Indirect Valuation

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Indirect Evaluation (INVAL) and 40ECS Feature

Purpose

Indirect Evaluation is a method to calculate the eligible amounts for some of the wage types. INVAL is the

Indirect Evaluation Module used to meet the Indian specific business requirements. INVAL calculates theeligible amounts for certain wage types that are defaulted intothe Basic Pay Infotype (0008)or entered intheRecur. Payments/Deductions Infotype (0014)andthe Additional Payments Infotype (0015).

When you populate the Long term reimbursements Infotype (0590), the infotype checksthe INVAL amounts for eligibility. The Claims programs also check the INVAL amounts while processingclaims.

In addition to, or instead of, computing the eligibility as a currency value amount, INVAL can alsocalculate the eligibility in terms of numbers, if the wage type has been configured accordingly. Forexample, an employee can be eligible for 50 liters of petrol.

When you are populating the Basic PayInfotype (0008), the wage types get defaulted into the infotypedepending on the Pay Scale Grouping for Allowances of the employee. Pay Scale Grouping forAllowances determines the eligible wage types for the employee. For some of these wage types, whichget defaulted into the Basic PayInfotype (0008), the eligible amounts also get defaulted. This happensdue to Indirect Evaluation Module INVAL.

ForRecur. Payments/Deductions Infotype (0014) andAdditional Payments Infotype (0015), if you enteran INVAL wage type, the eligible amount will get defaulted into the infotype. This is also due to IndirectEvaluation.

In case ofBasic PayInfotype (0008), Recur. Payments/Deductions Infotype (0014) andAdditionalPayments Infotype (0015), if you overwrite the Indirectly Evaluated amounts, the amounts entered by youare valid. In this case, the Iindicator in the Ind. Val. will disappear. Again, if you delete this overwritten

amount, the default amount and the Iindicator in the Ind. Val. will reappear. The INVAL amount for adefault wage type for an employee may change in the middle of the year. In this case, you can check theeligibility amount on a particular date, by entering that date in the start date of the IVfield at the bottom ofthe Basic PayInfotype (0008).

There are four module variants forINVAL:

1. A This calculates the value of the wage type as a fixed amount.2. B This calculates the amount as a percentage of a base wage type added to a fixed amount.

More than one such amount, with same or different percentage of the base wage type, can becalculated for an INVAL wage type. In this case, the amount that will be Indirectly Evaluated willbe the sum of all such calculated amounts, added to a fixed amount. For example, for the wagetype M230, the different INVAL B amounts are

a. 10% of MB10b. 30% of M220c. Fixed amount of Rs.1000

In this case, the INVAL amount for the wage type M230 will be the sum of a, b and c.

3. C This calculates the amount as a percentage of a base wage type subject to a maximum limit.More than one such amount, with same or different percentage of the base wage type, can becalculated for an INVALwage type. In this case, the amount that will be Indirectly Evaluated will
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be the sum of all such calculated amounts, subject to a maximum limit. For example, for the wagetype M230, the different INVAL C amounts are

a. 10% of MB10b. 30% of M220c. Limit of Rs.5000

In this case, the INVAL amount for the wage type M230 will be the sum of a and b subject to amaximum of c.

4. D This calculates the amount as one or any combination of the following INVAL Modulevariants based on Basic salary slabs:

a. Fixed amountb. Percentage of a base wage type added to a fixed amountc. Percentage of a base wage type subject to a maximum limit

In the SAP system, INVAL D can be configured as only INVAL B or C. Once the percentage of the basewage type is calculated, the result is multiplied with a factor. This resultant amount is then added to fixedamount or is compared with a maximum limit. For example, the INVAL module variant for the wage typeM210, for an employee who falls in the Basic Salary slab of Rs.10,000 12,000, is INVAL C.

The INVAL amounts are:

i. 10% of MB10ii. 30% of M220iii. Multiplication factor of 50%iv. Limit of Rs.7000

In this case, the INVAL amount for M210 for the employee is the sum of i and ii, multiplied by iii and theresult is subject to a maximum of iv.

If you want to configure the wage type as a fixed amount for a particular slab, the wage type is configuredas INVAL B. In this case, the percentage of the base wage type is multiplied with the factor of 0% andthen the fixed amount added to the result. For example, the INVAL module variant for the wage type

M230, for an employee who falls in the Basic Salary slab of Rs.15,000 25,000, is INVAL B.The INVAL amounts are:

i. 100% of MB10ii. Multiplication factor of 0%iii. Fixed amount of Rs.5000

In this case, the INVAL amount for M230 for the employee is the value of i, multiplied by ii and the resultadded to iii. In this case, the INVAL amount will be the fixed amount of Rs.5000.

For defining INVAL D, instead of using only the Basic salary to be compared with the salaryslabs, you can use the user exit EXIT_SAPLHRPADINA1_006, available in the

Enhancement HRINRAP5, to define additional wage types to be added to the Basic salary. Thesum of all these wage types can then be compared with the salary slabs for the computationofINVAL D.

The base wage type in case ofINVAL B, C or D may be the Basic salary, the Dearness Allowance or/andany other wage type the employee is eligible for.

Only those factors, which affect the compensation of the majority of employees are assigned to Pay ScaleGrouping for Allowances. There are some compensation factors that affect selected employees only.


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These compensation factors are not considered to define the Pay Scale Grouping for Allowances. Thesepay parameters are configured through the 40ECS Feature. Example of such parameters are, number ofdependents, marital status, years of experience in the organization.

Only the wage types that are Indirectly Evaluated can be further calculated using the 40ECS feature. Thisfeature determines the factor which is multiplied with the INVAL amount to arrive at the amount payable

to the employee. For an employee, a wage type may be evaluated using INVAL. But the same wage typemay be configured in the 40ECS Feature for the employee. In this case, the factor returned bythe 40ECS Feature will be multiplied with theINVAL amount and the total will be defaulted into therespective infotypes. For example, an employee is eligible for a Leave Travel Allowance of Rs.24000according to Indirect Evaluation. But you can configure the 40ECS feature, so that an employee who haschildren will get 25% extra for each child for a maximum of two children.

Implementation Considerations

If you want Indirect Evaluation for a wage type, you have to define it as a characteristic of thewage type. To do this, go to the IMG underPayroll India: Reimbursements, Allowances andPerks -> Maintain Wage Type Characteristics.

You have to maintain each INVAL wage type for a Pay Scale Grouping for Allowances in the IMG

forPayroll India: Reimbursements, Allowances and Perks -> Calculate Eligibility for RAPs.

If you want the payroll to check the 40ECS Feature to determine the eligible amount for aparticular wage type, you must configure the wage type in the IMG under PayrollIndia: Reimbursements, Allowances and Perks ->Calculate Eligibility for RAPs.

Integration

Defaulting and Indirect Evaluation for the Housing (HRA / CLA / COA) and Conveyance wage typeshappen only when you populate and save the respective infotypes Housing (HRA / CLA / COA) Infotype(0581) and Car & Conveyance Infotype (0583).

Features

The important pay parameters that can be configured through the 40ECS feature are:

Number of children for children education allowance

Number of children for children hostel allowance

In case of these parameters, you also have to configure the relevant wage types in the IMG under PayrollIndia: Reimbursements, Allowances and Perks -> Calculate Eligibility for RAPs. In this view, you mustselect Check for Ee characteristics in the Elig Checkfield. Whether a child is eligible for Child EducationAllowance or for Child Hostel Allowance, or whether a dependent is eligible for any other allowance, isentered in theFamily/Related Person Infotype (0021). The 40ECS feature checks this infotype andaccordingly calculates an eligibility amount for each of the allowances for each employee.

The other parameters that can be configured through the 40ECS feature are:

Country Grouping

Company Code

Payscale Grouping for Allowances

Wage Type

Job

Gender Key
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Marital status key

Region (State, Province, County)

Personnel Number

Start date

Constraints

Indirect Evaluation requires that the base wage type, on which the evaluation of any other wage typedepends, should have been evaluated previously. For example, wage types MB10 and M230 areevaluated indirectly and M230 is evaluated as a percentage of MB10. Then, it is required that MB10 beevaluated prior to M230 in the Basic PayInfotype (0008).

Basic Pay (Infotype 0008)

You can store the employees basic pay in the Basic Payinfotype (0008) . You get an overview of theemployees payroll history using the infotype history.

The standard system contains the following reference types:

Subtype 0: Basic contract

Subtype 1: Increase main contract

Subtype 2: Comparable domestic pay

Subtype 3: Refund of costs in foreign currency

Subtype 4: Local weighting allowance

You can process the Basic Payinfotype (0008) on its own or during a personnel action. If you want tocreate a new data record, enter the reference type on the screen Maintain HR Master Data. Thereference type is already set if you carry out a personnel action

Pay scaleThe system automatically proposes the Pay Scale Type and the Pay Scale Area. However, you canoverwrite these values.

Wage Types

If you want to insert a data record, the system automatically suggests the wage types. There are a fewwage types that you can not overwrite or delete. You can enter up to forty wage types. You specify thenumber of wage types in the LGMSTfeature.

When an employee leaves a company you are not permitted to delimit the Basic Payinfotype

(0008). Basic payroll data must remain in the system. This is the only way of ensuring theaccuracy of any retroactive accounting runs that need to be performed.
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Recurring Payments/Deductions (Infotype 0014)

By specifying a wage type in theRecurring Payments/Deductions infotype (0014),

you can enter an amount and/or a value and a unit of measurement that should always

be paid or deducted byPayroll. Recurring payments/deductions are wage elements

which are paid or deducted in every payroll period. In contrast to additional payments,

recurring payments/deductions are paid or deducted within a defined periodicity.

In addition, you have the possibility to enter default cost assignment settings for

recurring payments/deductions for the application component Controlling(CO). This

enables you, for example, to store a different cost center and company code

combination than the one in the Organizational Assignmentinfotype (0001); the

additional payments will then be charged to this cost center. SelectEditMaintain

cost assignment. TheDefault Cost Assignment Settings dialog box appears. Enter the

relevant data. If any data has already been entered for the cost assignment it will be

displayed on the infotype single screen. You can set up further controlling objects in

the Customizing forPersonnel Administration underRecording Cost Assignment

Specifications.

The standard system contains, amongst others, the following wage types:

Subtype M110: Vacation bonus

Subtype M120: Christmas bonus

Subtype M30: Special payment

Recurr. Payments/Deductions

Enter the wage type that is to be paid or deducted in the Wage Type field. In

conjunction with the Wage type you must process either theAmountfield or

theNumberand Unitfields. The system checks the combination entered. The currency

is defaulted according to the company code. This can be overwritten.

Date of Payment

The wage type should only be paid in certain periods or on certain days; this can be

defined either in the fields 1st payment periodandInterval in periods, thus defining

the interval to the next and all subsequent periods, or in the fields 1st payment

date andInterval/Unit, thus defining the interval to the next day and all subsequent

days. Enter the payment period without the payroll year. The subsequent payment

periods will be determined by adding the intervals.
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If the report RPCDTBX0 (Preliminary Data Medium Exchange Program for SeparatePayment Run) has created a preliminary document for a wage type transfer,the Transferfield is displayed on the infotype screen. You can not delete the wage type inthis case.

Indirect Valuation

Documents

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