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Administrator Guide
Last Updated: 2025-02-21
Setup Considerations: Payroll and Benefits

Setup Considerations: Payroll and Benefits

You can use this topic to help make decisions when planning your configuration and use of Workday Payroll and Workday Benefits. 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

When used together, Workday Payroll and Workday Benefits enable you to integrate worker benefits with their associated costs, including:
  • Defining benefit plans.
  • Configuring payroll earnings and deductions for benefits.
  • Integrating with third-party benefit providers to handle contribution amounts.
This topic only discusses how Workday Payroll interacts with Workday Benefits. It doesn't address how Cloud Connect for Third-Party Payroll (CCTPP) interacts with Workday Benefits.

Business Benefits

Reduce the risk of errors from manual entries by using Workday to pull the latest values automatically into Payroll from Benefits.
Configure security policies to prevent unauthorized users from viewing confidential benefit and payroll data.

Use Cases

  • Process 401 (k), Health Savings, and Spending Account contributions through payroll.
  • Process any benefit plan credits and surcharges through payroll.
  • Deduct benefit plan costs for health care and insurance through Payroll.
  • Configure biweekly pay schedule for 26 paychecks in a year, with HSA and spending account deductions twice a month.
  • Coordinate benefits changes for leave of absence transitions from short-term disability to long-term disability.
  • Process benefit changes that result from salary changes.
  • Automatically enroll workers into a benefit plan based on eligibility rules.

Questions to Consider

Questions
Considerations
Do you need to apply deduction limits to benefit amounts?
If you need to apply a deduction limit to benefit amounts, configure this limit in Payroll. Example: Federal limits on retirement plans or health savings accounts.
If you don’t use Workday Payroll, work with your payroll provider to set limits.
Do you need to create a new deduction or earning? Or, can you reuse an existing one?
When your benefits plans change, you can reuse earnings and deductions.
Don't remove the mapping between an old benefit plan and the associated earning or deduction.
When you remove the mapping for a worker with a supported retro event, Workday tries to rescind all deductions ever calculated for the worker in the retro recalculation.
Workday recommends that you leave the old plan mapped to the deductions. You can remove the benefit plan from the benefit plan year.
If you create a new plan, map it to the deductions as the active plan.
Does your weekly or biweekly payroll overlap payroll years at the end of the year?
Workday automatically processes a deduction if the pay period end date is on or after the deduction begin date.
To prevent Workday from using benefit deduction rates from the wrong year, you might need to modify how Workday applies the deduction begin date.
When you create or edit deductions in Payroll, you can select the coverage or cost as of the payment date. Workday processes the deduction if the payment date is on or after the deduction begin date. Workday doesn't consider in which pay period the deduction starts.
Do you want Workday to adjust the final paycheck to meet the worker's annual deduction goal for HSA and spending accounts?
You can configure a benefit group so that Workday Payroll adjusts deductions in the final pay period to meet annual goals.
To adjust the final paycheck, you must configure the deduction to occur in the final pay period of that year.
To enable this deduction adjustment option:
  • The worker must be enrolled in an HSA or spending account plan in the final pay period of the year.
  • The HSA or spending account must be in a benefit plan year using this calendar year (with end date of December 31).
  • The deduction must be an HSA or spending account plan.
  • You must calculate remaining deductions based on the payment date as opposed to the period end date.
Do you need to manage Déclaration Sociale Nominative (DSN) reporting for France?
You can use Workday Payroll for France to declare benefits information in DSN reporting. To do so, you must:
  • Map benefit contributions to DSN blocks.
  • Enter additional benefit data, such as coverage targets, when setting up the French company tax configuration.
To ensure correct DSN reporting, when setting up health care plans, don't map the same deduction to more than 1 health care benefit plan reported as prevoyance in a DSN. Use the plan that you report as mandatory health and disability coverage in a DSN.
Do you have Irish or UK-based workers?
Irish and UK legislation means that you must provide a pension plan for workers who match specific criteria.
You can combine eligibility assessments in Payroll with a pension plan in Benefits. Based on the assessment results, you can enroll eligible workers into the plan.
Do you match U.S. worker 401(k) contributions?
You can configure set contributions on the benefit plan. If you calculate employer matches based on the worker’s contributions, set up the calculation on the payroll deduction.
Do you enable your workers to give some of their pay regularly to an outside benefit plan or charity?
Occasionally it's impractical to provide a benefit plan, such as when it would only apply to a few workers. In that case, Workday provides alternative functionality that enables workers to request that you take voluntary deductions or flexible payments from their pay.
Example: A worker wants to donate to a specific charity, or to pay back a relocation expenses loan provided by the business.
When do you want to begin and end payroll deductions for a benefit plan?
You can set up enrollment event rules to specify when to begin or end payroll deductions. You can specify when to deduct from a worker's pay by configuring:
  • The coverage begin date, which determines when coverage by the benefit plan starts for a worker.
  • The deduction begin date, which Workday uses to determine the pay period to start withholding deductions from a worker's pay.
Workday only withholds deductions for workers covered by a plan. It uses the combination of the coverage begin date and the deduction begin date to determine when the first deduction occurs.
Similarly, you can configure when to stop payroll deductions based on a:
  • Coverage end date.
  • Deduction end date.

Recommendations

Performance
Workday recommends creating the minimum number of earnings and deductions to optimize performance.
To maximize performance, set up earnings and deductions using precise criteria to streamline payroll processing. Use specific eligibility criteria so that Workday runs calculations only for applicable workers and pay and benefit groups.
Selection Criteria
To prevent possible calculation mismatches, Workday recommends that you use the same selection criteria when you create rules that:
  • Enroll workers into a plan in Workday Benefits.
  • Calculate worker contributions in Workday Payroll.
Global Payroll and Benefits
Workday recommends that you use Workday Benefits to integrate with Workday Payroll.
Workday Payroll for the UK customers who don't have a license to use Workday Benefits can use limited benefits features to support the set up of UK pension auto-enrolment.
If calculating payroll with Workday Payroll for France, Workday recommends using advanced lookup tables to store benefit rates to meet plan requirements.
Health Savings Accounts and Spending Accounts
To simplify the enrollment experience and deduction configurations for catch-up HSA plans, Workday recommends that employers create a separate plan for each of these age groups:
  • Workers under 55.
  • Workers 55 and older.
Workday strongly recommends that you avoid using a plan for all workers with an add-on plan for workers 55 and older.
If you use a deduction schedule different from the pay frequency, use both override and custom scheduling in Payroll to ensure correct deductions. Example: You use a biweekly pay schedule for 26 paychecks in a year, but take HSA and spending account deductions twice a month.
Benefit Earnings and Deductions
Workday recommends that you avoid removing a benefit plan from earnings and deductions. These changes can result in the over- or under-payment of prior deductions, or a lump sum deduction. Instead, remove the benefit plan from the plan year.
Example: You remove an old benefit plan from the deduction and add the new plan. When you run retro calculations, Workday recalculates and attempts to rescind all prior deductions for the worker, resulting in incorrect calculation values.
Consider leaving out HSA and spending plans from retro calculations. Unwanted retro calculations might occur after plan changes or when a worker meets their annual goal.
Avoid using benefit plans labeled with
Do Not Use
. Benefit administrators can mark benefit plans with this label to hide obsolete benefit plans based on an effective date. The
Benefit Plan
 prompt displays on the
Non-Effective Dated
 tab for these tasks:
  • Create Deduction
    .
  • Create Credit
    .
Workday appends the effective date of future-dated benefit plans to the
Do Not Use
 label.

Requirements

Set up your benefit plans before creating the associated earnings and deductions.
If managing DSN reporting, provide the group policy number on the benefit plan and the provider ID.

Limitations

  • Workday Payroll doesn't support effective dating of deductions and earnings. Instead, Workday Benefits enables you to record an effective date between benefit plans and deductions and earnings.
  • To avoid processing a retroactive payroll calculation, you can make plans unavailable to workers after a certain date using:
    • Benefits eligibility rules.
    • Plan year definitions.
  • Workday Payroll for the UK doesn't support pension auto-enrolment in prior pay periods. If you run payroll in arrears, you can either turn off the pension auto-enrolment feature or ensure you monitor the process and make the necessary adjustments.
  • Workday Payroll for Australia doesn't support superannuation configured with Workday Benefits.

Tenant Setup

To determine allowable YTD payroll contributions, you can select an additional HSA coverage target option on the
Edit Tenant Setup - HCM
 task. This option also enables you to configure family or individual IRS limits in Workday Payroll for the additional coverage target.

Security

Domains
Considerations
Manage: Benefits for Organizations
 in the Benefits functional area.
Enables you to create benefit groups.
Set Up: Benefits
 in the Benefits functional area.
Enables you to create benefit plans and set up enrollment.
Set Up: Payroll (Calculations - Payroll Specific)
 in the Core Payroll functional area.
Enables you to create and modify earnings and deductions.
Set Up: Tenant Setup - HCM
 in the Systems functional area.
Enables you to enable the Benefits mobile app and configure tenant options.
You can enable the benefits administrator and the benefits partner to view benefit plan deductions for workers. You can apply segmented security to custom reports based on these segmented data sources:
  • Earning/Deduction Payroll Balances for Organization
  • Earning/Deduction Payroll Balances for Worker
  • Earning/Deduction Payroll Results for Organization (As of Sub Period End Date)
  • Earning/Deduction Payroll Results for Organization, Worker, Period and Date Range (As of Sub Period End Date)
  • Earning/Deduction Payroll Results for Worker (As of Sub Period End Date)

Business Processes

Business Processes
Considerations
Change Benefits
Add as step to other business processes, such as
Change Job
 or
Termination
. Launches the
Change Benefits for Life Events
 business process, which uses the
If there is an effect on employee benefits?
 condition rule to determine whether to create a benefit event.
Change Benefits for Life Event
Enables users to change benefits for life events, including births, divorce, and promotion.
Change Benefits for Open Enrollment
Enables you to open enrollment for benefits. You can add step-related worklets with the
Business Process > Maintain Step Related Worklets
 related action on the
Change Benefits for Open Enrollment
 task.
Change Job
Enables you to change to a worker's position, such as promotion or a transfer, which can affect their benefits. You can add a step to launch the
Change Benefits for Life Events
 business process to initiate a benefit event.

Reporting

Reports
Considerations
All Deductions
All Earnings
Use these reports to verify any pay component configurations, such as which benefit plan the pay component references.
Benefits Eligibility by Benefit Group
Use this report to view future-dated benefits groups.
DSN Benefits Contributions by Establishment
Use this report to compare benefit amounts aggregated by benefit plan and population with the aggregated payroll amounts. (For French Payroll Déclaration Sociale Nominative (DSN) reporting only.)
View Benefit Eligibility Rule Results
Use this report to determine why someone is or isn't meeting an eligibility rule. It can be useful when troubleshooting issues with deductions and credits.
View Workers in Multiple Benefit Groups Audit
Use this task with an effective date to ensure that employees are only eligible for 1 benefit group. It can be useful when troubleshooting issues with deductions and credits.

Integrations

Integration
Considerations
Cloud Connect for Benefits
Workday offers integration templates for benefit providers through Cloud Connect for Benefits (CCB).
Change Benefits
This web service loads workers' benefit elections and retirement savings plans.
Enroll in Retirement Savings Plans
This web service loads workers' retirement savings plan elections. It enrolls workers, updates existing elections, and carries forward prior elections unless they are explicitly changed.

Connections and Touchpoints

Touchpoint
Consideration
Absence
When you configure time off plans to track balances in Absence Management, you can retrieve the units for approved time off as part of earning and deduction calculations. Use absence component-related calculations (ACRCs) to associate absence plans to earnings and deductions. Ensure that you map all absence plans that can impact payroll or benefits earnings or deductions.
HCM Staffing and Compensation
Provide worker and job-related data for payroll and benefit processing, such as:
  • Worker status.
  • Personal information.
Provide salary changes that can trigger benefit enrollment events.
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.