Configure Deduction Limits

You configure deduction limits in the Deductions tab of Payroll Setup > Earnings and Deductions for a selected deduction in the Limits sub-tab.

Deduction limits are used to cap the amount employees pay for particular deductions. An example is configuring a limit on RRSP contributions to ensure that the application does not deduct more than $5,000 in payments to an employee's RRSP account.

Similar to configuring earning limits, deduction limits can be configured as either a flat amount or a specified percentage of a deduction, earning, or grouping, such as limiting a deduction of 15% of an employee's regular earnings. Limits can be configured on a per-pay-period basis or on a month, quarter, year, or fiscal year to date basis.

If an employee's deduction reaches the limit within the specified period, the application reduces any further payments to zero. For example, medical insurance contributions, a deduction, are configured as 4% of all of an employee's time-driven earnings (regular pay, overtime pay, and vacation pay), but they are limited to $500 each fiscal year. After the limit of $500 is reached for the year, the employee does not have to pay into the insurance plan any more for the year. If the employee has already contributed a total of $475 in previous pay runs for the year-to-date, then earns $900 in the next pay run, the application calculates 4% of these earnings as $36. However, because the employee's deductions are limited to $500 per year, the application only deducts another $25 from the employee's pay.

To define a deduction limit:

1. Go to Payroll Setup > Earnings and Deductions and click the Deductions tab.
2. In the left navigation field, select the deduction that you want to limit.
3. Click the Limits tab.
4. Click Add.
5. In the Accumulation Type drop-down list, select the period for which the limit is enforced:
   • Current Pay: The application applies the limit to the current pay. Each pay's deduction is capped at the specified limit. See Current Pay Accumulation Type for Deduction Limits.
   • Fiscal Year to Date: The application applies the limit to the entire fiscal year, tracking the amount employees have paid for the deduction from the start of the fiscal year to date and capping it at the specified limit.
   • Fiscal Month to Date: The application applies the limit to the current fiscal month, tracking the amount employees have paid for the deduction from the start of the fiscal month to date and capping it at the specified limit.
   • Fiscal Quarter to Date: The application applies the limit to the current fiscal quarter, tracking the amount employees have paid for the deduction from the start of the fiscal quarter to date and capping it at the specified limit.
   • Month to Date: The application applies the limit to the current month, tracking the amount employees have paid for the deduction from the start of the month to date and capping it at the specified limit.
   • Quarter to Date: The application applies the limit to the current quarter, tracking the amount employees have paid for the deduction from the start of the quarter to date and capping it at the specified limit.
   • Year to Date: The application applies the limit to the current year, tracking the amount employees have paid for the deduction from the start of the calendar year to date and capping it at the specified limit.
6. In the Accumulation Type Detail drop-down list, select one of the following options to determine how your check amount is applied:
   • Current check Legal Entity accumulation only: The limit amount applies only to the legal entity of the check that is being calculated.
   • Sum accumulation across all Legal Entities for the country: The limit amount applies against the earning or deduction amount that is summed across all legal entities in the country over the selected accumulation period.
7. In the Access drop-down list, select one of the following options to determine how limits are specified: 
   • Employee: Limits are employee-specific and provided on each employee's record in People.
   • Pay Group: Limits are pay group-specific and provided in the Pay Group tab of the deduction definition. Employee overrides cannot be provided, so the limit specified for a pay group is used for all employees who belong to that pay group.
   • Pay Group or Employee Override: Limits are pay group-specific but can be overridden per employee in People. For the employees with an override in People, the application uses the employee-specific limit instead of their pay group's limit.
8. In the Limit Type drop-down list, select one of the following options:
   • Fixed Amount: The application limits the deduction to a specified dollar amount.
   • Percent of: The application limits the deduction to a percentage of the reference selected in Look Up Type.
9. In Look Up Type, select one of the following drop-down options: Deduction, Deduction Group, Earning, Earning Grouping, or Expression Rate Table.
10. In Look Up Value, based on the deduction or earning option selected in Look Up Type, select the earning, deduction, or group used to calculate the deduction limit.
11. Click Save.

Next, you need to provide the limit's value, either per pay group, employee, or payee, and with any employee overrides, as necessary.

Pay Group Limits

1. With the appropriate deduction selected, select the Pay Groups tab.
2. Select the pay group that you want to define a limit for. If the deduction has not been assigned to the pay group, you cannot define a limit for it.
3. In the Schedule field, select how frequent the deduction is taken from the pay group.
4. Define the start and expiry dates for the deduction.
5. In the Limits section, enter the flat amount or percentage for the limit, depending on whether you selected Percent of or Fixed Amount in the Limit Type drop-down list of the Limits tab. Otherwise, leave the field blank to use the value of the referenced earning, deduction, or grouping.
6. Click Save.

Employee-Specific Limits

Employee-specific values are provided in an employee record in People.

To provide employee override values:

1. Go to People, open the employee profile, and click Payroll > Payroll Elections.
2. In the Payroll Elections section, expand the appropriate deduction, if it is displayed. If it isn’t:
   1. Click Add.
   2. In the Type drop-down list, click Deduction.
   3. In the Effective Start field, specify when the limit is applicable.
   4. (Optional) In the Effective End field, specify an effective end date. The application only limits the deduction during the effective date range defined by the Effective Start and Effective End fields. By default, the Effective End field is blank and the value does not expire.
3. After expanding the deduction, enter the amount or percentage of the limit in the Parameters section.
4. Click Save.