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Administrator Guide
Last Updated: 2024-09-20
Create a Payroll Third-Party Payment

Create a Payroll Third-Party Payment

Security: These domains in the Core Payroll functional area:
  • Set Up: Payroll (Payroll Third-Party Payments)
  • Process: Payroll Third-Party Payments Settlement
  • Process: Payroll Third-Party Payments Escheatment
When you enable payroll third-party payments on a deduction recipient, Workday generates payable items on result lines for payments that need to be sent to a third party. You can add this payable item to a settlement run to generate a payment to the deduction recipient.
You can use this process to generate and settle payments for:
  • Income Withholding Orders (IWO) or Court Orders
  • For Payroll for Canada and the U.S., agency fees for Income Withholding Orders
  • Benefit Premiums
  • Retirement and pension contributions
  • Charitable contributions
  • Union dues
  • Other customer-owned employee and employer deductions.
  1. Access the
    Create Deduction Recipient
     task. For more information, see Create Deduction Recipient.
    The deduction recipient serves as the payee for payroll third-party payments.
  2. Select the
    Enable Payroll Third-Party Payments
     checkbox.
  3. Workday selects the
    Always Separate Payments
     checkbox by default when you select
    Enable Payroll Third-Party Payments
    .
    The
    Always Separate Payments
     option generates an individual payment for each payroll third-party payable item. For more information, see Concept: Payroll Third-Party Payable Items.
  4. Add a row to the
    Payroll Third-Party Payments
     grid on the deduction recipient snapshot.
  5. In the
    Pay Component
     field, select the pay component associated with the deduction recipient. For example, you would select
    Charitable Contribution
     to make a charitable contribution deduction.
  6. (Optional) In the
    Worktag
     field, select from
    Company
    ,
    Pay Group
    , and
    Custom Worktag
     (if configured). Custom Worktag will only be available if you have configured a custom worktag dimension in the Calculation Worktag field on the Pay Component.
    Acceptable worktag combinations are:
    • (Single) Custom Worktag value of one custom worktag dimension.
    • (Single) Custom Worktag value of one custom worktag dimension AND (single) Custom Worktag value of another custom worktag dimension.
      Note:
       This supports pay components with 2 custom worktag dimensions configured in the calculation worktag field.
    • Company AND Pay Group.
    • Company AND Pay Group AND (single) Custom Worktag value of one custom worktag dimension.
    • Company AND Pay Group AND (single) Custom Worktag value of one custom worktag dimension AND (single) Custom Worktag value of another custom worktag dimension.
  7. Access the
    Run Pay Calculation
     task. For more information, see Calculate On-Cycle Payroll.
  8. Access the
    Create Settlement Run
     or
    Schedule Settlement Run
     task. For more information, see Steps: Use Settlement.
  9. Add the payroll third-party payable items to the settlement run. To find these items, use the
    All Available Payroll Third-Party Payments
     filter, or custom filters you create. To add payroll third-party payable items manually, select the
    Payroll Third-Party Payments
     payment category from the
    Add
     button. For more information, see Concept: Payroll Third-Party Payable Items.
  10. Complete the settlement run.
When you generate a payroll result for a worker, Workday generates a payroll third-party payable item if these values match in both the payroll result line and the Payroll Third-Party Payments grid:
  • Pay Component
  • Company
  • Pay Group
  • Custom Worktag (if configured).
You want to create a deduction recipient for a benefit provider where the benefit premium amounts have been calculated in Workday. First, configure benefit plans in Workday. For more information, see Steps: Set Up Benefits. Then, follow steps 1 - 4 described above. In the
Pay Component
 field of the
Payroll Third-Party Payments
 grid, select a benefit related pay component with one or more benefit plans are assigned. In the
Benefit Plan
 field, select the benefit plans specific to the benefit provider associated with the deduction recipient. Continue from step 6 onward.
The employee must be enrolled in a benefit plan mapped in the same row as the pay component. Enrollment must be active as of the period end date or payment date of the payroll result where you've enabled Coverage Cost as of payment date on the pay component.