Concept: Fiscal Year Proration with HCM Event (CAN, USA)

Workday prorates commitments and obligations when a pay period spans 2 fiscal years. You can enable either the

Earnings Proration

Forward Accrual Proration

options on the

Edit Company Payroll Commitment Options

task. Workday will calculate existing earnings proration before applying fiscal year proration.

When an HCM event such as New Hire
or Compensation Change
occurs within a prorated subperiod, Workday uses these

Calculation Proration

options from the

Edit Earning

task to calculate proration within that subperiod:

Prorate Using Days Worked

Prorate Using Calendar Days

Prorate Using Annual Working Days

When the final pay period of a fiscal year crosses into the next fiscal year, and you have fiscal year proration configured, Workday prorates the obligation and commitment balances:

For the current fiscal year, Workday creates a sub-period that begins on the pay period start date and ends on the fiscal year end date.

For the following fiscal year, Workday creates a sub-period that begins on the fiscal year start date and ends on the pay period end date.

When you complete payroll for the final full pay period of the current fiscal year, Workday prorates and liquidates the amounts in the first sub-period at the end of the fiscal year.

Example: Forward Accrual Proration Using Calendar Days

A budget manager needs to prorate a worker's earnings for a pay period that spans 2 fiscal years. The budget manager:

Sets up forward accruals using the

Edit Period Schedule

task.

Enables the Forward Accrual Proration
option on the

Edit Company Payroll Commitment

task.

Selects

Prorate Using Calendar Days

option on the

Edit Earning

task.

An HR administrator makes a compensation change to the worker's earnings for the same pay period.

Field	Result
Fiscal Year	7/1/19 - 6/30/20
Final pay period for 2019	6/26/19 - 7/9/19
Forward accrual - Days to accrue	3
Forward accrual - Days in basis	14
Calendar days for full pay period	10
Worker's earning for pay period	4000
Compensation change on 7/4/19	5000

Workday calculates earnings for the prorated subperiods based on forward accrual as:

Subperiods	Result
Subperiods pay (6/26/19 - 6/30/19)	(Days to accrue/ Days in basis) x Earnings: (3/10) x 4000 = 1200
Subperiods pay (7/1/19 - 7/9/19)	((Days in Basis - Days to accrue)/ Days in basis) x Earnings: (7/10) x 4000 = 2800

Workday then calculates prorated obligation as:

Description	Result
Calendar days in subperiod (7/1/19 - 7/3/19) before compensation change	3
Calendar days in subperiod (7/4/19 - 7/9/19) after compensation change	6
Total calendar days in subperiod	9
Prorated obligation before compensation change (7/1/19 - 7/3/19)	[(Days in subperiod before compensation change)/Calendar days in full subperiod)] x [Subperiod pay amount]: (3/9) x 2800 = 933.33
Prorated obligation after compensation change (7/1/19 - 7/3/19)	[(Days in subperiod after compensation change)/Calendar days in full subperiod)] x [Subperiod pay amount after compensation change]: (6/9) x [(7/10) x 5000] = 2,333.33

Configure Payroll Commitment Options (CAN, USA)