Voluntary deductions are deductions that an employee chooses to pay through their salary instead of making the payments directly.
To create a Voluntary Deduction Element in Oracle HCM, follow these steps:
1. Navigate to Payroll Elements
- Go to My Client Groups > Payroll > Elements.
- Click Create to start creating a new element.
2. Enter Basic Information
- Primary Classification: Select Voluntary Deductions (as it will be a voluntary deduction chosen by employees).
- Secondary Classification: If there’s a specific type that applies (e.g., Union Dues, Gym Membership), select it. If not, you can leave it blank.
- Element Name: Enter a descriptive name like “Gym Membership Deduction” or “Charity Donation”.
- Reporting Name: Enter a short reporting name, like “Gym Deduction” or “Charity”.
3. Additional Element Information
- Effective Date: Specify the start date for the element.
- Input Currency: Define the currency (e.g., USD).
- Open-ended: Select this if the deduction is indefinite or ongoing.
4. Define the Processing Rules
- Process the element at payroll run: Ensure this is selected so it’s deducted in each payroll.
- Recurring or Non-Recurring: Choose Recurring if the deduction will be taken regularly (e.g., monthly), or Non-Recurring if it’s a one-time deduction.
- Deduction Priority: Set a priority level if necessary (voluntary deductions usually have lower priority compared to mandatory deductions like taxes).
5. Specify the Calculation Rules
- Calculation Rule: Decide how the deduction should be calculated. Options include:
- Flat Amount: Deduct a fixed amount per period.
- Percentage of Earnings: Deduct a percentage of the employee’s eligible earnings.
- Predefined Values: You can set a standard deduction amount or percentage, or leave it open for employee-specific entries.
6. Configure Element Eligibility
- Go to the Element Eligibility section.
- Click Create to define eligibility criteria. This might include criteria like:
- Employee Group (e.g., specific employee groups that are eligible for this deduction).
- Payroll if the deduction applies only to certain payrolls or geographies.
7. Define the Element Entry Values
- If the deduction has variable input values, define them here. Examples include:
- Deduction Amount: For a flat deduction rate.
- Deduction Percentage: If it’s based on a percentage of earnings.
8. Save and Close
- Once you’ve completed all details, click Save and Close.
9. Test the Element
- Run a payroll process with a test employee to ensure the voluntary deduction processes correctly.