Payroll Overview

Overview

In this chapter, you explore the general sequence of steps in the payroll process and identify sources of payroll data. You review pay components and complete activities to process payroll from start to finish.

Objectives

After completing this chapter, you should be able to:

List the elements of the payroll processing framework.

Describe how the elements of the framework impact payroll processing.

List the steps in the payroll process.

Identify payroll calculation statuses and options.

Identify sources of payroll data.

Define pay components.

Process payroll.

Payroll Processing Framework

The payroll processing framework includes period schedules, run categories, and pay groups. The association between these three elements identifies when to process payroll, what to process, and who to process.

Diagram showing When Period Schedule first pointing to What Run Category pointing to Who Pay Group.

Payroll Processing Steps

Workday Payroll processing consists of the steps shown here.

Diagram of text with arrows pointing from each one in a circle. Starting with Add Payroll Input, Run Retro Calculation, Review Retro Results, Complete Retro, Run Payroll Calculation, Review Payroll and Accounting Results, Complete Payroll, Settle Payments, and Process Integrations.

The steps that you complete each pay period will vary depending on what is happening in the process. You may repeat some steps, such as adding payroll input and calculating payroll. You will practice these steps as you go through the course.

Step	Description
Add Payroll Input	Although payroll input appears as the first step, this input can occur throughout the payroll process. There are multiple ways to add payroll input: Use the Add Payroll Input by Worker task. As a Related Action off a worker, select Payroll > Add Input. As a Related Action from an in-progress payroll result, select Payroll Input for Worker and Period > Add Input. Run an EIB (Enterprise Interface Builder) integration.
Run Retro Calculation	In Workday, a retro is any change that affects a completed pay result. Retroactive changes can come from benefits, compensation, time, and other payroll touchpoints. Run the Run Retro Pay Calculation task to calculate retroactive results for workers.
Review Retro Results	Review your retroactive results, so that you can complete the retro and move on with the current payroll processing steps.
Complete Retro	Run the Run Retro Pay Complete task. Complete your retro processing before you can complete your regular processing.
Run Payroll Calculation	You can run a pay calculation using the Run Pay Calculation task and review the calculation results at any point during your payroll processing. The payroll has a status of In Progress when at least one worker has gross-to-net results. Running a pay calculation creates both gross-to-net and accounting results.
Review Payroll And Accounting Results	You can review payroll results throughout the process. However, before you complete the payroll, do a final check of payroll and accounting results. Use delivered reports to review gross-to-net results. Workday automatically generates accounting entries when you calculate on-cycle and off-cycle payrolls. It generates entries for accruals and accrual reversals as part of typical, on-cycle runs based on the accrual dates specified on the period schedule.
Complete Payroll	You can complete payroll results for all In Progress results using the Run Pay Complete task. Any results that are in the Requires ReCalculation, Pending Completion, On Hold, or In Error statuses will not complete. Note : Some changes that affect payroll results will not update the payee status to Requires ReCalculation.
Settle Payments	When you create a settlement run using the Create Settlement Run task, Workday launches the Settlement Run Event business process to settle its unpaid open items and pending payments as a single unit. Once you approve and complete the subprocesses (if applicable), Workday updates the settlement run status to Complete. The settlement process also generates the accounting entries associated with each payment and sends them to financial accounting.
Process Integrations	After the settlement business process completes, integrations will run (including ACH files to the bank, any positive pay files, the check print task, etc.). Use a tax filing integration to send periodic, quarterly, and annual tax information from Workday Payroll to a third-party service provider. Workday hosts and maintains tax-filing integrations to ADP, MasterTax, and Ceridian. Workday supports integrations with third-party vendors that provide withholding order payment services, such as Ceridian.

Payroll Calculation Statuses

Payroll calculation statuses help you track the progression of workers through the payroll process.

Status	Description
In Progress	A payroll result exists for the worker, but it is not complete.
Waiting	There are in progress retro results not included in the pay result. You need to recalculate the pay result and complete retro before you can complete payroll.
Requires ReCalculation	After a change to the payroll, you must recalculate it before completing it.
Pending Completion	The payroll process cannot continue until you complete other in-progress results.
In Error	You cannot calculate payments if there is missing or invalid data. An In Error status commonly occurs if a worker's net pay falls below zero.
On Hold	You can put a worker's payroll results on hold, so that Workday does not pay them. The result is held until you reverse the status.
Completed	The pay calculation, payroll accounting, and payroll complete tasks have run for the result.

When you calculate payroll for one or more pay groups, the Calculation Status grid displays the number of workers in each status.

Calculation Status Grid

Pay Calculation Options

When running a pay calculation, select the workers to calculate from the options below:

Smart Calculation:
Workday processes workers who have yet to be calculated in the period and workers who need to be recalculated based on changes to their data.

Note

: This option does not pick up configuration changes, such as changes to pay components. The smart calculation is looking for worker changes.

Smart Calculation Based on Events:
Select specific events to calculate.

Note

: You can configure the events listed using the

Configure Smart Calculation Event Processing

task.

Based on Result Status
: Select one or more result statuses to calculate. For instance, you may recalculate workers with an Error status to verify resolution to the error.

Note

: When you need to pick up configuration changes, select workers based on status.

Workers
: Select specific workers in the pay period and pay group whose pay results are not on hold or completed.

Note

: You cannot select workers with pay result statuses Not Yet Started when the pay group calculation status is Complete with Exceptions.

Selecting the appropriate Employees to Calculate option streamlines the process and ensures that you are picking up all required changes in the calculation.

Pay Calculation Options

Tip
: You can preview the events that Workday has detected in a smart calculation by running the Preview Smart Calculation Run
report.

Another option when running a pay calculation is the Limit Accounting Population Based on Calculation Criteria
option. This option is selected by default when using one of the smart calculation options.

Select this checkbox to optimize calculation times by only processing accounting results that meet your calculation criteria.

Schedule a Payroll Calculation

To schedule pay calculations, select the Schedule a Pay Calculation
button on the

Run Pay Calculation

task. The scheduler allows you to use the smart calculation criteria. For example, you can schedule a calculation to run weekly that picks up time and payroll input.

Continuous Payroll Calculation

You can enable the continuous payroll calculation option in your tenant to calculate regular, on-cycle payroll results automatically as payroll-impacting events occur. Enabling this feature reduces time spent calculating payroll, and results in faster smart calculations when manually run.

To enable the continuous payroll calculation option, access the

Edit Tenant Setup - Payroll

task.

Sources of Payroll Data

When you run a pay calculation, Workday Payroll pulls data from several sources. All the following data have the potential to affect payroll results.

Data Source	Examples
Basic Biographical	Home and work addresses, government issued IDs
Worker and Job	Pay rate type, employee type, time type
Compensation	Compensation plans, allowance plans, bonus, merit
Benefit Elections	Rates per elected plans
Absence	Leave and time off taken
Time Worked	Time entry from Time Tracking
Withholding Orders	Recorded orders
Payroll Tax Withholding Elections	Self-service elections for federal, state, province, local
Payment Elections	Self-service elections
Work Schedules	Pay per schedule
Payroll Input	Adjustments or overrides

Pay Components

In Workday, we refer to earnings, deductions, and associated calculations generically as pay components. Pay components include earnings, deductions, taxes, and withholding orders; in general, anything that affects an employee's pay.

Three boxes with the words Earnings, Deductions, and Associated Calculations.

Pay Component Groups

Workday calls a group of pay components a pay component group, or PCG. Use PCGs to combine items that you use together. For example, Adds to Gross is a PCG that includes all pay components that make up gross pay. Each group sums the values of the earnings, deductions, and calculations that it contains. Aggregating them this way can be convenient for payslips and other reports.

A conceptual diagram illustrating multiple payroll input icons feeding into a large blue funnel labeled "PCG," which filters down via a gray arrow into a bucket labeled "Adds to Gross."

For a list of all pay component groups, including tenanted PCGs and those PCGs delivered by Workday, run the

All Pay Component Groups

report.