Creating Wage Types in SAP HR: A Step-by-Step Guide

Accurate and efficient payroll processing depends on a well-defined wage-type structure. Wage types in SAP HR are the fundamental building blocks used to represent various components of an employee’s compensation package. These can include:

• Basic salary
• Allowances (housing, travel, etc.)
• Bonuses
• Deductions
• Reimbursements

If your organization has unique compensation elements not covered by standard SAP wage types, you must create custom ones. This process involves careful configuration to ensure payroll calculations run smoothly.

Steps for Creating Wage Types in SAP HR

1. Analysis and Planning:
   • Thoroughly analyze your company’s compensation structure.
   • Identify the new wage types that need to be created.
   • Determine the unique characteristics of each wage type (earning, deduction, taxable, non-taxable, etc.).
2. Copying an Existing Wage Type:
   • Access transaction code OH11.
   • Select the ‘Copy’ method.
   • Choose a similar existing wage type as a template and enter its code.
   • Enter a new unique code for your custom wage type.
3. Configuration
   • Maintain Technical Characteristics:
     • Navigate to view V_512W_T and adjust settings for Processing Classes, Cumulation Classes, and Evaluation Classes. These determine calculations and how the wage type is grouped for reporting.
   • Define Posting Characteristics:
     • Go to the IMG path: Payroll > [Your Country] > Reporting to Payroll Posting Results to Accounting > Activities in HR System > Maintain Wage Types > Define posting characteristics of Wage Types.
     • Link the wage type to a symbolic account and general ledger (G/L) account. This dictates where the wage type amount posts in accounting.
4. Assign Wage Type to Infotypes (Optional):
   • If the new wage type represents recurring payments or deductions, link it to the relevant info types (e.g., IT0014 – Recurring Payments/Deductions or IT0015 – Additional Payments). You can do this using transaction SM30 and editing table V_T512Z.

Important Considerations

• Wage Type Numbering: Use a consistent numbering convention to organize your wage types.
• Country-Specific Requirements: Payroll configuration can vary between countries. Ensure the new wage type aligns with local legal and tax regulations.
• Testing: Thoroughly test the new wage type in a test environment before implementing it in production. Run payroll simulations to verify accuracy.

Example: Creating a ‘Travel Allowance’ Wage Type

1. Copy an existing allowance wage type.
2. Configure technical characteristics for appropriate grouping and reporting.
3. Set up posting characteristics to map to an expense account in the G/L.
4. Add the wage type to info type 0014 if it is a recurring allowance.

Additional Tips

• Consult SAP documentation and online resources for detailed explanations of wage-type configurations.
• Collaborate with your finance/accounting team to ensure accurate wage type mapping to G/L accounts.