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Premiums and Differentials: Position Premiums

Employee premiums are additional compensation that is paid to an employee on top of their existing earnings for working particular positions. Position premiums are similar to [shift premiums], the most important difference between the two kinds of premiums is that position premiums will apply while working a position, not a shift.

Premiums are highly configurable:
  • Premiums can be as simple as a flat-rate addition on top of time worked
    (e.g. an extra $5.00/hour),

  • Or as complex as a top-up premium percentage of the earnings
    (e.g. when an employee works 5 hours less than their full shift they can earn a top-up premium at 50% of their normal rate for the remaining 5 hours).

How the premiums connect to earnings

Premiums can be setup to pay as a flat-rate, or as a percentage of whatever earnings the premium was earned on.

If the premium should pay a flat-rate:
  1. When a Premium Rule is attached to a position in the Employee Profile it is important that the corresponding Earning Code for that premium is added to the employee profile as well

  2. The actual rate for the premium earnings is set on this Earning Code on the Employee Profile and will apply to all premium units generated by the Premium Rule.

If the premium rate is setup as a percentage of earnings the premium rate will be calculated automatically instead.

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1The Premium Rule is attached to the position on the Employee Profile.
2The Earning Code defined on the Premium Rule must be added to the Employee Profile.
Manager position premium

A common use of position premiums are to pay additional compensation to a specific employee when they work as a Manager, or Shift Leader.

For example there is an employee who should be paid an additional $5.00/hour for any hours worked as a Manager.

To achieve this two components are required:
  1. A Premium Rule must be attached to the employee position, and will generate additional premium earnings when the employee works under the position.

  2. An Earning Code must be added to the employee profile, which will determine the rate for the additional premium pay for the employee.

Manager Premium Rule

The premium that will be setup for the Manager position is a basic example of what premiums can be used for. The premium rate will be a flat-rate on top of the regular earnings for that position, without any restrictions or thresholds applied.

  1. Open Time & Attendance > Installation & Maintenance > Premium Rules.

  2. Create a new Premium Rule for the Manager position premium by pressing Insert.

The steps to setup the Premium Rule will be covered in the following sections.

Setup Premium Rule to pay a flat-rate premium

The Manager Premium Rule will be setup using the default values for most of the fields.

Important:

The premium rate will come from the Earn Code that is selected. The flat-rate premium rate will be set on the Employee Profile in a future step using this Earning Code.

  1. Enter the Premium Rule Id, and a Description for the Premium Rule.

  2. Select the Earning Code for the premium earnings from the Earn Code drop-down.

  3. If the premium earning should follow the G/L accounts for the earnings that the premium was earned on, enable Override Benefit Group now.

  4. Open the Eligible Earn Codes tab and enable the earning codes that the premium should be earned on. (Regular Earnings is generally the appropriate option).

  5. Save the new Premium Rule by pressing OK now.

Here’s an example of the Premium Rule setup used
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1The Premium Rule Id and a description are entered for the Manager premium.
2These settings have been left at default; as they are setup the premium will apply on any day of the week, for all of the time worked on any of the Eligible Earn Codes.
3A separate Earn Code of paying the Manager Premium has been selected here. The premium rate is set on this earning code.
4The Override Benefit Group option is enabled so that the premium earnings follow the G/L settings of the eligible earnings

The Premium Rule is now setup and can be added to a position from the Employee Profile, or to a shift from the Time & Attendance module.

Notes:
Premium Rule Id

The Premium Rule Id is a unique code to identify this premium rule. The maximum length for this field is 8 characters.

Description

The description of the premium. The maximum length for this field is 128 characters.

Earn Code

Premium earnings will be earned under this Earning Code based on the number of premium units earned.

Override Benefit Group

The Override Benefit Group option will replace the Benefit Group on the premium earnings Earning Code with the Benefit Group from the Earning Code of the earnings that the premium was earned on. This is used to make the premium follow the earning G/L settings.

Eligible Earn Codes

Premiums will be generated for each of the Codes that are selected within the Earn Code list.

Position Premium

Now that a Premium Rule has been setup for the Manager position the rule should be added to the position. Premium Rules are attached to positions per employee from the Employee Profile.

Open the Employee Profile of the employee

Let’s now open the Employee Profile of the employee that will earn the premium when working under a Manager position.

  1. Open the Employee Profile of the employee you want to add a shift Premium to:

    1. Open Canadian Payroll > Employee Profile > Employee Profile.

    2. From the Employee drop-down select the employee.

  2. Open the Positions tab of the Employee Profile.

Add premium to position

From the Positions tab the available positions for the current employee are listed. Premiums are added from the position settings. Let’s open the Manager position now and add the premium to it:

  1. Open the position to add an additional premium to.

    Shortcut:
    You can open the position by double-clicking the position in the list, or select the position and press Modify.
  2. Open the Premiums tab, below the position settings.

  3. Add a new premium to the position:

    1. Press Insert

    2. Select the Premium Rule of the premium to add.

    3. Press OK to add the premium to the position.

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1Open the Premiums tab here.
2Add a new Premium Rule to the position by pressing Insert here.
3Select the Premium Rule to add.
4Press OK to add the rule to the current position.

Save the position premium to the Employee Profile

Save the changes to the Employee Profile by pressing OK now.

At this point the premium will be earned whenever the employee works the Manager position, however the flat-rate amount for the premium must still be setup, which will be covered in the next section.

Premium Earning Code

At the beginning of this guide the premium was meant to be a flat-rate $5.00/hour. The rate for the premium is not controlled by the Premium Rule itself. Instead, the Earning Code that was specified on the Premium Rule controls the premium rate. We’ll need to add that Earning Code to the employee profile and set the premium rate on the Master rate of the Employee Profile.

Add Earning Code for premium

  1. Open the Earnings > Earning Codes tab of the Employee Profile.

  2. Add the premium Earning Code by pressing Insert.

After pressing Insert the Earning Code setup form will open where Earning Code can be selected, and a rate applied. This will be covered next.

Set the premium rate on the Earning Code

  1. Select the premium Earning Code.

  2. Enter 5.00 per Hour for the Rate.

  3. Add the Earning Code by pressing OK.

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Summary

  • A Premium Rule has been created and setup to earn a premium for each hour of regular earnings worked.

  • The Premium Rule has been attached to the position on the Employee Profile.

  • The Earning Code for the premium Earnings has been added to the Employee Profile and a flat-rate configured for the premium rate.

At this point whenever the employee works using the Manager position they will earn an additional $5.00/hour for every hour worked.

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Figure 1. Example of the premium earned while working Manager position.
J
Jack is the author of this solution article.

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