SAP Knowledge Base Article - Public

# 2162127- Compensation Information: Pay Component Group Calculations

### Symptom

How do Pay Component Groups annualize Pay Component data?

Image/data in this KBA is from SAP internal systems, sample data, or demo systems. Any resemblance to real data is purely coincidental

### Environment

Employee Central V2

### Resolution

Pay Component Groups will calculate the "Annualization" of the associated Pay Components, by taking the Annualization Factor of the "Frequency" set against the Pay Component to calculate the Annualized value. Depending on the Frequency of the Pay Component will determine how this value is calculated.

Non-Hourly Frequencies

1. Associate the Pay Component "Base Salary" to the Pay Component Group "AnnualizedSalary"
2. Assign the Pay Component "Base Salary" to an employee with the paycompvalue (Amount) of "1,000" and give it a frequency of "Monthly (MON)" (the Frequency "Monthly (MON)" has an Annualization Factor of 12)
3. View the "AnnualizedSalary" in Compensation Information portlet - it will display "12,000" ( 1,000 * Annualization Factor of the Frequency )

Hourly Frequencies

1. Associate the Pay Component "Base Salary" to the Pay Component Group "AnnualizedSalary"
2. Assign the Pay Component "Base Salary" to an employee with the paycompvalue (Amount) of "250" and set frequency to "Hourly (HOURLY)" (the Frequency "Hourly (HOURLY)" has an Annualization Factor of 0)
3. Check the Standard Hours of the employee in Job Information - in our example we will say its 25 hours per week.
4. View the "AnnualizedSalary" in Compensation Information portlet - it will display "325,000" ( 250 * Standard Hours * 52 )

### FAQ

Q) Why does the Frequency in the "HOURLY" Frequency object have a Annualization Factor of 0?
A) The annualization factor indicates to the system how yearly totals are calculated for the pay components:

If the value is nonzero, the amount of the pay component is multiplied with the annualization factor, e.g: \$100 per Month (amount of pay component) x 12 Months per Year (annualization factor) = \$1200 per year

If the value is 0, the yearly total is calculated using the employee’s standard weekly hours from Job Information, e.g: \$10 per hour (amount of pay component) x 20 hours per week (standard weekly hours) x 52 weeks per year = \$10400 per year

Please Note: The number of weeks per year (52) is a constant used for every year.

Q) How does FTE get calculated?
A) FTE is calculated based on the Standard Weekly Hours defined on the Legal Entity/Location/JobClassification (or Position if using Rules). Calculation example-:

• If Standard Weekly Hours defined on the Legal Entity is "40" and Standard Hours defined in Job Information "20" > Then FTE will be calculated as 20/40 = 0.50 > So the FTE is 0.50

For more information on how Pay Component Groups are using in calculations, please see artcile 2136061 - How to determine which Pay Range is used in the Compa-Ratio and Range Penetration calculations - Employee Central