hong kong payroll

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PY-HK Payroll Hong Kong

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PY-HK Payroll Hong Kong SAP AG

2 December 1999

Copyright

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SAP AG PY-HK Payroll Hong Kong

December 1999 3

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4 December 1999

Contents

PY-HK Payroll Hong Kong..................................................................................6Payroll in the SAP System............................................................................................................ 7PY-HK Mandatory Provident Fund (MPF).................................................................................... 8PY-HK Occupational Retirement Schemes (ORSO)................................................................... 9PY-HK Gross Payroll Accounting .............................................................................................. 10PY-HK Entitlement Plan .............................................................................................................. 11

PY-HK Implementation of the Entitlement Plan........................................................................ 12PY-HK Entitlement Plan infotypes............................................................................................ 13

PY-HK Entitlement plan (0347) ........................................................................................... 14PY-HK Assigning an Entitlement Plan ........................................................................... 15PY-HK Transferring Entitlement Plans........................................................................... 16

PY-HK Contribution/Entitlement Eligibility (0349) ............................................................... 17PY-HK Eligibility Grouping for Entitlement Plan ....................................................................... 18

PY-HK Assigning the Eligibility Grouping............................................................................ 19PY-HK Offset Entitlement against Severance Payment........................................................... 20

PY-HK Guaranteed Payments..................................................................................................... 21PY-HK Setting up guaranteed payments ................................................................................. 22

PY-HK Calculation Bases.................................................................................................... 23PY-HK Probation Periods.................................................................................................... 24

PY-HK Statutory Probation Period................................................................................. 25PY-HK Defining the Company's Probation Period ......................................................... 26

PY-HK Guaranteed Payments-related infotypes...................................................................... 27PY-HK Contract Elements Infotype (0016) - Hong Kong .................................................... 28

PY-HK Defining an Employee's Guaranteed Payment .................................................. 29PY-HK Net Payroll Accounting................................................................................................... 30PY-HK Tax .................................................................................................................................... 31

PY-HK Implementation of Tax.................................................................................................. 32PY-HK Rental Allowance.......................................................................................................... 33

PY-HK Creation of Rental Allowance.................................................................................. 34PY-HK Rental Deduction .......................................................................................................... 35

PY-HK Creation of Rental Deductions ................................................................................ 36PY-HK Overseas Travel Allowance.......................................................................................... 37

PY-HK Creation of Overseas Travel Allowance.................................................................. 38PY-HK Tax Infotypes ................................................................................................................ 39

PY-HK Tax (0345) ............................................................................................................... 40PY-HK Creating tax data for an employee..................................................................... 41

PY-HK Contribution Plan ............................................................................................................ 42PY-HK Implementation of Contribution Plan ............................................................................ 43PY-HK Contribution Plan Infotypes .......................................................................................... 45

PY-HK Contribution Plan (0346) ......................................................................................... 46PY-HK Assigning a Contribution Plan............................................................................ 48PY-HK Transferring Contribution Plans ......................................................................... 49

PY-HK Contribution/Entitlement Eligibility (0349) ............................................................... 50


December 1999 5

PY-HK Eligibility Grouping for Contribution Plan...................................................................... 51PY-HK Assigning the Eligibility Grouping............................................................................ 52

PY-HK Crediting previous years of service .............................................................................. 53PY-HK Deductions ....................................................................................................................... 54PY-HK Subsequent Activities..................................................................................................... 55PY-HK Payroll Results Checking ............................................................................................... 56

PY-HK Evaluation of Payroll Results........................................................................................ 57PY-HK Preparation of Payroll Results Check Data............................................................. 58

PY-HK Generating Payroll Results Check Data ............................................................ 59PY-HK Displaying the Payroll Results Check Data ....................................................... 60

PY-HK Payroll Results Check Tool ..................................................................................... 61PY-HK Evaluating the Payroll Results Check Data ....................................................... 62

PY-HK Reporting.......................................................................................................................... 63PY-HK Tax Reporting .................................................................................................................. 64

PY-HK The Tax Reporting Process.......................................................................................... 65PY-HK Generating a tax report ................................................................................................ 66


PY-HK Payroll Hong Kong

6 December 1999

PY-HK Payroll Hong KongPurposeThis component allows you to process the payroll for the employees of your organization in HongKong, using data from the SAP Personnel Administration component. In addition, you can run anumber of payroll reports that will generate useful information that you can use to analyse thepayroll with.

Implementation ConsiderationsYou should take into consideration the other areas in SAP HR, in particular PersonnelAdministration, when implementing the Hong Kong payroll.

IntegrationThe payroll component is closely integrated with the other areas in SAP HR, as well as otherSAP modules such as Financial Accounting and Controlling.


Payroll in the SAP System

December 1999 7

Payroll in the SAP SystemPurposeYou can use this component to calculate the remuneration for work done for each employee.

However, Payroll does not just involve the calculation of remuneration, but consists of a variety ofprocesses that are becoming increasingly important due to the employer’s increased obligation tosupply benefits and medical welfare. These benefits are products of:

• Labor law

• Tax law

• Contribution law

• Benefits law

• Civil law

• Reporting law

• Information law

• Statistics law

IntegrationPayroll can be integrated in Personnel Administration, Time Management, Incentive Wages andAccounting:

• Standardized data retention enables you to use master data and other payroll relevant datafrom Personnel Administration.

• Time data, entered via Time Management, is automatically included in the Payroll and isvaluated during the payroll run.

• Data from the Incentive Wages component is used to calculate piecework wages andpremium wages directly in Payroll.

• Information on expenses and payables from Payroll is posted for accounting directly inFinancial Accounting, and you assign the costs to the appropriate cost center. You can alsocontrol the financial system of third-party providers.

FeaturesThe System calculates the gross and net pay, which comprises the individual payments anddeductions that are calculated during a payroll period, and are received by an employee. Thesepayments and deductions are included in the calculation of the remuneration using different wagetypes [Ext.].

After the remuneration payroll you can carry out various subsequent activities, for example, youcan see to remuneration payment or the creation of various lists, and make evaluations.


PY-HK Mandatory Provident Fund (MPF)

8 December 1999

PY-HK Mandatory Provident Fund (MPF)PurposeThe Mandatory Provident Fund contains the necessary information required to process the MPF-approved retirement schemes. These schemes require periodic contribution from the employee,with a similar contribution from the employer. When the employee quits or terminates his or hercontract, the retirement scheme calculates his or her entitlement.

Implementation ConsiderationsIn providing the MPF-approved retirement schemes, the system uses the following two functions:

Contribution Plan[Page 42]

This component processes the periodic contribution made by theemployee and employer.

Entitlement Plan[Page 11]

This component calculates the employee's entitlement due to him uponretirement, or when he terminates his contract.

IntegrationFor MPF-approved retirement schemes, a contribution plan will have its correspondingentitlement plan. When you create a contribution plan infotype for an employee, the system willprompt you for the relevant entitlement plan infotype.

FeaturesWith the MPF-approved retirement schemes in the system, you can:

• Set up default retirement plans for different employee groups.

• Allow employees to transfer from one plan to another plan. You can also restrict the transferof plans according to eligibility.

• Define variable contribution amounts, with a default amount.

• Calculate the contribution amount using a matrix of the employee's years of enrollment, ageand income.

• Vest the employer's contribution through a matrix of years of enrollment, age and terminationreason.

• Calculate the entitlement using a matrix of the employee's years of enrollment, age,termination reason and wages.


PY-HK Occupational Retirement Schemes (ORSO)

December 1999 9

PY-HK Occupational Retirement Schemes (ORSO)PurposeBesides MPF [Page 8], companies may also provide their employees other retirement schemes.These schemes can be divided into two categories:

• The first type of retirement schemes require a contribution from the employee and theemployer. When the retirement scheme matures, the employee then receives an entitlementamount.

• The second type of retirement schemes do not require any employee contribution, only anentitlement when the retirement scheme matures.

Implementation ConsiderationsIn providing the ORSO retirement schemes, the system uses the following two functions:

Contribution Plan[Page 42]

This component processes the periodic contribution made by the employeeand employer.

Entitlement Plan[Page 11]

This component calculates the employee's entitlement due to him or herupon retirement, or when he terminates his contract.

IntegrationThose schemes with a contribution plan has a corresponding entitlement plan. When you createa contribution plan infotype for an employee, the system prompts you for the relevant entitlementplan data as well.

Features• You can define default retirement plans for different employee groupings.

• Employees can transfer their contribution and/or entitlement from one plan to another eligibleplan.

• Contribution amounts are variable, with a company default.

• Contribution amount can be calculated through a matrix of years of enrollment, age andincome.

• Entitlement can be calculated througha matrix of years of enrollment, age and terminationreason and the employee's wages.

• Employer's contribution can be vested through a matrix of years of enrollment, age andtermination reason.


PY-HK Gross Payroll Accounting

10 December 1999

PY-HK Gross Payroll AccountingPurposeThe gross payroll component for Hong Kong processes employee's data from PersonnelAdministration and generates wage types that are to be used in Net Payroll. Pre-tax deductionsare included when processing Gross Payroll.


PY-HK Entitlement Plan

December 1999 11

PY-HK Entitlement PlanPurposeWhen an employee works for an organization, he or she is eligible to join one or more companyretirement schemes. He or she is also mandated to join the MPF scheme [Page 8]. Theseschemes entitles the employee to receive a lump-sum or pension fund once he terminates his orher employment.

This component records and processes these entitlement portions of the retirement schemes.

IntegrationSome retirement schemes require both the employee and employer to contribute to the schemes.Employee contribution, for example, may come in the form of a monthly deduction from hissalary. Therefore, such schemes require a contribution portion [Page 42] as well as anentitlement portion.

For those schemes that require employee as well as employer contribution, you need to alsoimplement the contribution portion of the schemes.

FeaturesWith the entitlement plan, you can:

• Group all employees that are eligible to join the same retirement schemes.

• Allow employees to transfer from one eligible retirement scheme to another.

• Allow employees to accrue their entitlement by crediting his previous entitlement.

• Calculate the entitlement via a matrix of years of enrollment, the employee's age and reasonfor termination. This applies to those schemes with no employee contribution.

• Calculate the entitlement via reference to the contributions paid, the declared returns as wellas the enrollment period, the employee's age and reason for termination. This applies tothose schemes with employee and employer contributions.

• Offset the employer's portion of the entitlement against the employee's severance or longservice payment. This applies to those schemes with employer's contribution.


PY-HK Implementation of the Entitlement Plan

12 December 1999

PY-HK Implementation of the Entitlement PlanPurposeBy implementing the entitlement plan, you record and process the entitlement portion of the MPF[Page 8] or other company retirement scheme available to the employees.

PrerequisitesMPF and some company retirement schemes require that the employee and employer contributeto the schemes. This is known as the Contribution Plan [Page 42]. For such schemes, you mustalso implement the corresponding contribution portion of the scheme.

Process FlowImplementing the entitlement plan involve the following steps:

• Define the different schemes that are available for the employees to enroll.

• Define the type and nature of the schemes that are available for the different groups ofemployees. Below are some examples of the different types and natures of schemes:

Schemes Example 1 Example 2

Type Employer sponsored scheme Master trust scheme

Nature Company self funding Mandatory provident fund

• Enter the details of the organization that provide each scheme. Some schemes may beprovided internally, while others are provided by external organizations.

• Define specific information about each scheme, including the provider, the type of scheme,the calculation base used to calculate the entitlement, and more.

• Define the eligbility groupings used to differentiate groups of employees enrolling in differentschemes. You must also define the eligibility period for each grouping.

• Define the transfer rules for changing from one scheme to another.

• Define the method in which the employee chooses to withdraw his entitlement. In addition,you can define the wage type in which the entitlement amount is stored.

• Define the vesting schedule and multiplier for each scheme, if applicable.

You can customize the above process via the Entitlement Plan [Ext.] section of the Hong Kongpayroll implementation guide (IMG).

ResultOnce you have implemented the entitlement plan, you are now able to:

• Group the employees into eligible groups.

• Enrol the employees into the relevant entitlement plan.

• Transfer the employees from one eligible plan to another.


PY-HK Entitlement Plan infotypes

December 1999 13

PY-HK Entitlement Plan infotypesDefinitionThese are the infotypes you need to record and process the entitlement portion of MPF andcompany retirement schemes.

IntegrationMPF and those retirement schemes that require employee and employer contributions also needcorresponding contribution plan infotypes [Page 45].


PY-HK Entitlement plan (0347)

14 December 1999

PY-HK Entitlement plan (0347)DefinitionThis infotype stores the entitlement portion of a MPF [Page 8] or company retirement schemethat the employee enrolls in.

UseWhen an employee enrolls in a scheme, you enter the enrollment details for the entitlementportion of the scheme. This includes administrative details such as the employee's accountnumber. You can also include details of previous schemes, especially if the current schemeallows the employee to transfer those details from the previous scheme.

When the employee terminates his or her employment, the entitlement due is either calculatedinternally, or by an external party. If an external party calculates the entitlement, you enter theamount here.

Moreover, for those schemes which are based on contributions from employee and employer, theentitlement amount is divided into employee and employer amounts, and further sub-divided intomandatory and voluntary amounts. The employer's portion can then be used to offset its liabilityfor long service payment or severance payment.

By dividing the entitlement into mandatory and voluntary amounts, you can treat each portiondifferently. For example, in MPF schemes, there must be full and immediate vesting ofmandatory employer contributions, but not for the voluntary contribution. Also, the employee'smandatory contribution may need to be withheld until the employee retires, but he or she mayhave more flexibility with the voluntary amount.

StructureThe account number field contains a unique ID of the employee who is enrolled in the scheme.

Previous planThe data contains details about any credit coming in from a previous scheme the employee wasenrolled in. This includes (if possible) the previous scheme, the payout amount of the previousentitlement, the period for which he was enrolled in the previous plan.

Withdrawal detailsBesides the dividing of the entitlement to employee and employer amounts, and further sub-dividing into mandatory and voluntary amounts, you can also define the type of withdrawal for theentitlement, and specify if the entitlement should be processed by the system.

IntegrationFor those schemes that require employee and employer contribution, this entitlement plan has acorresponding contribution plan (0346) [Page 46] to record and process the contribution details.


PY-HK Assigning an Entitlement Plan

December 1999 15

PY-HK Assigning an Entitlement PlanUseMPF [Page 8] and other company retirement schemes [Page 9] have an entitlement portionwhich record and calculate the lump-sum or pension fund an employee is entitled to. Byassigning an employee to a specific entitlement plan, the system records and processes theentitlement data for that employee.

PrerequisitesSome schemes (including MPF) require that the employee contribute to the scheme. For suchschemes, you need to assign that employee a contribution plan first.

When you have assigned that employee a contribution plan [Page 48], the system automaticallydisplay the entitlement plan infotype (0347) for you to enter the appropriate entitlement data ofthe scheme.

Procedure1. From the Easy Access menu, choose Human Resources → Personnel Management →

Administration → HR Master Data → Maintain.

The Maintain HR master data screen appears.

2. Enter the employee's personnel number, and then enter 0347 in the Infotype field of theDirect selection section of the screen (to access the Entitlement Plan infotype).

3. Then select the Create button.

A list of eligible MPF and ORSO-type schemes appears.

4. Select the appropriate scheme from the list.

The Create Entitlement Plan screen appears.

5. Enter the appropriate entitlement plan information for the employee into the entitlement planinfotype [Page 14].

6. Save the entry when you are done.

ResultThe employee is now enrolled into the selected entitlement plan.


PY-HK Transferring Entitlement Plans

16 December 1999

PY-HK Transferring Entitlement PlansUseAs an employee continues to work for the company, he or she may have the opportunity totransfer from one retirement scheme to another. For example, when he or she moves to a moresenior position, he or she may choose to upgrade his or her retirement scheme.

You can reflect this transfer of entitlement plans in the system, including recording any creditbrought forward from the old scheme.

PrerequisitesYou should have already set up the rules for transferring between eligible entitlement plans. Youcan do this via the Define retirement benefit entitlement transfer rules [Ext.] in the Hong Kongpayroll implementation guide (IMG).




8. Enter the employee's personnel number, and then enter 0347 in the Infotype field of theDirect selection section of the screen (to access the Entitlement Plan infotype (0347)).

9. Then select the Change button.

10. Select the appropriate MPF and ORSO-type scheme from the list.

The Change entitlement plan screen appears.

11. Select the Transfer button.

The Transfer entitlement plan dialog box appears for you to enter the plan to transfer to.

12. Choose the entitlement plan that the employee is being transferred to.

A new Create entitlement plan screen appears for you to enter the new data.

13. Enter the information for the new entitlement plan in the appropriate fields.


ResultThe employee is now enrolled into the new entitlement plan.

See also:Assigning a Contribution Plan [Page 48]

Assigning an Entitlement Plan [Page 15]


PY-HK Contribution/Entitlement Eligibility (0349)

December 1999 17

PY-HK Contribution/Entitlement Eligibility (0349)DefinitionThis infotype defines the retirement schemes that the employee can enrol in. These schemesinclude company retirement schemes [Page 9] as well as MPF [Page 8] schemes.

UseAn employee is mandated to join the MPF scheme. He or she may also be eligible to join othercompany retirement schemes, depending on the employee's seniority and occupation, as well asother company requirements.

The system allows you to organize the employees into different groups, with each group eligiblefor specific schemes.


PY-HK Eligibility Grouping for Entitlement Plan

18 December 1999

PY-HK Eligibility Grouping for Entitlement PlanUseFor each entitlement plan, you can assign a group of employees that are eligible for this plan.This enables an organization to tailor the retirement schemes to specific groups of employees.For example, you may have one entitlement plan for executives and another for general staff.

IntegrationOnce you create eligibility groups for the entitlement plans, you have to also create rules fortransferring from one eligbility entitlement plan to another.

ActivitiesBefore you can assign the eligibility grouping for each employee, you need to set up the eligibilitygrouping for each entitlement plan. This includes:

• Defining the employee different groupings in your organization.

• Assign all the entitlement plans that are eligibility for each group of employees.

• Defining the transfer rules for moving between eligibility entitlement plans within a group.

The steps mentioned above in setting up the eligibility grouping can be found in the Hong KongPayroll Implementation Guide (IMG).

After you have customized the eligibility groupings to reflect your organization, you can thenassign each employee to the appropriate grouping. This assignment is done using theContribution/Entitlement Eligibility infotype [Page 50].


PY-HK Assigning the Eligibility Grouping

December 1999 19

PY-HK Assigning the Eligibility GroupingUseYou define the entitlement plans that an employee is eligible to enrol in.

PrerequisitesYou have to set up the eligibility groupings beforehand. This is done via the Entitlement Plansection of the Hong Kong payroll implementation guide (IMG).




16. Enter the employee's personnel number, and then enter 0349 in the Infotype field of theDirect selection section of the screen (to access the Contribution/Entitlement Eligibiltyinfotype (0349) [Page 50]).


The Create Cont/Ent Eligibility screen appears.

18. Enter the appropriate entitlement plan eligibility grouping for the employee.


ResultThe entitlement plan eligibility grouping is created for the employee.


PY-HK Offset Entitlement against Severance Payment

20 December 1999

PY-HK Offset Entitlement against Severance PaymentPurposeAn employee, who terminates his or her employment, receives either a long service payment orseverance payment. However, if the organization already contributes to the employee'sretirement scheme, then the employer's contribution to the scheme is used to offset its liability tothe long service or severance payment.

PrerequisitesYou should have set up the long service or severance payment function before you offset theemployer's portion of the entitlement against the long service or severance payment. To set upthe long service or severance payments, please go to the Hong Kong Payroll ImplementationGuide (IMG).


PY-HK Guaranteed Payments

December 1999 21

PY-HK Guaranteed PaymentsPurposeA guaranteed payment is an annual bonus that is paid to an employee for his or her contributionto the company. It is usually paid at the end of the year, and the amount is calculated as a factorof the employee's pay. For example, a guaranteed payment can be the equivalent of two timesthe employee's monthly salary.

The guaranteed payments component lets you setup, define and process an employee'sguaranteed payment.

Guaranteed payment is also commonly known as end-of-year (EOY) payment,thirteen month payment or annual bonus.

Implementation ConsiderationsIn the payroll environment, guaranteed payments can be calculated in the following scenarios:

• You include the calculation of guaranteed payments in the regular payroll run. The employeewill be paid both his or her monthly payments as well as the guaranteed payment.

• You calculate the guaranteed payments in a separate (off-cycle) payroll run. This is a once-off payroll run that calculates the employee's guaranteed payment.

• When an employee terminates his or her employment, you need to calculate his or herguaranteed payment as part of his final regular payments.

You have to ensure that all three scenarios are taken into consideration when you implement theguaranteed payments [Page 22] component into the system.

FeaturesWith the guaranteed payments component, you can:

• Assign differing guaranteed payments for different employees. This is done by creatingorganizational groupings as well as employee groupings, and then assigning these groupingsto respective guaranteed payments settings.

• Assign differing valuation of a month's bonus for different employees. For example, oneemployee uses the average of his or her annual salary, while another uses his or herDecember's salary as the calculation basis for guaranteed payments.

• Pro-rate an employee's guaranteed payment if he or she terminates his or her contractbefore the end of the financial year.

You enter an employee's guaranteed payment [Page 29] data via the Contract Elements infotype(0016).


PY-HK Setting up guaranteed payments

22 December 1999

PY-HK Setting up guaranteed paymentsPurposeBefore you can let the system calculate an employee's guaranteed payment, you need to set upthe system. The main purposes of setting up the system are:

• customizing the system according to your company's requirement.

• making sure that the system can handle all the different scenarios for guaranteed payments.For example, the system must handle guaranteed payments in a regular payroll run, as wellas during an off-cycle payroll run.

PrerequisitesIn order to set up the system correctly, you need to have all the possible guaranteed payment'scalculation bases [Page 23] available in the system. These calculation bases appear in theContract Elements infotype (0016) where you select the appropriate calculation base and enterthe multiplication factor for the employee's guaranteed payment.

Process FlowTo set up the system for guaranteed payments:

1. Specify all the different guaranteed payment methods that your company requires. You needto specify, among other attributes, the payment methods and the eligible period for anemployee's guaranteed payment.

2. Group all employees with the same guaranteed payment processing together. You can thenrun payroll according to these groupings.

3. Specify all the possible calculation bases for all the guaranteed payment scenarios.

4. Check that the calculation bases and statutory probation periods [Page 25] are correctly setup, in the payroll schema, for each of the following scenarios:

a. incorporating guaranteed payments within the regular payroll run

b. as an off-cycle payroll run

c. for a terminating employee

You can use the implementation guide to help you set up the above process. To do so, go to theEnd-of-Year (EOY) Payment section [Ext.] of the Hong Kong payroll implementation guide.

ResultOnce you have completed this process, you can enter an employee's guaranteed payment [Page29] details in the Contract Elements infotype (0016).


PY-HK Calculation Bases

December 1999 23

PY-HK Calculation BasesDefinitionA calculation base is an amount (in a wage type) that is used as a basis to determine anemployee's guaranteed payment. Some examples of calculation bases are:

• an employee's current month salary (/007)

• an employee's monthly salary as at December of the current year (/033)

• an employee's current month basic pay (/031). The basic pay is listed in the Basic Payinfotype (0008), and can include such wages as:

− the employee's current month salary

− the employee's monthly allowances (meal, accommodation, travel)

− the employee's overtime allowance

UseBy specifying a calculation base for an employee's guaranteed payment, along with amultiplication factor in the form of guaranteed months, the system calculates the employee'sguaranteed payment.

You specify both calculation base and guaranteed months in an employee's Contract Elementsinfotype (0016) [Page 28].

You have to specify all the calculation bases that are used for all the differentgroups of employees in the company. This is done via the Set up the end-of-year(EOY) payment calculation bases [Ext.] step in the Hong Kong payrollimplementation guide (IMG).


PY-HK Probation Periods

24 December 1999

PY-HK Probation PeriodsDefinitionTo calculate guaranteed payments, you must take into account two types of probation period:

Statutory probation[Page 25]

This is the time period a person needs to serve in a company to belegally entitled to the benefits as an employee.

Company probation This period is set by the company, and is usually used to determine theemployee's capability before confirmation of full-time employment. Youcan define this period in one of the following infotypes:

• Contract Elements (0016) [Page 28]

• Monitoring of Dates (0019)

UseFor an employee to be eligible for guaranteed payment, he must fulfill the minimum period of thetwo probation periods. Both probation periods are also used to calculate the pro-rated period forthe guaranteed payment.


PY-HK Statutory Probation Period

December 1999 25

PY-HK Statutory Probation PeriodDefinitionThe statutory probation period is the time period an employee must be with a company to beentitled the full benefits from the company.

UseThe statutory probation period is used to calculate the number of eligible days, as well as thenumber of calendar and anniversary months used to determine an employee's guaranteedpayment.

You should make sure that the statutory probation period defined in the function (HKEOY) usedto calculate the abovementioned parameters is accurate. This is done via the maintain maximumstatutory probationary period [Ext.] step in the Hong Kong payroll implementation guide (IMG).

See also: Probation Periods [Page 24]


PY-HK Defining the Company's Probation Period

26 December 1999

PY-HK Defining the Company's Probation PeriodUseBesides being the period for confirming the employee's full-time employment, the company'sprobation period is used, together with the statutory probation period [Page 25], to determine theguaranteed payment for the employee.

PrerequisitesYou should check that the statutory probation period is correctly defined. You can do this via themaintain maximum statutory probationary period [Ext.] step in the Hong Kong payrollimplementation guide (IMG).

ProcedureTo define the company's probation period with the Contract Elements infotype (0016) [Page 28]:

1. From the Easy Access menu, choose Human Resources → Personnel management →Administration → HR Master Data → Maintain.

The Maintain HR Master Data screen appears.

2. Enter the employee's Personnel number, and select the Contract Elements infotype (0016).Then choose New or Change.

The Contract Element screen appears.

3. In the Deadline section of the screen, enter the probation period for the employee.

4. If applicable, you can enter the extended probation end date.

5. Save the entry.

To define the company's probation period with the Monitoring of Dates infotype (0019):

1. From the Easy Access menu, choose Human Resources → Personnel management →Administration → HR Master Data → Maintain.

2. The Maintain HR Master Data screen appears.

3. Enter the employee's Personnel number, and select the Monitoring of Dates infotype (0019).Then choose New or Change.

4. The Monitoring of Dates screen appears.

5. Select Expiration of Probation as the Date type, and enter the date on which theprobation expires.

6. Save the entry.


PY-HK Guaranteed Payments-related infotypes

December 1999 27

PY-HK Guaranteed Payments-related infotypesDefinitionFor the system to calculate an employee's guaranteed payment, you must enter the relevant datarequired to determine the guaranteed payment. You enter this data via the following infotypes:

Contract Elements (0016) [Page 28] - There is a section in this infotype where you can enter theinformation regarding an employee's guaranteed payment. You can also enter the company'sprobation period [Page 24] information here.

Monitoring of Dates (0019) - You can also enter an employee's company's probation periodinformation in this infotype. The system takes the information from either the Contract Elementsinfotype or here.

In addition, you must maintain the respective infotypes that generates the calculation bases usedto calculate guaranteed payments. For example, if you want to use an employee's salary, youmust maintain the Basic Pay infotype (0008).


PY-HK Contract Elements Infotype (0016) - Hong Kong

28 December 1999

PY-HK Contract Elements Infotype (0016) - Hong KongUseThe Contract Elements infotype for Hong Kong includes a section where you can enter theguaranteed payment information for an employee. In addition, the company's probation period[Page 24] information you enter here is used to determine if the employee is eligible for theguaranteed payments benefit.

StructureContractual regulationsIn this section, you enter the information about the contract signed between the employee andthe company.

Guaranteed paymentThis section is where you enter the guaranteed payment information of the employee.Specifically, you specify the calculation basis that is used, and enter a multiplication factor of thecalculation basis. This multiplication factor is usually entered as a number of "months", since thecalculation basis is usually based on a monthly income.

DeadlinesIn this section, you enter the different time-specific deadlines that are critical to the employee.The deadlines that you can enter here are:

• Probation period

• Notice period

• Work permit expiration period

EntryIn this section, you enter the time-related information about the employee. For example, you canenter the initial date that the employee is hired with respect to the corporation. You can also entera time period which can be credited to the employee's tenure. This can be used to calculate, forexample, an insurance scheme contribution.

See also: Guaranteed payments-related infotypes [Page 27]


PY-HK Defining an Employee's Guaranteed Payment

December 1999 29

PY-HK Defining an Employee's Guaranteed PaymentUseYou define the employee's guaranteed payments entitlement in the Contract Elements infotype(Infotype 0016).

PrerequisitesDuring the implementation stage, you have to setup the different groupings to pay guaranteedpayment either with the regular payroll run, or during a separate off-cycle run. You should alsomake sure that the statutory probation period is correctly set. Please refer to the End-of-Year(EOY) Payments section of the Hong Kong payroll implementation guide (IMG).

When entering an employee's personal data, you have to enter the employee's probation period[Page 26] with the organization.

Procedure6. From the Easy Access menu, choose Human Resources → Personal management →



7. Enter the employee's Personnel number, and select the Contract Element infotype (0016)[Page 28]. Then choose New or Change.

The Contract Element screen appears.

8. In the Guaranteed payment section of the screen, enter the number of months the employeewill be paid for the entire year. For example, if an employee is entitled one month ofguaranteed payment, then he will be paid 13 months for the year.

9. If you want to base the employee's guaranteed payment on a different month's pay, enter thewage type in Calculation base field. The default calculation base is the employee's lastmonth's pay.


PY-HK Net Payroll Accounting

30 December 1999

PY-HK Net Payroll AccountingPurposeThe net payroll component for Hong Kong calculates employee's net remuneration according tostatutory regulations. The Net Payroll converts gross wages into net wages and processes thetaxes for the employees. Gross wages includes wage types entered in Personnel Administrationand those generated within Gross Payroll. The net payroll also includes the processing of anyregulatory and/or company retirement schemes that the employees may have enrolled in.

The Net Payroll generates a results cluster of wage types for the employees in the payroll run.This cluster serves as the basis for all further processing and output from the payroll system. Thisincludes the generating of statutory reports.

IntegrationThe Net Payroll is closely integrated with the other areas in SAP HR, as well as other SAPmodules such as Financial Accounting and Controlling.


PY-HK Tax

December 1999 31

PY-HK TaxPurposeThe tax component lets you set up and maintain an employee's tax data. The data is thenprocessed and printed to the relevant IR56 tax reports that is to be submitted to the Hong Kongtax authority.

FeaturesWithin the tax component for Hong Kong, you can:

• Group employees into tax reporting groupings.

• Declare the percentage of an employee's salary as overseas travel allowance.

• Declare the percentage of an employee's salary as rental allowance.

• Specify that the employee's quarters is provided by the company. In this case, you havethree options:

− The employer pays the rent and can recover a percentage of the rent from the employee.

− The employee pays the rent and can recover a percentage of the rent from the employer.

− The rental is recorded as an additional payment, and is entered manually into thesystem.

• Enter relevant information that is required for the IR56 tax reports.


PY-HK Implementation of Tax

32 December 1999

PY-HK Implementation of TaxPurposeIn order to process an employee's tax data, you need to tailor the tax component to yourorganization's specifications.

Process FlowTo implement the tax component, you must:

• Set up the system to store the employee's address for the IR56 tax reports if an employee isprovided with company-owned quarters.

• Define the types of quarters an employee is entitled to rent, or stay at during an overseastrip.

• Set up the different tax groupings in the organization. These groupings are used for taxreporting purposes.

• Define the tax period for the different tax groupings.

• Set up the tax reporting details required in the IR56 tax reports.

ResultNow that you have implemented the tax component, you can

• Declare a percentage of the employee's salary as rental allowance.

• Declare a percentage of the employee's salary as overseas travel allowance.

• Specify the percentage deducted from the employee's salary as rental deduction.

You can also specify other information the is required in the IR56 tax reports.


PY-HK Rental Allowance

December 1999 33

PY-HK Rental AllowanceDefinitionAccording to the Inland Revenue Department (IRD), an employee's rental allowance is taxexempt up to a percentage of the employee's salary. As such, some organizations allow theiremployees to declare a portion of their salary as rental allowance.

UseBy specifying a percentage of the employee's salary as rental allowance, the accumulatedamount over the financial year will be tax exempted.

IntegrationThe employee must provide rental receipts, which will be recorded in the system with theReceipts infotype. The Hong Kong payroll will reconcile the accumulated rental allowance withthe actual receipts. If the accumulated receipts are less than the stipulated rental allowance, thenthe remaining portion of the rental allowance is no longer considered tax exempted. However, ifthe accumulated receipts exceed the rental allowance, the excess receipts are ignored.


PY-HK Creation of Rental Allowance

34 December 1999

PY-HK Creation of Rental AllowancePurposeBy declaring a portion of an employee's salary as rental allowance, it will be reported in therelevant IR56 form that this portion of income is tax exempted.

Process FlowTo create rental allowance as a portion of an employee's remuneration package,

1. Maintain the employee remuneration wage types via the Check provisional rental & overseastravel processing [Ext.] entry within the Wage Types section of the Hong Kong payrollimplementation guide (IMG).

2. Go to the General Tax infotype (0345) [Page 40] for the employee, and do the following:

a. Select the Quarters provided by ER checkbox, and the type of accomodations in theNature field.

When you select the Quarters provided by ER checkbox, the % to Rent, EE paysrent to landlord and % recovered from ER fields are now enabled.

b. Enter the percentage of the rental allowance in the % to Rent field.

c. Select the EE pays rent to landlord checkbox, and enter 100 in the % recovered from ERfield.

d. Select the save button.

ResultYou have entered the relevant rental allowance for the employee.

To reconcile the rental allowance, you must enter the rental receipt information in theRecipts infotype. You should do this before you print the IR56 tax reports [Page 66].


PY-HK Rental Deduction

December 1999 35

PY-HK Rental DeductionDefinitionRental deduction is a recurring payment which the employee pays the employer for providingaccommodations.

UseIf the organization provides the employee accomodations, it can recover the cost of theaccomodation from the employee as rental deduction.

In this case, the cost of the accommodation is not linked to the employee's salary, it is based onthe actual cost to the employer when the employee accepts the accommodation.


PY-HK Creation of Rental Deductions

36 December 1999

PY-HK Creation of Rental DeductionsPurposeIf the organization provides accommodations to the employee, they can recover the cost of theaccommodations from the employee by charging him a monthly rental deduction.

Process FlowTo deduct rental from an employee's remuneration,

1. Enter the rental amount as a recurring deduction payment using the RecurringPayments/Deductions infotype (0014). You can use the Rental Base wage type MX01.

2. Go to the General Tax infotype (0345) [Page 40] for the employee, and do the following:

a. Select the Quarters provided by ER checkbox, and the type of accommodations in theNature field.

When you select the Quarters provided by ER checkbox, the % to Rent, EE paysrent to landlord and % recovered from ER fields are now enabled.

b. Select the ER pays rent to landlord checkbox, and enter 100 in the % recovered from EEfield.

c. Select the save button.

ResultThe employee will have a rental deduction equal to the cost entered in wage type MX01.


PY-HK Overseas Travel Allowance

December 1999 37

PY-HK Overseas Travel AllowanceDefinitionAccording to the Inland Revenue Department (IRD), an employee's overseas travel allowance istax exempt up to a percentage of the employee's salary.

As such, some organizations allow their employees to declare a portion of their salary asoverseas travel allowance.

UseBy specifying a percentage of the employee's salary as overseas travel allowance, theaccumulated amount over the financial year will be tax exempted.

IntegrationThe employee must provide overseas travel receipts, which will be recorded in the system withthe Receipts infotype. The Hong Kong payroll will reconcile the accumulated overseas travelallowance with the actual receipts. If the accumulated receipts are less than the stipulatedoverseas travel allowance, then the remaining portion of the overseas travel allowance is nolonger considered tax exempted. However, if the accumulated receipts exceed the overseastravel allowance, the excess receipts are ignored.


PY-HK Creation of Overseas Travel Allowance

38 December 1999

PY-HK Creation of Overseas Travel AllowancePurposeBy declaring a portion of an employee's salary as overseas travel allowance, it will be reported inthe relevant IR56 form that this portion of income is tax exempted.

Process FlowTo create overseas travel allowance as a portion of an employee's remuneration package,

1. Maintain the employee remuneration wage types via the Check provisional rental & overseastravel processing [Ext.] entry within the Wage Types section of the Hong Kong payroll IMG.

2. Go to the General Tax infotype (0345) [Page 40] for the employee, and enter the percentageof the employee's salary that is to be declared as overseas travel allowance. You can findthis field directly under the employee's tax file number.

ResultYou have declared the overseas travel allowance for the employee.

To reconcile this overseas travel allowance, you must enter the overseas travel receipts in theRecipts infotype. You should do this before you print the IR56 tax reports [Page 66].


PY-HK Tax Infotypes

December 1999 39

PY-HK Tax InfotypesDefinitionThese are the infotypes you require to record and process an employee's tax data.

Use

Structure

Integration


PY-HK Tax (0345)

40 December 1999

PY-HK Tax (0345)DefinitionThis infotype stores the relevant information required for the processing of an employee's taxinformation.

UseWithin this infotype, you can record:

• The employee's enrollment in the rental and overseas travel allowance scheme.

• The percentage of salary declared as rental and overseas travel allowance.

• The amount deducted from the employee for accommodation provided by the employer.

• The employee's plan to depart from Hong Kong upon termination of his employment. Youcan enter the reason of his departure and the country he is going to.

• Information that is relevant to the IR56 tax reports{link}.

StructureThe % to os trav field states the percentage of the employee's wages that is to be considered asoverseas travel allowance, and is therefore exempted from tax.

RentalThe Quarter provided by ER and Nature fields are for the IR56 tax reports.

By selecting ER pays rent to landlord, and specifying the percentage recovered from EE, you cancreate a rental deduction from the employee.

By selecting EE pays rent to landlord, and specifying the percentage recovered from ER, you cancreate a rental allowance for the employee.

You can also specify that the rental allowance is entered manually as an additional payment.

Other info related to IR56This section provides relevant information that is required in the IR56 tax reports, such as:

When the employee plans to leave Hong Kong.

When the employee's salary is paid by the employer.

If the employee is only working part-time for the company. In this case, you can specify theprincipal employer.


PY-HK Creating tax data for an employee

December 1999 41

PY-HK Creating tax data for an employeeProcedure20. From the Easy Access menu, choose Human Resources → Personnel management →



21. Enter the employee's personnel number, and then enter 0345 in the Infotype field of theDirect selection section of the screen (to access the Tax infotype (0345) [Page 40]).


The Create Tax screen appears.

23. Enter the appropriate tax information for the employee into tax infotype.


ResultYou have entered the relevant tax data for the employee.


PY-HK Contribution Plan

42 December 1999

PY-HK Contribution PlanPurposeMPF [Page 8] and some company retirement schemes require employee and employercontributions. This component records and processes these contributions while the employee isenrolled in such schemes.

IntegrationFor each contribution plan, you need to have a corresponding entitlement plan [Page 11] torecord and process the entitlement owed to the employee.

FeaturesWith the contribution plan, you can:

• Define the eligibility for entry into the retirement schemes. This may depend on, among otherthings, the seniority of the employee, the employee's occupation and location.

• Group all employees that are eligible to join the same retirement schemes.

• Allow employees to transfer from one eligible retirement scheme to another.

• Recognize some portion of the employee's previous years of service when calculating hisschedule for contribution.

• Divide employee and employer contributions into mandatory and voluntary portions. You canalso define the amount value for each portion to be based on the employees' years ofservice, age and income.

• Set up contributions as a percentage of the employee's salary or a fixed sum.

• Define alternative contribution amounts when an employee's total cash income either fallsbelow a minimum value, or exceeds a maximum value.


PY-HK Implementation of Contribution Plan

December 1999 43

PY-HK Implementation of Contribution PlanPurposeBy implementing the contribution plan, you can record and process the contribution portion of theMPF [Page 8] or other company retirement schemes available to the employees.

PrerequisitesYou also need to implement the entitlement portion [Page 12] of such schemes.

Process FlowImplementing the contribution plan involve the following steps:

• Create the different schemes that are available for the employees to enroll.

• Define the eligbility groupings used to differentiate groups of employees from enrolling indifferent schemes. You must also define the eligibility period for each grouping.

• Create the rules for transferring from one scheme to another.

• Create specific rules to determine the default contribution amounts.

• Set up the matrix of rules that are used to decide the level of contributions by employees andemployers. The rules include:

− the employee's age

− the employee's length of service (with option to include any previous length ofemployment)

− the employee's salary

• Set up the non pro-rated calculation bases for those employees that enrol in a scheme afterthe start of a payroll period. This also applies to the situation when an employee mustcontribute the entire contribution for the payroll period regardless of any absence takenduring that period.

• Define the type and nature of the schemes that are available for the different groups ofemployees. Below are some examples of the different types and natures of schemes:

Schemes Example 1 Example 2

Type Employer sponsored scheme Master trust scheme

Nature Company self funding Mandatory provident fund

• Enter the details of the organization that provide each scheme. Some schemes may beprovided internally, while others are provided by external organizations.

• Define specific information about each scheme, including the provider, the wage type thatprovides the employee's salary, the wage types where the contributions are stored and more.

• Define any special rules that applies to the scheme.

• Customize the proration and cumulation of contribution plan wage types, if applicable.


PY-HK Implementation of Contribution Plan

44 December 1999

You can use the Contribution Plan [Ext.] section of the Hong Kong payroll implementation guide(IMG) to implement the abovementioned steps.

ResultOnce you have implemented the contribution plan, you are now able to:

• Group the employees into eligible groups.

• Enrol the employees to the relevant contribution plan.

• Transfer the employees from one eligible plan to another.


PY-HK Contribution Plan Infotypes

December 1999 45

PY-HK Contribution Plan InfotypesDefinitionThese are the infotypes you require to record and process the contribution portion of MPF andcompany retirement schemes.

IntegrationThese schemes also require corresponding entitlement plan infotypes [Page 13] to record andprocess the employee's entitlement.


PY-HK Contribution Plan (0346)

46 December 1999

PY-HK Contribution Plan (0346)DefinitionThis infotype stores the contribution portion of a MPF [Page 8] or company retirement schemethat the employee enrolls in.

UseWhen an employee enrolls in a scheme, you can enter the enrollment details for the contributionportion of the scheme. This includes administrative details and the contribution levels.

You can also specify different contribution levels if the employee's income falls within differentspecific ranges. The three income ranges that exists are as follows:

• Less than minimum relevant incomed

• Within the normal income range

• Greater than maximum relevant income

StructureThe account number field contains a unique ID provided to the employee who is enrolled in thescheme.

Normal contributionYou can either choose the default contribution levels or specify alternative levels. You use theHong Kong payroll implementation guide (IMG) to set the default contribution levels [Ext.]. Foralternate levels, you can specify the contributions as:

Flat rate Specifies a flat percentage, for example, 5% of the employee's salary

Flat amount Specifies a fixed amount, for example, $500.

Excess rate Specifies a percentage in excess of the mandatory amount, for example, themandatory contribution plus 5% of the employee's salary.

Excess amount Specifies an amount in excess of the mandatory amount, for example, themandatory contribution plus $500.

Less than minimum relevant incomeThis section specifies the contribution levels if the employee's relevant income is less than theminimum relevant income. For this to take effect, you should have defined the income range forthe contribution plan in the payroll IMG for Hong Kong.

Similar to the Normal contribution section, you can either choose the default contribution levels orspecify alternative levels.

Greater than maximum relevant incomeThis section specifies the contribution levels if the employee's relevant income is more than themaximum relevant income.

Similar to the Normal contribution section, you can either choose the default contribution levels orspecify alternative levels.


PY-HK Contribution Plan (0346)

December 1999 47

IntegrationAs all contribution plans are eventually paid back to the employee, every contribution plan willhave a matching entitlement plan (0347) [Page 14].


PY-HK Assigning a Contribution Plan

48 December 1999

PY-HK Assigning a Contribution PlanUseSome retirement schemes, including MPF [Page 8], require a regular contribution from both theemployee and the employer. Assigning the appropriate contribution plan allows you to record thecontribution amounts from both employee and employer. This amounts are then used in thepayroll run to calculate the employee's net income.

PrerequisitesWhen an employee terminates his employment, he can expect to receive an entitlement from theretirement scheme he enrolled in. This means that the system also needs to record and processthe entitlement data as well.




26. Enter the employee's personnel number, and then enter 0346 in the Infotype field of theDirect selection section of the screen (to access the Contribution Plan infotype (0346)).


A list of eligible MPF and ORSO-type schemes appears.

28. Select the appropriate scheme from the list.

The Create Contribution Plan screen appears.

29. Enter the appropriate contribution plan information for the employee into contribution planinfotype [Page 46].


ResultThe employee is now enrolled into the selected contribution plan. The system will automaticallydisplay the corresponding entitlement plan for you to enter the entitlement data for this scheme.

See also: Assigning an Entitlement Plan [Page 15]


PY-HK Transferring Contribution Plans

December 1999 49

PY-HK Transferring Contribution PlansUseDuring the course of his employment, an employee may transfer from one retirement scheme toanother. For example, when he moves to a more senior position, he may choose to upgrade hisretirement scheme.

You can reflect this transfer of contribution plans, including recording any brought forward creditfrom the old scheme.

PrerequisitesYou should have already set up the rules for transferring between eligible contribution plans. Youcan do this via the Define contribution plan transfer rules [Ext.] in the Hong Kong payrollimplementation guide (IMG).




32. Enter the employee's personnel number, and then enter 0346 in the Infotype field of theDirect selection section of the screen (to access the Contribution Plan infotype (0346)).

33. Then select the Change button.

34. Select the appropriate MPF and ORSO-type scheme from the list.

The Change contribution plan screen appears.

35. Select the Transfer button.

The Transfer contribution plan dialog box appears for you to enter the plan to transfer to.

36. Choose the contribution plan that the employee is being transferred to.

A new Create contribution plan screen appears for you to enter the new data.

37. Enter the information for the new contribution plan in the appropriate fields.


ResultThe employee is now enrolled into the new contribution plan. The system will then automaticallydisplay the corresponding entitlement plan infotype (0347) [Page 14] for you to enter theentitlement data for this new scheme.

See also:Assigning a Contribution Plan [Page 48]

Assigning an Entitlement Plan [Page 15]


PY-HK Contribution/Entitlement Eligibility (0349)

50 December 1999

PY-HK Contribution/Entitlement Eligibility (0349)DefinitionThis infotype defines the retirement schemes that the employee can enrol in. These schemesinclude company retirement schemes [Page 9] as well as MPF [Page 8] schemes.

UseAn employee is mandated to join the MPF scheme. He or she may also be eligible to join othercompany retirement schemes, depending on the employee's seniority and occupation, as well asother company requirements.

The system allows you to organize the employees into different groups, with each group eligiblefor specific schemes.


PY-HK Eligibility Grouping for Contribution Plan

December 1999 51

PY-HK Eligibility Grouping for Contribution PlanUseFor each contribution plan, you can assign a group of employees that are eligible for this plan.This enables an organization to tailor the retirement schemes to specific groups of employees.For example, you may have one contribution plan for executives and another for general staff.

IntegrationOnce you create eligibility groups for the contribution plans, you can also create rules fortransferring from one eligbility contribution plan to another.

ActivitiesBefore you can assign the eligibility grouping for each employee, you need to set up the eligibilitygrouping for each contribution plan. This includes:

• Defining the different employee groupings in your organization.

• Assign all the contribution plans that are eligibility for each group of employees.

• Defining the transfer rules for moving between eligibility contribution plans within a group.

The steps mentioned above in setting up the eligibility grouping can be found in theimplementation guide.

After you have customized the eligibility groupings to reflect your organization, you can thenassign each employee to the appropriate grouping. This assignment is done using theContribution/Entitlement Eligibility infotype [Page 50].


PY-HK Assigning the Eligibility Grouping

52 December 1999

PY-HK Assigning the Eligibility GroupingUseThis is to assign an employee to the set of contribution plans he is eligible to enrol in.

PrerequisitesYou have to set up the eligibility groupings with the implementation guide beforehand. You cando so via the Assign contribution plan eligibility [Ext.] step in the Hong Kong payroll implementionguide (IMG).




40. Enter the employee's personnel number, and then enter 0349 in the Infotype field of theDirect selection section of the screen (to access the Contribution/Entitlement Eligibiltyinfotype (0349) [Page 50]).


The Create Cont/Ent Eligibility screen appears.

42. Enter the appropriate contribution plan eligibility grouping for the employee.


ResultThe contribution plan eligibility grouping is created for the employee.


PY-HK Crediting previous years of service

December 1999 53

PY-HK Crediting previous years of serviceUseSome organizations allow their employees to take into account their previous employment whenthey enter a retirement scheme. You can enter this data in the employee's Contract Elementsinfotype (0016) [Page 28].


Administration → HR master data → Maintain.


45. Enter the employee's personnel number, and then enter 0016 in the Infotype field of theDirect selection section of the screen (to access the Contract Elements infotype).

46. In the Credit of Previous Service field, enter the years, months and days of previousemployment that the retirement scheme should take into account.

47. Save the entry.

ResultThe system will take into account the entered period of previous employment when calculatingthe contributions to enrolling into the retirement scheme.


PY-HK Deductions

54 December 1999

PY-HK DeductionsPurposeThe deductions component describes how some deductions can be handled in the R/3 system.


PY-HK Subsequent Activities

December 1999 55

PY-HK Subsequent ActivitiesPurposeAfter processing Net Payroll, the SAP Payroll system includes a number of post-payroll activitiesthat you can make use of. You can, for example, create electronic media for making directdeposits into employee's bank account.

IntegrationYou can post payroll results to the general ledger and controlling accounts in the FinancialAccounting module of the SAP system.

FeaturesFinal Payroll Processing allows you to:

• Check that the payroll results have no inconsistencies before you release them

• Directly deposit employee's pay

• Print out employee's payslip

• Post to Financial Accounting and Controlling


PY-HK Payroll Results Checking

56 December 1999

PY-HK Payroll Results CheckingPurposeThe payroll results check tool lets you evaluate the different payments made to and on behalf ofthe employees in a particular payroll area for a particular payroll accounting period.

This allows you to check for inconsistencies in the payroll results prior to the final release of thatperiod's payroll.

Implementation ConsiderationsYou need to set up any additional user wage types that is to be used in the payroll results checktool.

For more information, please refer to the Payroll Result Checking [Ext.] sectionof the Hong Kong payroll implementation guide (IMG).


PY-HK Evaluation of Payroll Results

December 1999 57

PY-HK Evaluation of Payroll ResultsPurposeEvaluating the payroll results prior to releasing the payroll enables you to check forinconsistencies that may arise from mistakes and errors. Hence you can correct these errors andre-run the payroll for that period, before releasing the payroll.

PrerequisitesYou have to make sure that the payroll for the payroll area and period has been run before youcan evaluate the payroll results.

Process FlowOnce the payroll has been run for a particular payroll area and period, you can evaluate thepayroll results as follows:

1. Generate the payroll results check data to prepare the data for the payroll results check tool.You can use a batch job to generate for more than one payroll area or period.

2. Run the payroll results check tool. You will see a number of reports that you can use toanalyse the payroll results for that period.

ResultFrom the reports of the payroll results check tool, you can compare the payroll results fordifferent periods and check for inconsistencies. If you find any inconsistency, you can that checkto see if it is an accounting error.

When you are sure that there are no inconsistencies, you can then release the payroll results.


PY-HK Preparation of Payroll Results Check Data

58 December 1999

PY-HK Preparation of Payroll Results Check DataUseBefore you can use the payroll results check tool, you need to prepare the payroll results checkdata. This is done by generating the payroll results check data for the appropriate payroll areasand periods.

IntegrationYou can display the generated payroll results check data at a later stage without the need toregenerate the data. This is useful if you generate a number of payroll results check data as anovernight batch job. You will then be able to see the generated payroll results data at a later time.

PrerequisitesYou have to run the payroll before you can generate the payroll results check data.

ActivitiesYou should generate the payroll results check data for each period sequentially. Changes madeto data in one period will affect data in subsequent periods. Therefore, if you change data in oneperiod, you must regenerate the payroll results check data for all subsequent periods. However,this only applies to the payroll results check data that falls within a single tax year.

For performance reasons, you should create a batch input file to run this reportduring off-peak time.


PY-HK Generating Payroll Results Check Data

December 1999 59

PY-HK Generating Payroll Results Check DataPrerequisitesYou have to run the payroll for this period before you can generate the payroll results check data.

Procedure1. Choose Human resources → Payroll → Asia/Pacific → Hong Kong → Subs. activities → Per

payroll period → Evaluation → Payroll results check tool → Preparation → Data generation.

The Payroll results check tool: Generation screen appears.

2. Enter the relevant payroll area and period.

3. If you want the results to be written to the cluster, set the Data update required checkbox.

4. If you want to display the results of the generation on the screen, set the Results displayrequired checkbox.

5. Choose the Execute button.

ResultThe payroll results check data is generated for the period selected. If you had set the Resultdisplay required checkbox, the results of the generated data appears on the screen.

See also:Displaying the Payroll Results Check Data [Page 60]

Evaluating the Payroll Results Check Data [Page 62]


PY-HK Displaying the Payroll Results Check Data

60 December 1999

PY-HK Displaying the Payroll Results Check DataUseYou can use this function to display the generated payroll results check data for a particularpayroll area and period. This is especially useful if you had generated the payroll results checkdata using a overnight batch job.

PrerequisitesYou have to generate the payroll results check data for the specific period before you can displaythe generated results.


payroll period → Evaluation → Payroll results check tool → Preparation → Data display.

The Payroll results check tool: Display screen appears.



ResultThe summarized results of the payroll results check data appears on the screen.

See also:Generating Payroll Results Check Data [Page 59]

Evaluating the Payroll Results Check Data [Page 62]


PY-HK Payroll Results Check Tool

December 1999 61

PY-HK Payroll Results Check ToolUseOnce you have generated the payroll results check data for all the relevant payroll areas andperiods, you can then use the payroll results check tool to analyse the payroll data.

PrerequisitesYou have to generate the payroll results check data before you can run the payroll results checktool.

FeaturesWhen running the payroll results check tool, you can restrict the check to only specific wagetypes that you are interested in. Otherwise, the default list of wage types is used. You cancustomize this list of wage types in the payroll customizing IMG for Hong Kong.

You also have the option to exclude data of terminated employees (leavers) from the payrollresults check tool until the end of the tax year.

ActivitiesWhen you execute the payroll results check tool, you will receive the following analysis:

Payroll reconcialiation report Contains a list of all the incoming and outgoing payments (interms of wage types) for the period.

From this report, you can move back and forth to view datafrom preceding and subsequent periods.

Payroll summary report Contains period and year-to-date amounts for the followingwages:

• Gross payment

• Other payment

• Total deductions

• Net payment

Breakdown of payments report Contains the list of payments that will or has been paid toemployees, broken down by the methods of payment.

Retroaction details report Contains a detailed listing of the retroactive payments for theperiod.

Adjustment details report Contains a detailed listing of the adjustments for the period.


PY-HK Evaluating the Payroll Results Check Data

62 December 1999

PY-HK Evaluating the Payroll Results Check DataPrerequisitesYou have to generate the payroll results check data before you can run the payroll results checktool.


payroll period → Evaluation → Payroll results check tool → Evaluation.

The Payroll results check tool screen appears.


11. If you only want to analyse specific payments, enter the wage types that represent thesepayments. Leaving the Wage type selection option blank to have the system use the defaultlist of wage types.

12. If you want data of terminated employees (leavers) to be included, select the Keep leaversuntil end of year checkbox.


ResultThe Payroll reconciliation report appears on the screen.

The top of the screen contains buttons to display the other reports evaluated bythe payroll results check tool.

See also:Generating Payroll Results Check Data [Page 59]

Displaying the Payroll Results Check Data [Page 60]


PY-HK Reporting

December 1999 63

PY-HK ReportingPurposeThe reporting component provides the reports required for submitting year-end tax returnsaccording to statutory regulations.


PY-HK Tax Reporting

64 December 1999

PY-HK Tax ReportingPurposeRegulation requires that a set of tax reports be submitted to the tax office. These are the IR56 taxreports that provides the tax authorities information to enable them to process an employee's taxfor the financial period.

The required tax reports that you have to generate include:

IR56B Employee's return of remuneration and pensions for the tax year report.

IR56E Notification by an employer of an employee who commences to be employed report.

IR56F Notification by an employer of an employee who is about to cease to be employedreport.

IR56G Notification by an employer of an employee who is about to depart from Hong Kongreport.

Implementation ConsiderationsThe payroll IMG for Hong Kong sets up some of the tax reports default settings.

IntegrationYou need to have all the relevant information prepared in the R/3 system before you cangenerate the tax reports.


PY-HK The Tax Reporting Process

December 1999 65

PY-HK The Tax Reporting ProcessPurposeFor the organization, the tax reporting process consist of a number of reports that is to be sent ofthe tax authorities at specific times during an employee tenure with the organization. In addition,additional reports may be needed if the employee leaves the country or if any payroll datachanges after a report has been submitted.

PrerequisitesNormally, you can generate a tax report only after a payroll run.

Process FlowBelow shows the various tax reports, the situation when these reports must be submitted, and itis implemented in the system.

Tax report When to submit How it is implemented

IR56E After an employee has beenhired.

You can generate this report after completingthe first payroll run for that employee.

IR56B At the end of the financialyear.

You have to resubmit thisform if any payroll data haschange.

You can generate this report for all employeesafter completing the final payroll run for thefinanical year.

If additional payroll data should becomeavailable after the IR56B is submitted, then anamended IR56B form should be resubmittedafter the subsequent payroll has been run.

IR56F When the employee givesnotice of termination.

You have to resubmit thisform if any payroll data haschange.

You can generate this report after entering thetermination event for the employee.

If additional payroll data should becomeavailable after the IR56F is submitted, then anamended IR56F form should be resubmittedafter the subsequent payroll has been run.

IR56G When the employee isleaving Hong Kong.

You can generate this report after entering thedeparting Hong Kong information within theTax infotype for Hong Kong.


PY-HK Generating a tax report

66 December 1999

PY-HK Generating a tax reportProcedureTo generate the IR56B at the end of the financial year,

1. From the Easy Access menu, choose Human Resources → Payroll → Asia/Pacafic → HongKong → Subs. activities → Annual → Country reporting → IR56B Report.

The selection screen for the report appears.

2. User either the Personnel number or matchcode selection to select the employees.

3. Enter the relevant conditions in the General IR56B information section.

4. Select the Execute button.

To generate any of the IR56E, F and G reports, or to generate the IR56B report asubsequent time,

1. From the Easy Access menu, choose Human Resources → Payroll → Asia/Pacafic → HongKong → Subs. activities → Period-independent → Country reporting.

2. Choose the appropriate report to generate.

The selection screen for the relevant report appears.

3. User either the Personnel number or matchcode selection to select the employees.

4. If you are generating IR56E, F or G reports, select the relevant period that this report is valid.

5. Enter the relevant conditions to generate the reports.

6. Select the Execute button.

ResultThe relevant reports will be generated and printed out to the selected printer.

hong kong payroll

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