Segregate Overtime Hours for Different Calculations & Limit the Slab based on Company Policy

[Kamran_Sarwar]

Introduction:

Overtime is one of the major subject in all the companies. Every company has it's own rules and regulations for OT allocation and calculation. Additionally, companies are also bound to obey the rules according to country legislation. In this regard, the main question is "How to segregate overtime for different calculations and how can we limit the overtime based on the company policy?" I spoke to few senior consultants about the solution but almost everyone is handling it through custom PCR that is making it more complex. Although the solution is perfect with PCR and working quite fine (even I have done that as well) but I would like to bring the attention that we can also achieve it through standard SAP solution with only little help of PCR. 

Deep Dive:

Let's discuss the scenarios in detail. There are 2 main requirements that will be covered in this article. 

1. There are different slabs for different companies that the OT hours can't be exceeded with a specific number of hours per day. Every company has different slab for this but I will take example of 5 hours where per day OT can't be exceeded more than 5. Similarly, there could be slabs in term of weekly, monthly and yearly based on number of hours and number of iterations (I can write another blog to cover all these type of slabs based on the request but as of now, I am considering daily slab of 5 hours maximum)

2. There are different rates of first 2 hours and remaining hours (3 hours in my case) that is 125% and 150% respectively (Basic Salary + Housing Allowance). There could be multiple scenarios with different rates like OT on weekend, public holidays and so on.

Solution :

(Kindly note that I am using S/4 HANA demo environment to illustrate the scenarios. Currency = Kuwaiti Dinar)

There is a sample employee whose 

- Basic Salary = 1300, Housing Allowance = 200, Total = 1500 (Per day rate = 50)

- Planned Working Hours on 03.08.2023 = 09:00 to 17:00 (8 Hours Shift)

- Actual Working Hours on 03.08.2023 = 09:00 to 23:00 (14 Hours Shift)

- Here are some important points as of now

**Time Type 0310 is used for overtime (M) in Time Type Determination (V_T555Z)

**There are 6 "actual working hours" more than "planned working hours"

**There is company policy that there could be maximum of 5 OT hours per day

**Processing Class 1 (Specification 1) is set for both Basic Salary & Housing Allowance (Per day rate = 50)

At this moment, let's run the Time Evaluation and observe that the output of TIP table is showing 6 hours as overtime

Now the exciting part is going to start of the article and move to our main agenda. Below are the steps to achieve our goal

- I created 1OT2 and 1OT3 two time wage types

Now We need to create 2 rules in V_T510S where

- First rule in V_T510S with below important points

**This rule is created for first 2 OT hours where 1OT2 wage type is used

**Sequential no. is very important here and I used 001 for first rule

**We need to select processing type "M" which is for Overtime

**Enter 2 in the maximum field so this wage type will hold only 2 hours

- Second rule in V_T510S with below important points

**This rule is created for remaining OT hours where 1OT3 wage type is used (but maximum 5 hours)

**Sequential no. is used 002 for second rule

**We need to select the same processing type "M" which is for Overtime

**Enter 2 in the minimum and 5 in the maximum field so this wage type will hold remaining 3 hours maximum

Now again we will run the Time Evaluation and see the results

- Below screenshots are from GWT (M) processing

- Final output from ZL table

We achieved our goal in time management. Now we need to do a little configuration in payroll and we are done with final results

- We need to configure Valuation Base (V_512W_B) for both of the wage types with 125% and 150% respectively

Below screenshot is from RT table after running the payroll

Note: There could be N-number of variations in the requirements and we can change the solution accordingly

Regards,

Kamran Sarwar (SAP HCM & Successfactors Solution Architect)

www.linkedin.com/in/kamransarwar0510