Dayforce uses payroll policies to determine the earnings, deductions, and taxes that apply to employees. Payroll policies can, for instance, include whether employees receive auto pay or forecast pay, if they are eligible for auto-enrolment in UK pension schemes, and so forth. You can view and edit existing payroll policies, or add new ones, in Payroll Setup > Payroll Policies. Payroll policies are set individually for employees, and pay groups can contain employees who have different payroll policies.
If you are familiar with the general concepts described in this topic and need detailed conceptual or task information, the following topics have more information:
- Payroll Policy Rule Types
- Add or Configure Payroll Policies
- Configure Payroll Rule Qualifiers
- Payroll Rules and Qualifiers Library
General Information about Payroll Policies
Payroll policies are assigned to employees as part of their HR records, either as part of an HR import or manually in the People feature in the Employment > Employment Settings screen.
Payroll policies contain one or more rulesets, which are collections of rules and qualifiers, that are used by the Dayforce payroll engine when calculating earnings, pre-tax deductions, taxes, and post-tax deductions.
There are a number of rules available for you to select when you are configuring payroll policy rulesets in Payroll Setup > Payroll Policies, like the Apply Earnings Rule and the Apply Deductions Rule. You can apply different qualifiers to these rules.
Order of Rules in Payroll Policies
The order of rules in payroll policies is extremely important. When calculating a pay run, Dayforce looks for the payroll policy assigned to each employee in the pay group, and it sequentially applies the rules and qualifiers in each employee's assigned payroll policy. The order, or sequence, in which the rules are applied depends on where each rule entry is located in the list of rules in a ruleset. The first rule entry in the list is the first rule applied; the second rule entry is the second; and so forth.
The order in which earnings, deductions, and taxes are calculated and applied can depend on the dependencies that exist between the earnings and deductions configured in the application. Tax rules must be added after earnings rules and pre-tax deductions rules to ensure that gross-to-net amounts are calculated correctly, and a post-tax deduction rule must be added after the tax rule.
Also, because Dayforce calculates earnings, deductions, and taxes in the order specified in the payroll policy, any earning or deduction that is referenced by other earnings or deductions must be calculated and applied first. You must ensure a rule that applies the referenced earnings or deductions is specified in the payroll policy before any rules that apply the dependent earnings or deductions.
For example, say your organization has a payroll policy that includes a generated earning definition, an employer RRSP match of 50% of the amount (5% of their regular earnings) that an employee pays into their RRSP account. In this example, there are several dependencies. First, three definitions must exist:
- An employer-paid RRSP match generated earning definition.
- An employee-paid RRSP contribution amount deduction definition.
- An employee's regular earnings amount earning definition.
The amount of the employee-paid RRSP contribution deduction is calculated at 5% of the employee's regular earnings, and that amount is used by the generated earning calculation, which is 50% of the employee's contribution. To calculate the generated earning correctly, the definitions must exist, and then the application must to consider them in the following order:
To do this, Dayforce needs a payroll policy with at least three rules:
- An Apply Earnings Rule that applies the regular earnings.
- An Apply Deductions Rule that applies the deduction to the earning.
- A second Apply Earnings Rule that applies to the results of the deduction rule to calculate the generated earning.
Important: Dayforce automatically applies time-driven earnings before generated earnings, even if they are both applied within a single Apply Earnings Rule. You do not need to configure multiple instances of a rule to ensure that a time-driven earning is applied before a generated earning that references it is calculated.
Typically, a payroll policy will contain several instances of the Apply Earnings Rule and Apply Deduction Rules so that various earnings and deductions can be applied in the correct order.
The following screenshot shows an example of Payroll Setup > Payroll Policies:
First, you must add a ruleset, then one or more rules and specify what kind of rule each is, setting the rule properties, which depend on the rule type, then, optionally, any qualifiers.
After setting up a ruleset, you can add rules (by rule type) and qualifiers to the ruleset. Information about common payroll policy rule types is available in Payroll Policy Rule Types.
For information about available payroll policy rules and qualifiers, see Payroll Rules and Qualifiers Library.