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Administrator Guide
Last Updated: 2026-05-15
Define Deduction Priorities and Arrears Handling

Define Deduction Priorities and Arrears Handling

Security:
Set Up: Payroll (Calculations - Payroll Specific)
 domain in the Core Payroll functional area.
When a worker's net pay falls below the minimum defined net pay, you can define how to:
  • Eliminate or reduce deductions.
  • Track and later recoup arrears.
You can define the deduction priority when eliminating deductions and recouping arrears. For each deduction, you can also define whether to:
  • Take partial deductions.
  • Recalculate other associated deductions.
You can't stop arrears when a worker goes on leave. However, you can configure the
Worker Eligibility
 section of a deduction to only process arrears when the worker's status is active. For more information, see Concept: Pay Component Eligibility. You can also configure this at the run category level on the
Nonactive (On Cycle, On Demand Replacement)
 tab. For more information, see Example: Set Up Pay Run Category for Workers on Leave.
  1. Access the
    Maintain Deduction Priorities
     task.
  2. Add a row for each deduction that you want to:
    • Reduce or eliminate in a specific order when an employee's net pay falls below the minimum net amount.
    • Recover in a specific order when multiple deductions fall into arrears.
    Workday:
    • Reduces or eliminates deductions to restore net pay in the reverse order of the rows on the grid.
    • Recovers arrears amounts in the same order as the rows in the grid.
    For Payroll for the UK, Workday recommends that you only add customer-defined deductions, as the priorities are automatically assigned for Workday-delivered statutory deductions.
    For Payroll for Australia, Workday recommends that you only add customer-defined deductions, as the priorities are automatically assinged for Workday-delivered statutory deductions.
  3. As you complete the task, consider:
    Option Description
    Do Not Take Partial Deduction
    Select to prevent Workday from resolving the deduction when the employee’s net pay isn’t sufficient to take the sum total amount for the deduction. If there are multiple payroll result lines within a payroll result for the same deduction, Workday applies this setting to the sum total of the payroll result lines for the deduction.
    Clearing the check box enables Workday to take partial deductions to restore the net pay to the net pay minimum.
    Example: Janet's gross pay is 400. She has a 500 deduction. Minimum net pay is zero. When the
    Do Not Take Partial Deduction
     is:
    • Selected, Workday doesn't take the deduction. Janet's net pay is 400.
    • Cleared, Workday takes 400 of the 500 deduction. Janet's net pay is zero.
    If a limit is defined on the deduction, in the payroll period where the deduction limit is reached; Workday withholds up to the defined limit, even when you select the
    Do Not Take Partial Deduction
     check box. Example: The deduction has a $75 limited defined. $50 is scheduled to calculate each payroll period:
    • In payroll period 1, $50 is calculated.
    • In payroll period 2, $25 is calculated.
    In payroll period 2; the period where the limit is met, the full $50 can't be withheld, only $25. Workday withhelds $25, meeting the limit defined on the deduction.
    Deduction Impacts Other Deductions
    Select to recalculate other deductions when Workday reduces or eliminates the selected deduction due to insufficient net pay.
    Example: Jonah has 2 deductions:
    • Deduction A (with an assigned priority, and
      Deduction Impacts Other Deductions
       selected).
    • Deduction B = 10% of Deduction A (with no priority assigned).
    If Workday reduces or eliminates Deduction A due to insufficient net pay, Workday also recalculates Deduction B.
    This option applies only if the related deduction directly impacts net pay. In most cases, you won't select this option for an employer benefit contribution based on an employee contribution, because most employer contributions don't affect net pay.
    Workday automatically recalculates taxes when it reduces or eliminates a pretax deduction. Select this check box only to recalculate nontax deductions.
    Deduction Impacts Addl Pay Components/Groups
    Select to recalculate additional pay components and pay component groups in the run category when Workday reduces or eliminates the selected deduction.
    Track Arrears
    Select this check box to keep a record of any deduction amount Workday doesn't take due to insufficient net pay.
    Recoup Arrears
    Select to recoup the arrears amount for a deduction. When you select this check box, also set an arrears limit to ensure accurate arrears processing when workers have enough pay.
When a worker's net pay falls below the minimum amount, you want Workday to apply post-tax deductions in this order of priority: A, then B, and finally C. You also want Workday to track and recoup arrears for all of these deductions. You define these settings on the
Maintain Deduction Priorities
 task.
Deduction
Priority Order
Track Arrears
Recoup Arrears
A
Selected
Selected
B
Selected
Selected
C
Selected
Selected
Pam's gross pay is 75. The minimum net amount is zero. She has 175 in deductions, resulting in a net pay of - 100:
  • A: 100
  • B: 50
  • C: 25
Pam's net pay varies depending on whether you enable partial deductions:
Do Not Take Partial Deductions
Eliminated Deductions (in order of elimination)
Final Net Pay
Calculated Arrears
Selected
  • C: 25
  • B: 50
  • A: 100
75
  • A: 100
  • B: 50
  • C: 25
Clear
  • C: 25
  • B: 50
  • A: 75
0
  • A:25
  • B: 50
  • C: 25
On the next payroll, when attempting to recover arrears, Workday processes deduction A first.
Set arrears limits for the deductions that have the
Recoup Arrears
 check box selected.