You can configure reimbursement earnings so that the application excludes them from deduction calculations and adds the total reimbursement to the employee's net pay. To use this functionality, you need to manually enable it.
When you enable this functionality for the earning, you can add a reimbursement earning to the Normal system check template, or other check templates that allow deductions, and the application won’t attempt to withhold from the reimbursement amount.
If you don’t enable this functionality for an earning, you can only exclude it from deduction calculations by paying the amounts through a check template that excluded deductions. For example, if you included a reimbursement on the Normal system check template (which allows deductions) and there were zero or insufficient regular earnings to cover a deduction, the application withholds from the reimbursement.
To enable this functionality, in the Earnings tab of Payroll Setup > Earnings and Deductions, when you select a new or existing earning that has the Reimbursement earning type and open the General sub-tab, select the Exclude from disposable net checkbox. This checkbox is cleared by default.
The Exclude from disposable net checkbox is only displayed for earnings that have the Reimbursement type and isn’t displayed for other types of earnings (for example, earnings with the Normal type). To review earning type, in the Earnings tab of Payroll Setup > Earnings and Definitions, select the earning and click the Tax and Compliance sub-tab. In this sub-tab, a reimbursement earning will have Reimbursement selected from the Earning Type list.
Note: When you create an earning code, the Exclude from disposable net checkbox isn’t initially displayed in the Details tab. In order for it to be displayed, you need to select Reimbursement from the Earning Type list in the Tax and Compliance sub-tab of the earning, save the earning, and then go back to the General sub-tab.
When you select the Exclude from disposable net checkbox, and an employee has a reimbursement earning amount on a payment, the application behaves as follows:
- It doesn’t withhold deductions from the earning amount.
- It doesn’t consider the earning amount when calculating a deduction is that is based on a percent of disposable net income.
- It doesn’t attempt to collect arrears from the earning amount for deductions that have arrears enabled. This is the case even if the deduction has the Allow Impromptu Arrears checkbox selected from the General sub-tab of the Earnings tab in Payroll Setup > Earnings and Deductions. Conversely, when you clear the Exclude from disposable net checkbox for the reimbursement, and pay the earning from a check template that excludes deductions, the application can still collect arrears from the earning. See Impromptu Arrears for Manual Deduction Entries.
As an exception, for Canadian employees only, when a garnishment is configured to allow withholding from reimbursements, and Exclude from disposable net is selected for the earning definition, the application is still able to withhold the garnishment from the reimbursement.
You can review this garnishment setting in People by loading a Canadian employee's record, opening Payroll > Garnishments, and selecting a garnishment from the list. In the Properties sub-tab of the garnishment, under the Order Details section, the Include Reimbursement checkbox defines whether reimbursements can be subject to withholding.
In all other cases, for Canadian and US employees, it is a default behavior that the application doesn’t withhold garnishments from reimbursement earnings, regardless of whether Exclude from disposable net is selected for the earning.