Configure Automatic Negative Net Pay Reconciliation

General information about the options in Payroll Setup > On-Demand Pay is available in Set Up On-Demand Pay Control Configurations.

Role feature access: Payroll Setup > On Demand Pay > Negative Net Pay Reconciliation

Important: Your role must have access to the role feature Negative Net Pay Reconciliation, mentioned immediately before this note. Without this role access, you cannot see the controls described in Create an On-Demand Pay Configuration with Negative Net Pay Reconciliation.

You can configure Dayforce to automatically reconcile negative net pay conditions (or negative net pay errors) in pay runs for on-demand pay, a condition that normally causes an error that prevents you from committing the pay run. Negative net pay errors can occur if an employee’s on-demand pay request exceeds the total amount of their available net pay for the pay period.

You can use the Allow Recalc to Reconcile Negative Net Pay option, and its associated settings, to configure your instance of Dayforce to automatically avoid an error on payroll commit if there is negative net pay in a pay run resulting from an on-demand pay request. With this functionality configured, if a negative net pay condition occurs in a pay run as a result of an on-demand pay request, Dayforce automatically adds an offset, a deduction with arrears for the employee for the affected pay period that balances the employee’s net pay and allows you to commit the pay run. The offset amount can then be withheld from the employee in a subsequent pay run.

The following tasks describe the general process for configuring automatic negative net pay offsets for on-demand pay:

• Configure the Tax and Compliance Rule
• Configure the Deduction
• Add the Deduction to Employee Payroll Elections
• Create an On-Demand Pay Configuration with Negative Net Pay Reconciliation

Configure the Tax and Compliance Rule

Be sure that you are familiar with how to set up tax and compliance rules in Dayforce. For information, see “Tax Compliance Rules” in the Dayforce Implementation Guide.

To configure the tax and compliance rule that you will use for the negative net pay reconciliation deduction you must create.

1. Go to Payroll Setup > Earnings and Deductions and click the Tax Compliance Rules tab.
2. Click Add.
3. Click the country or countries that you are creating the rule for (Canada, United States of America, or both), and leave the Process of Employment drop-down list blank.
4.  Configure the rule, using the recommended options here:
   • Give the rule a recognizable name, for example, ODP Overage.
   • Include a reference code (XREF), for example, ODP_Overage. This field isn’t required, but it is recommended.
   • In the country tabs in the rule, select the following options:
     • In the Canada tab: 
       • In the Tax Type drop-down list, select Post Tax.
       • In the Tax Method drop-down list, select Normal After Tax Deduction.
     • In the United States tab:
       • In the Tax Type drop-down list, select Post Tax.
       • In the Tax Method drop-down list, select Amount Legally Owed/Due Employer - D007.
5. Click Save.
6. Proceed to the next part of the process to configure the deduction.

Configure the Deduction

Be sure that you are familiar with how to set up deductions in Dayforce. For information, see “Deductions and the Deductions Tab” in the Dayforce Implementation Guide.

To configure a deduction that uses the tax and compliance rule that you configured:

1. Go to Payroll Setup > Earnings and Deductions, and click the Deductions tab.
2. Click Add.
3. In the Add Deduction dialog box, select a Post-Tax tax type and the country of the tax and compliance rule you created. Click Next.
4. Click Select a Rule, and under Custom, click the tax and compliance rule you had previously created for the negative net pay reconciliation deduction.
5. Click Select this Rule and click Finish.
6. Configure the deduction using the options recommended here:
   • In the Options sub-tab, select the Allow for On-Demand Pay Reconciliations checkbox.
   • In the General sub-tab, provide a reference code (XREF), for example, ODP_Over. The Reference Code field isn’t required, but it is recommended. Assign the deduction a recognizable name, for example, On-Demand Overage.
   • In the Parameters sub-tab:
     • Verify that the Calculation Type is Flat Amount, and verify that the Access is Pay Group. Changing either of these options generates a warning message and clears the Allow for On-Demand Pay Reconciliation checkbox in the Options sub-tab, disabling the functionality.
     • Verify that the selection in the Apply from Normal Checks by Legal Entity drop-down list is Only within primary legal.
   • In the Pay Groups sub-tab:
     • Assign the deduction to the pay groups for which you want to configure the automatic negative net pay reconciliation functionality.
     • In the Parameters section of this sub-tab, enter 0 in the Amount field.
7. Click Save.
8. Proceed to the next part of the process to add the deduction to employee payroll elections.

Add the Deduction to Employee Payroll Elections

To add the deduction that you created to the payroll elections for appropriate employees:

1. Go to People, open the employee profile, and click Payroll > Payroll Elections.
2. Click Add.
3. Enter a start date.
4. In the Type drop-down list, select Deduction.
5. In the Code drop-down list, select the deduction that you configured in the preceding part.
6. Click Save.
7. Repeat steps 2 through 8 for each employee you want to add the deduction to.
8. Proceed to the next part of the process to add the deduction to employee payroll elections

Create an On-Demand Pay Configuration with Negative Net Pay Reconciliation

Be sure that you are familiar with the concepts and options for creating on-demand pay configurations, which are described in Set Up On-Demand Pay Control Configurations.

Before You Begin: Your role must have access to Payroll Setup > On Demand Pay > Negative Net Pay Reconciliation to perform this task.

1. Go to Payroll Setup > On-Demand Pay and click Add.
2. In addition to configuring the options described in Set Up On-Demand Pay Control Configurations, ensure that you configure the entry using the following recommendations:
3. Select the Allow Recalc to Reconcile Negative Net Pay checkbox.
4. In the Negative Net Pay Reconciliation Deduction drop-down list, select the deduction you created for negative net pay reconciliation.
5. In the Maximum Negative Net Pay Reconciliation Amount field, enter an amount to limit the negative net pay deduction amount. For example, 25 or 50.
6. Click Save.
7. Repeat steps 2 through 7 for each set of configurations that use negative net pay reconciliation functionality that you need.