You can configure mid-period proration in Dayforce to distribute scheduled amounts for payroll elections and benefits elections that are started or ended between the start and end dates of the pay period.
Proration is a method for calculating a partial amount relative to a fixed amount. Mid-period in this case means after a pay period has begun and before it has ended.
Note that this topic describes mid-period proration for payroll and benefits elections.
The following requirements apply to this functionality:
- It is currently supported only for payroll elections that are calculated based on a flat amount and scheduled every regular pay run.
- It is only available for items applied to the employee's primary legal entity.
To configure this functionality, select one of the following options in the Mid-Period Proration drop-down list in the Options sub-tab of both the Deductions tab and the Earnings tab in Payroll Setup > Earnings and Deductions:
- Not Enabled: Amounts added after the beginning of a pay period aren’t prorated.
- Calendar Days: Elections are prorated based on days in the week. Primarily intended for non-European customers.
- Annual 260 Business Days: Elections are prorated based on the yearly average of 260 business days.
- Annual 365 Days: Elections are prorated based on the yearly average of 365 days.
- Annual 312 Business Days: Elections are prorated based on the yearly average of 312 business days.
- Business Days - 6 Days a Week: Elections are prorated based on a yearly average of six business days a week. Supported for native payroll for Singapore only.
- Monthly 30 Business Days: Elections are prorated based on a monthly average of 30 business days.
- Monthly Calendar Days: Elections are prorated based on the number of calendar days in the month.
- Business Days - 5 Days a Week: Elections are prorated based on a five business days a week. Supported for native payroll for Singapore only.
When you enable mid-period proration by selecting an option in the Mid-Period Proration drop-down list for an earning or deduction code, and a payroll election that uses this code is effective started or effective ended during the current pay period, Dayforce calculates the prorated scheduled amount using the formula that corresponds to the option that you selected. For more information about mid-period proration formulas, see Auto Pay Rule.
Example 1
An employee is in a biweekly pay group with a current pay period of June 25 to July 8. In the Payroll > Payroll Elections screen of their profile in People, the employee has a scheduled deduction election for $140 that was effective from before the current pay period, and that you end date on June 30. You also create a scheduled election using the same deduction code for $200 that is effective from July 1 and onward. This means that the first election record is effective for 6 days of the current pay period (June 25 to June 30) and the second election record is effective for 8 days (July 1 to July 8).
If this deduction code has an option selected in the Mid-Period Proration drop-down list, Dayforce calculates the prorated amount for these elections accordingly.
For example, if you select Calendar Days in the Mid-Period Proration drop-down list, the amount is calculated as follows:
End-dated election record (effective up until June 30):
140.00 / 14 * 6 = 60.00
Current election record (effective from July 1 onward):
200.00 / 14 * 8 = 114.29
As a result, Dayforce calculates a prorated scheduled amount of $174.29 for this deduction code.
Example 2
An employee is in a monthly pay group with a current pay period of June 1 to June 30, 2020. The employee has a scheduled deduction election for £140 that was effective from before the current pay period, and that you end date on June 10. You also create a scheduled election using the same deduction code for £200 that is effective from June 11 onward. This means that (using the Annual 260 Business Days method) the first election record is effective for 8 days of the current pay period (June 1 to June 10) and the second election record is effective for 14 days (June 11 to June 30).
So, if you select Annual 260 Business Days in the Mid-Period Proration drop-down list, the amount is calculated as follows:
Dayforce will work out the annualized value and perform the following calculation:
Old Value £140.00 * 12 = £1680 - New Value £200.00 * 12 = £2400
(1680 – 2400) / 260 * 8 = £-22.15
As a result, Dayforce calculates a prorated adjustment amount of £-22.15 to the current month calculation for this election code.
Requirements and Other Information
At this time, the Mid-Period Proration drop-down list is subject to the following requirements:
- The Mid-Period Proration drop-down list is only supported for earning and deduction codes that have the following configuration in Payroll Setup > Earnings and Definitions (otherwise, Dayforce displays a validation error when you select an option in this drop-down list and attempt to save changes to the code):
- In the General tab:
- (Applicable for earning codes only) The Generated option must be selected. This is because Dayforce can only prorate amounts for scheduled earnings elections and not time-based earnings.
- In the Options tab:
- The Source drop-down list must have Payroll or Benefits selected.
- The Extend Date Effectiveness to Pay Date checkbox must be cleared. The calculation for mid-period proration can currently only be based on the number of days between the pay period start date and pay period end date, and not the pay date.
- In the Parameters tab (Applicable for both earnings and deductions):
- The Calculation Type drop-down list must have the Flat Amount option selected.
- The Apply from Normal Checks by Legal Entity drop-down list must have the Only within primary legal option selected. This setting isn’t always visible on the screen. If it isn’t visible, then the default is set to Only within primary legal option already.
- In the General tab:
- Dayforce can calculate mid-period proration only when the payroll election record for the relevant earning or deduction code is scheduled for every regular pay run. You define the schedule for individual elections in the Payroll > Payroll Elections screen of the employee's profile in People. Here, the Schedule drop-down list for any earning or deduction elections that you set to be prorated must have the Every Regular Run option selected, otherwise proration doesn’t occur. Using the earlier example, both the end dated and current election record must be scheduled every regular pay run.
- Dayforce only calculates proration based on changes to election start dates and end dates. For example, proration cannot occur if you update the amount of an existing election without end dating it. In this case, you need to end date the current election and create an election with the updated amount, as illustrated in the earlier example.
- Dayforce doesn’t support proration for payroll elections that are started or ended due to updates that originate from the Benefits module. Currently, when you update an election through the Benefits module, the start or end date becomes effective in the Payroll > Payroll Elections screen on the pay period end date, and not mid-pay period.
- The calculation for proration is always based on the number of days from the pay period start date to pay period end date (for example, for biweekly pay periods, the calculation is always based on 14 days).