Compensation 2.0 changes how an employee's base pay is recorded on the Salary tab. Instead of a single Annual Basic Payment amount, you record three things: the Base Pay Amount, the Pay Basis (the period the amount is stated in) and the Pay Frequency (how often the employee is paid). OrangeHRM then works out the base pay for each pay period and shows it in the Earnings section.
Together with the Pay Grade and Currency, these values make up the employee's compensation structure. Once it is set, the structure can only be changed through a guided Change Compensation Structure workflow. This keeps pay changes deliberate, correctly converted and recorded in Salary History.
- The employee's name with the Cost to the Company and Total Payable totals, and the Create Document and Snapshot buttons.
- The Compensation Details section: Pay Grade, Currency, Pay Grade Salary Range (Annual), Base Pay Amount, Pay Basis, Pay Frequency, EEO Pay Band and Comments.
- The Change Compensation Structure link under Pay Frequency. It is shown only to users who can update salary details.
- The Earnings section, which starts with a read-only base pay row such as Monthly Base Pay, followed by the other earnings and the Gross Pay total.
- The Deductions section with the Total Deductions total.
To open the Salary tab, go to Employee Management > Employee List, select the employee and click Salary. The Compensation sub-tab opens. For an employee whose compensation structure is set, you will see:
Note: New OrangeHRM systems use Compensation 2.0 from the start. If your system was upgraded from an earlier version, Compensation 2.0 is turned on for your organisation as a whole by OrangeHRM. It cannot be turned on from the OrangeHRM screens, and once it is turned on it cannot be turned off again. To have it turned on, contact OrangeHRM Gold Support. Until then, the Salary tab works as it did before. If an integration sends salary details to OrangeHRM or reads them from it, for example the BizPay Central integration, check with your OrangeHRM Implementation Consultant before Compensation 2.0 is turned on.
Pay Grade, Currency, Pay Basis and Pay Frequency are read-only on this screen. Base Pay Amount can still be edited and saved here.
The compensation fields
| Field | What it means |
|---|---|
| Pay Grade | The employee's pay grade. It decides which currencies are available and the salary range shown. |
| Currency | The currency the employee is paid in. Only currencies set up for the pay grade and the employee's location are offered. |
| Pay Grade Salary Range (Annual) | The minimum and maximum for the pay grade. The range is always an annual amount. |
| Base Pay Amount | The employee's base pay, stated for the period chosen in Pay Basis. It must use the right number of decimal places for the currency. |
| Pay Basis | The period the Base Pay Amount is stated in: Annual, Monthly, Weekly or Bi-Weekly. A new salary record starts with Annual. |
| Pay Frequency | How often the employee is paid: Monthly (12 times a year), Bi-Weekly (26 times a year) or Weekly (52 times a year). A new salary record starts with Monthly. |
The Pay Frequency options depend on the Pay Basis you choose:
| Pay Basis | Pay Frequency options |
|---|---|
| Annual | Monthly, Bi-Weekly, Weekly |
| Monthly | Monthly |
| Weekly | Weekly, Bi-Weekly |
| Bi-Weekly | Bi-Weekly |
Base pay per pay frequency
OrangeHRM works out the base pay for each pay period from the Base Pay Amount, Pay Basis and Pay Frequency. It shows the result as the first row of the Earnings section, named after the Pay Frequency, for example Monthly Base Pay, Weekly Base Pay or Bi-Weekly Base Pay. The row is read-only, and the help icon next to its name shows System-derived.
| Pay Frequency | Pay Basis | Earnings row | Value |
|---|---|---|---|
| Monthly | Annual | Monthly Base Pay | Base Pay Amount ÷ 12 |
| Monthly | Monthly | Monthly Base Pay | Base Pay Amount |
| Bi-Weekly | Annual | Bi-Weekly Base Pay | Base Pay Amount ÷ 26 |
| Bi-Weekly | Bi-Weekly | Bi-Weekly Base Pay | Base Pay Amount |
| Bi-Weekly | Weekly | Bi-Weekly Base Pay | Base Pay Amount × 2 |
| Weekly | Annual | Weekly Base Pay | Base Pay Amount ÷ 52 |
| Weekly | Weekly | Weekly Base Pay | Base Pay Amount |
Example: An employee has a Base Pay Amount of $72,000.00, a Pay Basis of Annual and a Pay Frequency of Monthly. The Earnings section shows Monthly Base Pay of $6,000.00.
Note: Amounts are rounded to the number of decimal places used by the currency, with halves rounded up. For example, AUD 75,000 a year paid weekly is 75,000 ÷ 52 = 1,442.3077, shown as AUD 1,442.31.
Set the Compensation Structure for a New Employee
When an employee has no salary records yet, for example someone you have just added, the Salary tab shows the compensation fields ready to fill in. No Set or Change Compensation Structure link is shown, and the Earnings section has no base pay row yet.
Step 1 - Go to Employee Management > Employee List and select the new employee.
Step 2 - Click Salary. The Compensation sub-tab opens.
Step 3 - Select the Pay Grade. The Pay Grade Salary Range (Annual) for the employee's location is shown.
Step 4 - Select the Currency.
Step 5 - Enter the Base Pay Amount.
Step 6 - Select the Pay Basis. It starts as Annual.
Step 7 - Select the Pay Frequency. It starts as Monthly, and only the options allowed for the Pay Basis are shown.
Step 8 - Enter any other earnings and deductions the employee receives.
Step 9 - Click Save. The Salary - Confirm Changes window opens.
Step 10 - Select the Event and the Changes Effective From date, then click Confirm.
OrangeHRM creates the employee's compensation structure and adds the base pay row, for example Monthly Base Pay, to the Earnings section. From now on, Pay Basis and Pay Frequency are read-only, and the Change Compensation Structure link is shown.
Note: If the Add Employee Wizard includes the Salary step, you can enter the Base Pay Amount, Pay Basis and Pay Frequency while you add the employee. See "How To Setup And Use Add Employee Wizard in OrangeHRM".
Set the Compensation Structure for an Existing Employee
After Compensation 2.0 is turned on, employees who already have salary records keep the earlier layout, with the Annual Basic Payment row in Earnings. Their salary works exactly as before until you set their compensation structure. These employees show a Set Compensation Structure link under the Comments box.
Step 1 - Go to Employee Management > Employee List and select the employee.
Step 2 - Click Salary.
Step 3 - Click Set Compensation Structure. The Current Compensation Structure window opens and shows the current Pay Grade, Currency and Annual Basic Payment.
Step 4 - Read the warning and select I understand that this change affects compensation calculations and payroll outcomes.
Step 5 - Click Continue. The Define New Compensation Structure window opens.
Step 6 - Select the Pay Basis.
Step 7 - Select the Pay Frequency.
Step 8 - Enter the Base Pay Amount. The field label shows the Pay Basis, for example Base Pay Amount (Annual).
Step 9 - Click Proceed. The Conversion Preview and Confirmation window shows the changes.
Step 10 - Click Proceed. The Salary - Confirm Changes window opens with the Event set to Set Compensation Structure.
Step 11 - Select the Changes Effective From date.
Step 12 - Click Confirm.
The Salary tab changes to the Compensation 2.0 layout. The Annual Basic Payment row in Earnings is replaced by the base pay row, for example Monthly Base Pay, and the Set Compensation Structure link changes to Change Compensation Structure. The record is added to Salary History with the event Set Compensation Structure.
Note: The date you choose must be later than the employee's most recent salary history record. If it is not, the window shows Cannot transition to Compensation 2.0 on this date with the date and event of the record that blocks it, and you cannot confirm. Choose a later date, or cancel and edit or remove the conflicting record in Salary History first.
Note: If you close the window before you click Confirm, nothing is saved.