Concept: Retro and Pay Component Eligibility

Effective Dating

The

Recalculate During Retro

setting on deductions and the

Do Not Recalculate During Retro

setting on earnings are effective-dated. To change the retro setting on a pay component, add a new effective date. If you don't, any setting changes apply to all periods regardless of a worker's No Retro Processing Prior To (NRPPT) date. When you add a new effective date, you can:

Reset the

Recalculate During Retro

setting for the earning or deduction for the intended time frame.

Advance the NRPPT date to limit how far back Workday processes events for a worker.

When Workday processes a pay component in a prior period, it evaluates the pay component definition based on the appropriate effective date.

You can change the NRPPT date to ensure that no retroactive changes get processed before you want to process the pay component.

Pay Component Eligibility

When a retro pay calculation processes a pay component in a prior period, it evaluates the:

Worker eligibility criteria as of the pay component effective date.

Worker data based on the effective date of the retroactive event.

Active or inactive status of the pay component for the period.

Regardless of the

Retro Calculation

setting, Workday processes retro differences when you update:

Worker eligibility criteria.

The active or inactive status of the pay component.

Workday recommends that when you configure pay components to recalculate in retro, you only reference other pay components that also recalculate in retro. This configuration ensures that retro uses correct amounts when calculating prior periods. Example: You leave the

Do Not Recalculate During Retro

check box clear on an earning. To reference another earning, select 1 with the check box clear. To reference a deduction, pick 1 with the

Recalculate During Retro

selected.

You can configure the

Disable Automatic Retro Differences Processing for Non-Active Workers

field on the

Edit Tenant Setup - Payroll

task to use your pay component configuration on the nonactive tab for run categories when processing retro entries in payroll.

Example: Effect of changes to worker eligibility criteria: To be eligible for a car allowance earning in January, employees must work in city 1, city 2, or city 3.
At the beginning of February, you change the worker eligibility rules. Employees must now work in city 1 or city 3 to receive the car allowance. To make the change, you create a new effective-dated definition.

In February, Nancy, who works in city 2, gets a 100 car allowance that’s retroactive to January. You run a retro pay calculation in March. It doesn't generate any differences for the January car allowance earning because your definition has an effective date for February.
Editing a pay component definition without effective dating can affect employee pay during retro processing. These impacts are especially likely when you change eligibility criteria.

January
February
March

Rule
Must work in city 1, city 2, and city 3.
Effective-dated change: Must work in city 1 or city 3.
Must work in city 1 or city 3.

Event
Nancy, in city 2, gets car allowance effective January.
Run retro.

Retro difference
Zero.
Example: Effect of changes to worker data: Only full-time employees are eligible for a bonus earning. Monica was a full-time employee in January and switched to part time with an effective date in February.
In March, you enter a 1000 bonus for Monica for January. Monica passes the eligibility requirement because she was full-time when the retro event occurred. The retro pay calculation creates a 1000 retro difference for the earning, to pay Monica in the current period.

January
February
March

Rule
Bonus for full-time employees.
Bonus for full-time employees.
Bonus for full-time employees.

Event
Monica switches to part time.

Enter a bonus for Monica.
Run retro.

Retro difference
1000.
Example: Effect of changes to the active or inactive status of a pay component: Global Modern Services (GMS) has a new health plan coming into effect starting March. In March, you inactivate the deduction for the previous health plan. You also leave the
Recalculate During Retro
check box clear on the deduction definition.
The deduction for the previous health plan was 50 per month. Alex receives a 1000 bonus in January. He now has a supported retroactive change, so you run the retro pay calculation in the current period (March). The retro pay calculation generates these retro differences:
50 * 2 as a refund for the deductions in January and February, because it considers all pay components for eligibility.
1000 for the bonus.

January
February
March

Rule
50 health plan deduction.
50 health plan deduction.
50 health plan deduction.

Event
Alex gets a bonus.

Inactivate the previous health plan deduction.
Enter a bonus for Alex.
Run retro.

Retro difference
50 + 50 + 1000 = 1100

	January	February	March
Rule	Must work in city 1, city 2, and city 3.	Effective-dated change: Must work in city 1 or city 3.	Must work in city 1 or city 3.
Event		Nancy, in city 2, gets car allowance effective January.	Run retro.
Retro difference			Zero.

	January	February	March
Rule	Bonus for full-time employees.	Bonus for full-time employees.	Bonus for full-time employees.
Event		Monica switches to part time.	Enter a bonus for Monica. Run retro.
Retro difference			1000.

	January	February	March
Rule	50 health plan deduction.	50 health plan deduction.	50 health plan deduction.
Event	Alex gets a bonus.		Inactivate the previous health plan deduction. Enter a bonus for Alex. Run retro.
Retro difference			50 + 50 + 1000 = 1100

Benefit Plans and Coverage/Cost as of Payment Date

The retro pay calculation processes pay periods whose end date is on or after the effective date of a retro event. When you map benefit plans to pay components, you can select the

Coverage/Cost as of Payment Date

check box, to define how Workday applies the deduction begin date. When you select

Coverage/Cost as of Payment Date

:

In pay calculations, Workday compares the deduction begin date with the payment date instead of the pay period end date.

In retro pay calculations, Workday uses the pay period end date to determine the retro period to process. Workday doesn't include events falling outside the considered period.

Example: You run payroll biweekly and have completed the pay period from January 1 to January 15. The payment date for that period is January 18. The benefits at your company have a coverage begin date of January 1. You select

Coverage/Cost As Of Payment Date

on the deduction mapped to the benefit plan. You enter a benefit change effective on January 16. When you run retro, Workday:

Considers the period from January 15 to January 31 based on the retro event.

Doesn't consider any events falling outside the retro period, regardless of the deduction mapping and the payment date.

Adding and Removing Pay Components from a Run Category

Retro pay calculations recalculate all pay components configured for retro for the run category and pay group processed in the prior period. These pay components include earnings and deductions that you added or removed after the original calculation.

Added pay components: Retro processes added pay components when the worker meets eligibility requirements in the prior period.

Removed pay components: Retro can generate negative differences, reflecting the original resolved value of the earnings in the prior period. Alternatively, you can inactivate the earnings and deductions as of a certain date and keep them in the run category definition.