , and
    Compensation Basis
    .
    For unit-based plans
    Number of Units
    ,
    Per Unit Amount
    ,
    Currency
    , and
    Eligibility Rule
    .
    If you're defining the plan to have multiple targets, it enables you to create a single plan for what are effectively multiple plans. Example: You can set up one profile where the target for individual contributors is 500 USD and the target for directors is 1000 USD.
You can:
  • Assign (roll out) the plan to employees on the
    Rollout Compensation Plans to Employees
     task.
  • Add the plan to a compensation package on the
    Create Compensation Package
     task.
  • Access these reports:
    Allowance Plan
    ,
    Allowance Plans
    , and
    View Allowance Plan Usage
    .
  • Access the
    Edit Allowance Plan
     task.
    You can update default values only for plans not yet assigned to employees. You can, however, update the
    Compensation Element
     field regardless if the plan is assigned or not.
  • Adjust default values for assigned plans on the
    Set Up Allowance Plan Adjustment
     or
    Set Up Unit Allowance Plan Adjustment
     tasks.
  • Hide the compensation plan type from specified groups of workers using the
    Worker Data: Compensation Plan Type
     domain in the Core Compensation functional area.