Compensation Packages: Allowances, Benefits and Deductions

An employee’s pay in AWRA has two parts. Basic salary lives on the employment contract and only there; it is never copied into the package. Everything on top of it — allowances, benefits and voluntary deductions — comes from pay components, a catalog kept on the Pay Components screen in Human Resources by people with the manage pay components permission. Each component has a name, a code, a type of Allowance, Benefit or Deduction, and a calculation of either a fixed amount or a percentage of basic salary.

Three flags decide what a component does to the payslip. Taxable means it counts toward the PAYE base. Pensionable means it counts toward the NSSF or pension base. Cash means it is paid out and counts toward gross and net pay; the form says to untick it for a non-cash benefit. The flags apply to allowances and benefits only: a deduction always reduces net pay whatever its flags say. A component also has an Active box, and only active components can be added to a package or are used by payroll.

In practice: a logistics company sets up House Allowance as a fixed, taxable, pensionable, cash allowance; Commuter Allowance as a fixed, taxable cash allowance that is not pensionable; Responsibility Allowance as 10 percent of basic; and Voluntary Pension as a deduction at 5 percent of basic. Creating each one once in the catalog means every package uses the same names and the same tax treatment, so a payroll officer never has to remember whether commuter allowance is pensionable.

Open the employee and, in the Compensation card, click Manage. People who can view employees can see the package; adding or removing a component needs edit employees. The page shows the Current Package with its currency and the date it is effective from, and lists each component with its type and its amount, or its percentage of basic. Under Add a Pay Component choose the component, enter the Amount for a fixed one or the Percentage for a percentage one, add a note if it helps, and click Add Component. The bin button removes a line.

The first time a component is added, the package is created effective that day, in the currency of the employee’s active contract. After that, the current package is edited in place: adding or removing a line changes what the next payroll calculation uses. AWRA keeps dated packages underneath, and payroll always picks the active package covering the run’s month-end, but choosing a future start date for a change from this screen is being built — so make a change when it should apply, before the run for that month is calculated.

In practice: a driver is promoted to transport supervisor from 1 March. The HR officer raises the basic salary on a new contract and, on the compensation page, removes Commuter Allowance and adds Responsibility Allowance at 10 percent of basic. She does it on 28 February, after February’s payroll has been approved, so February is paid on the old terms and March’s run picks up the new ones. A package with no lines reads basic salary only, which is the right state for someone paid on basic alone.

When a regular payroll run is calculated, AWRA takes the employee’s basic salary from the active contract and the active package covering the month-end. Basic is prorated for unpaid leave first. Each cash allowance and benefit is then added to gross pay as its own line on the payslip; a percentage component is worked out on the prorated basic, while a fixed amount is paid in full. Taxable components are added to taxable pay and pensionable ones to pensionable pay. Statutory deductions run on those bases, and voluntary deductions come off after them, followed by any loan instalments.

Two consequences are worth knowing. A pension top-up set up as a deduction comes off net pay after PAYE, so it does not reduce taxable pay; applying tax relief to a voluntary pension contribution is something we can add to your workspace. And a benefit marked as not paid in cash is kept on the package for the record but does not appear on the payslip or add to taxable pay; taxing a non-cash benefit through payroll is also something we can add. An employee with no active contract or no basic salary is skipped with a message naming them, and off-cycle and final-settlement runs use the amounts entered on that run rather than the package.

A payslip freezes its figures when it is calculated, so editing a package later never changes a past payslip. A run that is only calculated picks up a package change when you click Recalculate; an approved run that has not been posted must be reopened, recalculated and approved again. In practice: a payroll officer adds an agreed allowance on the 25th after the run was calculated on the 24th. She recalculates, the allowance appears on the payslip with PAYE worked out on the new taxable pay, and the run is approved — while January’s paid payslips stay exactly as they were.