Overview of Contract Management
Processing Contract Pay
A contract employee is paid a salary based on a contract that defines the terms of employment. Under the contract pay option, an employee contracts to work a given number of days over the contract period and receives equal payments for each pay period regardless of how many contract days fall in the pay period. For employees to be eligible for any method of contract pay, their pay policies must permit employment contracts. The system provides for three methods of calculating contract pay: Normal Pay, Regular Contract/Reserve Pay, and Contract Pay Smoothing.
Normal pay processing - tracks actual hours worked and pays the employee based on the actual hours worked.
Regular Contract/Reserve pay - the contract portion of processing tracks hours and pay earned, along with actual amount paid. This Contract portion of the model uses the “normal” means of processing pay. The Reserve portion of the model is a separate process that uses a defined numerator/denominator to calculate how much pay to reserve per pay period so that the person can get paid throughout the year. The reserved amount is paid out during the period of time when an employee is not earning pay (example, a school teacher during summer).
Contract Pay-Smoothing - contract and reserve pay calculations work together to result in a smoothed payment over the course of the contract. An algorithm in the Gross-to-Net process determines how much reserve to pay out or to take, so that changes in pay rate are more easily accommodated than in the Regular Contract/Reserve pay model. Payments during the period of time when an employee is not earning are more even.
Contract Pay-Smoothing Model
The smoothing model takes the amount actually earned under the contract and then smoothens it to generate equal payments for the remainder of the contract period. The smoothing model both pays out and accrues reserve, depending on what is needed to smooth the payment. The Contract Pay - Smoothing model is calculated using either the Reserve Payout Factor table or the Work Day table as the smoothing factor.
Detailed information on the Contract Pay-Smoothing Model can be found in the "Contract Pay-Smoothing Model" topic.
Regular Model Contract and Reserve Pay
The regular model of contract pay uses normal pay processing. The amount the employee gets paid is generated using the numerator and denominator values entered on the Pay Class (PYCL) table. The hours for which the employee is paid and the payment amount are stored as contract actuals. These values can be viewed on the Contract Pay Summary page. However, the amount generated may or may not correspond to the actual amount of pay a contract worker has earned because pay periods can have different numbers of contract days as defined on Work Day Schedule (WDAY).
This model stores the hours and amount earned separately from the generated pay. The amount a contract worker earns each day equals the total contract amount divided by the number of contract days. Days worked are retrieved from Work Day Schedule (WDAY) for exception-paid employees. Days worked multiplied by the daily rate and days worked multiplied by the contract hours per day are stored as contract earnings on the Contract Pay Summary page.
Using Contract and Reserve Pay Together
Employees whose employment contracts are for a term less than a year may elect to receive their pay spread over a longer period. For example, an employee governed by a nine-month academic year contract may elect to receive pay for the entire 12 months of the year. Pay is generated just as in the regular contract pay model; however, in order to issue checks over a period longer than the employee’s contract stipulates, the system creates a reserve summary record, similar to an escrow account. Part of the contract pay is withheld and deposited into this account. The reserve summary record amount is disbursed during the pay periods that an employee is not earning pay.
Pay is generated just as in the regular contract pay model; however, in order to issue checks over a period longer than the employee's contract stipulates, the system creates a reserve record, similar to an escrow account. Part of the contract pay is withheld and deposited into this account. The reserve summary record amount is disbursed during the pay periods that an employee is not earning pay.
For more information on Using Contract and Reserve Pay Together, refer to the Using Contract and Reserve Pay Together topic.
Overriding an Employee's Contract Pay
COPT page, you override the work cycle, a contract’s value, contract period identification number, days and hours per contract day, reserve accrual period, and payout period by doing the following:
Work Cycle – change the work cycle code specified for the employee’s pay class on the Pay Class (PYCL) or Department Specific Data (DEPTD) pages.
Override Contract Value Amount – liquidate a new contract’s value amount by entering a new amount in this field.
Override Contract Period ID – override the employee’s Pay Policy code.
Override Days – modify the contract days count to be used as the override to the value specified for the employee's Pay Class code on the Pay Class (PYCL) page.
Override Hours per Day – change the hours per contract day count to be used as the override to the value specified for the employee's Pay Class code on the Pay Class (PYCL) page
Override Accrual Period – specify the reserve accrual period to be used as the override to the value specified for the employee's Pay Class code on the Pay Class (PYCL) page.
Override Payout Period – enter the reserve payout period to be used as the override to the value specified for the employee's Pay Class code on the Pay Class (PYCL) page.
In addition, you can also select whether or not the employee is eligible for contract pay and/or reserve pay.
For more information, refer to the Modifying an Employee’s Contract Pay topic.
Looking Up Contract and Reserve Pay Information
Contract and Reserve Pay information can be queried for various information:
Contract pay summary information for the regular model can be obtained from the Contract Pay Summary (CONP) page.
Reserve pay balance for the regular model can be obtained from the Reserve Pay Summary (RESP) page.
Contract pay summary and reserve pay balance information for the smoothing model can be obtained from the Contract Pay Summary - Smoothing Factor (CONS) page. This page provides the employee's contract period identification and information, the contract earnings time and amount, and the liquidation request and date.
To look up a summary of payroll activity for an employee’s contract pay for regular and smoothed models, open the Contract Pay Accrual Inquiry (PAMCONP) page.
Reporting on Contract and Reserve Pay Information
The following contract and reserve pay reports are also available:
Contract Pay Balance Report (HAACONP) - Regular Model. The Contract Pay Balance Report (HAACONP) report is produced by the Contract Pay Balance Report (HA00900R) process. It provides a summary of contract activity for the regular model as of the last payroll run.
Contract Pay Balance Report (HAACONS) - Smoothed Model. The Contract Pay Balance Report (HAACONS) report is produced by the Contract Pay Balance Report (HA00900R) process. It provides a summary of contract activity for the smoothed model as of the last payroll run.
Work Day Table Audit (HAR7200) - Smoothed Model. The Work Day Table Audit Report (HAR7200) report allows you to reconcile differences between the number of contract days on the Pay Class table and the number of days assigned to the work cycles present in the database. This reconciliation is necessary to make sure that the smoothed contract pay will be calculated correctly. This report can be run at the beginning of a contract period to verify that the work days assigned to a particular work cycle are correct, or all work cycles may be selected for reporting at the client’s discretion for any given period of time. A parameter card will allow the designation of a date range and various work cycles for which the report will be generated. Sites that do not use contract pay may also use this report to audit entries on their Work Day Schedule (WDAY) table.
