Salary and fringe benefit encumbrance rules

Define salary encumbrance processing on the project employee. If you select an employee for salary encumbrance, you must provide the employee's annual salary, currency, and finance structure for the encumbrance commitment. You can also encumber fringe. If you encumber fringe, specify the fringe encumbrance finance structure.

To track salary encumbrance you must select track on the encumbrance option field for system code GM on the FEG setup.

Note:  You cannot select the track and edit encumbrance option when the system code is GM-Grant Accounting.
Note: FSM Labor distribution does not perform budget edit checks for Payroll Salary and Wage distributions. Amounts are tracked for reporting only. Amounts are not updated nor are they reflected in the Budget Group Total that is for local obligations. Therefore, budget edit templates must exclude salary and labor distribution account amounts.

The percentage that is selected on the project employee record is used for salary encumbrance in the Encumbrance Basis field. The default is planned percent. The planned or actual effort percentage is used to determine the salary encumbrance amount by period.

  • For planned percent, specify a planned effort percentage for each period.
  • For actual percent, specify an actual effort percentage for each period. Alternatively, use the Copy Labor action to copy planned percentages to the open period to encumber.

The labor records that are in an entered state on the project assignment are used in the Encumber Salary action. The salary encumbrance is created using the percentage that is specified in the Planned Percent fields or Actual Percent fields. The percentage is based on the value that is used on the employee record. The salary and fringe encumbrance records for the current open and future labor periods are used in the Create Encumbrance action. These business classes are created or updated when the Create Encumbrance action is run:

  • GLCommit, or encumbrance type, records for system GM by project assignment and labor period.
  • GeneralLedgerTotal, or encumbrance scenario: The Create Salary Encumbrances action invokes the Update Released Commitment action which updates the General Ledger Total, or GLTOT, balances.
  • Salary encumbrances amounts are for tracking/reporting only. No budget edit is performed when creating or updating the Salary Encumbrance amount.

Salary encumbrance is calculated using this formula:

Salary encumbrance salary / Labor schedule frequency x planned or actual percentage = period salary encumbrance amount

If a salary cap exists, salary encumbrance salary is compared to the salary cap amount for the project and multiplied by the FTE for the employee. The lesser of the two amounts is used in the salary encumbrance calculation.

Salary encumbrance uses the project employee record for the salary encumbrance finance structure and the fringe encumbrance finance structure. If the project employee is specified to encumber fringe, the project assignment record is used. The fringe benefit burden code and fringe benefit finance structure are determined by the project assignment record..

Fringe burden encumbrance is calculated using this formula:

Period salary encumbrance amount x burden rate = fringe burden encumbrance amount

Reporting salary and fringe encumbrance amounts are available in these business classes or lists:

  • GLCommit maintains a 1 to 1 encumbrance record for every detail project assignment labor record.
  • GeneralLedgerTotal maintains encumbrance scenario balances by system and finance structure. Posting dimensions and code block balances.
  • GLTot cube maintains encumbrance scenario balances by system and finance structure. Posting and summary dimension and code block balances. Amounts are available in Landmark reports, which reference the cube. The reports include GL Account Analysis, Project Obligations Report, Project Variance Report, and Infor BI GL and Project reports.

When labor distribution is executed for a period with the actual percent approved and greater than 0%, the GLCommit records are deleted and updates the associated GeneralLedgerTotal and GLTOT balances.

The encumbrance basis on the employee record cannot be changed if encumbrance records exist for the employee. Delete the encumbrance records, change the encumbrance basis, and re-create encumbrance records.