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Administrator Guide
Last Updated: 2025-05-30
Setup Considerations: Flexible Payment and Deduction Options

Setup Considerations: Flexible Payment and Deduction Options

You can use this topic to help make decisions when planning your configuration and use of flexible payment and deduction options. It explains:
  • Why to set them up.
  • How they fit into the rest of Workday.
  • Downstream impacts and cross-product interactions.
  • Security requirements and business process configurations.
  • Questions and limitations to consider before implementation.
Refer to detailed task instructions for full configuration details.

What They Are

In Workday, flexible payment and deduction options provide a centralized business process to manage discretionary payments and deductions for workers through payroll. Examples:
  • Advances (CAN, UK, USA)
  • Donations
  • Loans

Business Benefits

You can use flexible payment and deduction options to increase efficiency in your payroll operations by:
  • Reviewing workers' requests, and status and outstanding balances, at any time.
  • Recording flexible payment and deduction on behalf of workers, bypassing approvals.
  • Setting limits on payment and deduction request types for more control over when and how much workers can request.
  • Configuring goal or target amounts as correctable, helping you avoid manual overrides and adjustments.
You can also enable workers to:
  • Request their own payments and deductions, reducing manual processing.
  • View the status of their requests and balances at any time, reducing the time you spend responding to queries.

Use Cases

Set up flexible payment and deduction options for:
  • Charitable donations where the worker specifies a total amount and deduction schedule.
  • The cost of company-issued uniforms that the worker pays for over time.
  • Advances (CAN, UK,USA) or loans (FRA) that workers can request for vacations, which they repay in deductions from their regular pay.
  • Cycle-to-work schemes that reduce the worker's pretax pay (UK).

Questions to Consider

Questions
Considerations
What types of flexible payment and deduction options do you want to support?
You can set up flexible payment and deduction types for different use cases, such as loans, charitable contributions, and equipment reimbursements. Each type can have different options and limits. You can also set up unique earnings and deductions for each type.
How do you want to make payments to workers that they’ll repay?
You can configure a flexible payment and deduction type with both an earning and a deduction.
How can workers request goal or target amounts (deductions that aren't repayments)?
Configure a flexible payment and deduction type with only a deduction.
How do you want to manage corrections to goal or target amounts for workers?
You can configure a goal or target amount as correctable, which enables you to change the target amount even after running several pay completes.
The deduction amount doesn't update automatically, but you can change it manually when you’re correcting the business process.
You can't access or update the number of installments because Workday doesn't store this information.
How do you support salary sacrifice for a flexible payment and deduction option?
You can create an earning with the calculations normally used for deductions (a negative earning). Select it as the deduction when you create the flexible payment and deduction type.
What period of time do you want to limit worker requests to?
You can configure payment and deduction types with an available date range.
How many simultaneous flexible payment and deduction requests do you want workers to have?
You can configure a flexible payment and deduction type to enable only 1 active request at a time. The worker can't request that type again until Workday fully deducts the active request.
You can't automatically prevent workers from requesting a different flexible payment and deduction type, but the approver can reject the request.
How do you want to manage worker requests for ongoing deductions?
Flexible payments and deductions are for a defined amount and number of installments. You can use the voluntary deductions feature to enable ongoing deductions with no specified end date.

Recommendations

To improve usability, create custom labels to replace the Workday default labels on flexible payment and deduction options tasks and reports.
Create keywords in your tenant to help workers find flexible payment and deduction options tasks and reports.

Requirements

Create dedicated pay components for flexible payment and deduction options.

Limitations

This feature doesn't support:
  • Creating or updating flexible payment and deduction transactions using payroll input web services.
  • Input from payroll input workbooks.
  • Interest charges on outstanding balances.
  • Ongoing payroll inputs.
  • Payroll history payments.
  • Payroll reversals.
  • Proration, except for leave of absence subperiods.
  • Retroactive loans and advances.
  • Tracking or recouping arrears.
Workday doesn't support net pay validation for flexible deductions, which can reduce net pay below the selected minimum net pay amount even if you assign them the lowest priority order on the
Maintain Deduction Priorities
 task. However, doing so can help you ensure that net pay validation iterates over the other deductions. You can also:
  • Correct the goal or target amount for flexible deductions you've configured as correctable.
  • Use payroll input to reduce the flexible deduction amount for the pay period.
Workday doesn't store the number of installments for flexible deductions. The goal, target, or deduction amount is deducted in every pay period until its outstanding balance reaches zero, regardless of the number of installments initially selected.
Workday doesn't support flexible payment and deduction options for workers:
  • In third-party payroll pay groups.
  • On international assignment.
  • Who relocate from a Workday Payroll supported country to a nonsupported country.
Workers with multiple positions can request flexible payments and deductions only for their primary position.
Workday doesn't convert the currency on existing flexible payment and deduction requests when a worker moves from 1 Workday Payroll country to another. You can either:
  • Manually calculate the balance and installment amounts in the currency of the new country and correct the transaction.
  • Add a one-time payroll input to offset the original amount and recreate the transaction in the currency of the new country.
For Payroll for the U.S., you can't set up flexible deductions for pretax deductions if you have also enabled Ongoing Multiple Work Jurisdictions.

Tenant Setup

You can use the
Edit Tenant Setup - Search
 task to create keywords to help workers find the flexible payment and deduction options tasks and reports. Examples: Advance, Balance, Goal, Loan.

Security

Configure these domains in the Core Payroll functional area:
Domains
Considerations
Process: Flexible Payments and Deduction Options Management
Enables you to use web services to process flexible payment and deduction transactions.
Report: Payroll (Flexible Payments and Deduction Options)
Enables you to view workers' flexible payment and deduction transactions.
Self-Service: Payroll (Flexible Payments and Deduction Options)
Enables workers to view their own transactions.
Set Up: Payroll (Flexible Payments and Deduction Options)
Enables you to create and edit flexible payment and deduction types.

Business Processes

Configure the
Request Flexible Payment and Deduction Options
 business process security policy to:
  • Identify the security groups that can request, approve, and take other actions on a request.
  • Set up notifications to let workers know when you take action on their requests.
Don't set up step conditions that bypass the approval step. You need to specify the payment and first deduction periods when you approve the request.

Reporting

Reports or Dashboards
Considerations
My Flexible Payments and Deductions
 worklet
Enables workers to:
  • Review the balances of existing requests.
  • Check the status of new requests.
Pay
 dashboard
You can add the
My Flexible Payments and Deductions
 worklet to the
Pay
 dashboard to enable easy worker access.
View Flexible Payments and Deductions
 report
View flexible payment and deduction events.
From the related actions menu of an event, you can:
  • Approve or deny a request.
  • Correct amounts on a request.
  • Rescind a previously approved request.
You can use the
Payment/Deduction Type ID
 from the report as a payroll worktag when you:
  • Adjust the request through payroll input.
  • Pay the request with an on-demand payment.
  • Use web services to process requests.
You can use the
Flexible Payment and Deduction Options
 report data source to create custom reports on flexible payment and deduction events.

Integrations

Web Services
Considerations
Get Flexible Payment and Deduction Event
Use to retrieve requests from Workday. Example: To get data from a previous bulk load that you need to rescind.
Import Flexible Payment and Deduction
Use to bulk load requests. Example: A company-wide donation campaign.
Import Payroll Off-Cycle Payment
Use to bulk load replacement or additional payments for flexible payment and deduction events.

Connections and Touchpoints

Workday offers a Touchpoints Kit with resources to help you understand configuration relationships in your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.