Wage Type Concepts:

Wage type being the back bone of entire payroll module thought of sharing some important
concepts related to wage type via this document. I hope it will help all those who are taking
their first step to to become a payroll consultant.

Types of Wage types:

Wage type can be categorized into different based on the way they store information,
purpose for which they are used etc.

Dialogue Wage Type/Primary Wage Type vs. Technical Wage

Type/Secondary Wage Type
Dialogue Wage Type/Primary Wage Type-These are the wage types for which data is
entered in Infotype. They are created by copying model wage types (model Wage types
provided by SAP).SAP stores information about model wage type from which wage type is
created in V_T52DZ.
Technical Wage Type/Secondary Wage Type-These are predefined wage types defined from
SAP which starts by /.

Time Wage Types

As name suggests time wage types are wage types used to store time related information.
Time wage type is link between payroll and time management. These wage types are
generated during time evaluation. Configuration through T510S or Custom PCR are two
ways to generate these wage types. Dialogue wage types for which only number is available
are generally time wage types.

Payroll Wage Types

Apart from dialogue wage types and technical wage types, wage types which are
generated/calculated during payroll run can be categorised as payroll wage types,

Deduction Wage
Types
Deduction wage type can be defined by marking deduction wage type indicator in
V_T511.When value is assigned to such wage types it is automatically reversed by
multiplying it with -1

Elements of Wage Type

Amount (AMT), Rate (RTE), Number (NUM) are different elements of wage type.
Depending on wage type purpose it can have value in one, two or all fields.
For Ex: Bonus pay will have only AMT and basic pay may have RTE and NUM

Processing Wage types

Processing Class, Cumulation Class, Evaluation class determines how wage type should be
processed. These properties of wage type is defined in V_512W_D
Processing Class:-Determines how a wage type should be processed during payroll run

Example: If processing class 01 specification of wage type say TEST, 5 it means wage type
is valuation base.
Cumulation Class: Cumulation class defines how a wage type should be cumulated.
Evaluation class: Value for evaluation class determines how wage type should be printed into
Pay slip

Wage type permissibility

Wage type permissibility for Infotype: By defining permissibility of wage type for Infotype we
define wage type should be displayed in which Infotype for which period.
Wage type permissibility for Employee subgroup and personnel subarea: Wage type could
be limited to certain employee subgroup and personnel subarea based on employee
subgroup grouping and personnel subarea grouping.

Wage type model

Wage type model is group of wage types which we want to get defaulted into IT0008 based
on some criteria (like EG group, PSA, country, allowance grouping etc).We can group wage
types in wage type model in table T539A.

Indirect evaluation
The amount of wage type can be directly entered, or it may be indirectly evaluated. There
are different methods available for indirect evaluation, one can give fixed amount to wage
types based on allowance grouping or value for wage type can be derived from other wage
types.

Allowance Grouping
Pay scale type, Pay scale area, group, level and ESG for CAP are grouped together in
combination to form allowance grouping. LGMST is the feature which helps in defaulting
wage type model to allowance grouping.

Factoring
In scenarios when employee has worked only for partial period or employees data like unit,
designation, salary etc. is changed in middle of period, payroll period needs to be divided
into partial period in order to calculate exact pay of employee. Its called factoring/wage type
split. In SAP factoring is done through partial period factors ranging from /801 to /816. Each
representing different rule. Splits could be WPBP (Work Center Basic Pay split, Cost center
Split (KR Split). In case of substitution during a payroll period an employee needs to be
remunerated differently in such case ALP split (Split for different pay) is used. If for an
employee country-specific information for tax, social insurance etc. is available then Country
specific splits are used.

Features and Tables

Feature LGMST
LGMST feature defaults wage type model. Which in turns decides which wage types should
be defaulted in IT 0008.

Wage type characteristic [V_T511]

Wage type characteristics helps in determining following things.
Is wage type is deduction wage type?
Will wage type have amount, number/unit, both or either of them?
What is maximum or minimum amount/number allowed?
Modules of indirect valuation.

Maintain wage type processing classes, cumulation classes and

evaluation classes [V_512W_D]

Wage type model definition/defaulting wage types in IT0008 [V_T539A]

Maintain valuation of base Wage types [V_T539J]

Wage type permissibility for PS and ESG [V_511_B]

Wage type permissibility for Infotype [V_T512Z]