Concept: Allocation of Payroll Costs

Workday Default Allocations

This table displays how Workday automatically allocates different types of payroll costs and which types you can reallocate.

Payroll Cost Type	Default Allocation	Reallocate?
Employee earnings in the Adds to Gross or Adds to Net pay component group.	To the: Cost centers, projects, grants, and other organization types associated with the worker's supervisory organization. Worker's location, if you enabled location worktags for payroll costing. If you use the Change Organization Assignments task to change a worker's cost center, fund, or other organization type, Workday allocates earnings to those organizations instead. For workers with multiple positions, Workday allocates the earnings to the organization assignments associated with their supervisory organization.	Yes
Employer-paid expenses The taxes and benefits that add to labor costs, but not to a worker's gross or net pay. Workday identifies them as additional pay components or in additional pay component groups for the run category.	Based on the distribution of workers' gross pay earnings. (CAN, USA) For workers with multiple positions, Workday allocates expenses for worker-based pay components to the processing position. (AUS, FRA, UK) For workers with multiple positions, Workday allocates expenses for worker-based pay components to the primary position.	Yes
Employee deductions	(CAN, USA) To the cost centers, projects, grants, and other organization types associated with the supervisory organization of the worker's processing position. (AUS, FRA, UK) To the cost centers, projects, grants, and other organization types associated with the supervisory organization of the worker's primary position.	Yes
Net pay	(CAN, USA) To the cost centers, projects, grants, and other organization types associated with the supervisory organization of the worker's processing position. (AUS, FRA, UK) To the cost centers, projects, grants, and other organization types associated with the supervisory organization of the worker's primary position.	No
Fringe benefit expenses	(CAN, FRA, UK, USA) Based on the distribution of the worker's gross pay earnings.	No
Fringe benefit recovery	(CAN, FRA, UK, USA) According to the balancing worktag, when you enable worktag balancing.	Yes

Allocations Based on Pay Period End Date

Workday applies the allocation instructions in effect on the pay period end date to the entire period. You can apply them to the mid period by selecting the

Enable Mid Period Costing

check box on the

Maintain Payroll Accounting Options

task.

When an instruction spans pay periods, the available values are the ones in effect on the end date of the last pay period included in the instruction's start and end dates.

Example 1: The current pay period is June 8 to June 14, and Ernesto has these worker overrides:

Row 1: June 1 - June 10

Row 2: June 11 - June 20

Row 3: June 21 - June 30

Workday applies the instructions for the row 2 override because it includes the June 14 pay period end date.

Example 2: The current pay period is January 1 to January 31. Amanda has worker overrides for January 10 to January 15. Because the pay period end date falls outside of the override dates, Workday applies the Default Organizational Assignments. For a February 15 allocation end date, Workday would apply the allocation instructions to the January pay period.

Proration and Midperiod Changes to Cost Allocations

When you select

Enable Mid Period Costing

on the

Maintain Payroll Accounting Options

task and change costing allocations midperiod, Workday prorates costs for earnings and deductions.

Workday uses the earning's proration method when you select

Prorate Using Days Worked

or

Prorate Using Calendar Days

while creating or editing an earning. Workday doesn't support midperiod costing with the

Prorate Using Annual Working Days

proration method, and uses calendar days instead. When you don't select a proration method for an earning, Workday prorates costs based on calendar days.

Workday always prorates deductions based on calendar days.

When Workday Payroll passes costs to Workday Financials, it also passes the end date of the costing allocation as the budget date.

Workday recognizes midperiod costing allocation changes for these organizations:

Business Unit

Cost Center

Custom Organizations

Fund

Grant

Location

Program

Project Plan Phase

Region

Changes to a worker's Default Organizational Assignments don't cause costed earnings proration.

Forward accruals use the costing allocations in effect on the period end date.

Rounding

When you allocate costs across multiple organizations, Workday calculates the final distribution using the formula: Total Calculated Value of Pay Component - Sum of All Instances Prior to Final Instance
= Final Distribution Amount
, and rounds the result to the nearest penny.

Example: Base pay of 1225 distributes across 3 cost centers. Workday applies the formula to instance 3:

Cost Center	Distribution Percent	Amount Allocated to Cost Center
200	33.33	1225 x 33.33 = 408.29 (rounded to nearest penny)
300	33.33	1225 x 33.33 = 408.29 (rounded to nearest penny)
400	33.34	1225 - (408.29 + 408.29) = 408.42

Reversals

You can reverse payroll results that include earnings with associated override values. Workday uses the allocation instructions associated with the original results to process the reversal.

Payroll for France doesn't support reversals.

Multiple Positions

For Payroll for Canada, Payroll for the UK, and Payroll for the U.S., when you enable the multiple jobs functionality from the Position Setup Options
field on the Edit Tenant Setup - HCM
task, you can define cost allocations for workers based on each of their positions. See: Define Cost Allocations for Position Restrictions.

Jean has 2 positions, each belonging to a different cost center:

Researcher, cost center 0001

Professor, cost center 0002

You want to allocate 50% of her earnings to cost center 0003. Access the

Assign Costing Allocation

task for her researcher position and enter:

Default (As of Start Date)	Costing Override	Distribution Percent
Cost Center: 0001	No entry	50
	Cost Center: 0003	50

Now, access the

Assign Costing Allocation

task for her professor position and enter:

Default (As of Start Date)	Costing Override	Distribution Percent
Cost Center: 0002	No entry	50
	Cost Center: 0003	50

For her researcher position:

50% of her earnings will go to cost center 0001.

50% of her earnings will go to cost center 0003.

For her professor position:

50% of her earnings will go to cost center 0002.

50% of her earnings will go to cost center 0003.

Getting Cost Allocation Data

The Get Worker Costing Allocation
web service retrieves costing information from a worker or position restriction.

Rescinding an Assigned Costing Allocation

You can’t rescind an assigned costing allocation once it has been used in a journal calculated after 09-20-2025 and with a status of Created, Error, or Posted. If you want to make changes to an existing costing allocation that you can no longer rescind, you can update the allocation from the Proposed Costing Allocations
tab.