Off-Cycle Payroll in SAP HR: What It Is and When to Use It

In the world of payroll, most payments follow a regular, predictable schedule. But what happens when you need to make payments outside of that standard cycle? That’s where off-cycle payroll runs come in, and SAP HR provides the tools to manage these situations.

What is Off-Cycle Payroll?

In SAP HR, off-cycle payroll refers to activities outside the regular payroll processing schedule. There are a few common reasons you might need an off-cycle run:

• Bonuses or Commissions: Paying out one-time bonuses or commissions calculated outside regular payroll.
• Terminations: Processing the final payment for terminated employees, potentially before the next payroll period.
• Time Entry Corrections: Adjusting for errors in previously submitted time records
• Retroactive Payments: Handling payments due to retroactive changes in salary or benefits.

How Off-Cycle Payroll Works in SAP HR

Here’s a breakdown of the general off-cycle payroll process in SAP HR:

1. Create Infotype 267 (IT267) Record: In the employee’s master data (accessed via transaction code PA30), create a record in Infotype 267. This record holds:
   • Wage type (the type of payment)
   • Amount
   • Payment date
   • Off-cycle Reason (more on this below)
2. Choose Off-Cycle Reason: The selected reason dictates how SAP processes the off-cycle payment:
   • A – Additional Off-cycle Payment: Simple additional payment.
   • B – Correction Run: Corrects payroll errors and triggers retroactive accounting if needed.
   • C – Early Calculation: Don’t create postings to calculate estimated net pay.
3. Run the Off-Cycle: Navigate to the Payroll Accounting program and execute the off-cycle payroll run, specifying:
   • Payroll Area
   • Personnel Number(s)
   • Off-cycle Reason
   • Payroll Schema
4. Follow-Up Tasks:
   • Run an off-cycle bank transfer to initiate the payments.
   • Post off-cycle results to general ledger (GL) accounts.

Important Considerations

• The Payroll Control Record must be in the ‘Exit Payroll’ stage to run an off-cycle.
• You can’t run an off-cycle payroll before the regular payroll has been calculated for that period.
• Off-cycle Workbench (functional for single employee adjustments) is an alternative to running the full payroll driver for a limited number of employees.

When to Choose Off-Cycle Payroll

Off-cycle payroll is a valuable tool, but it’s essential to use it strategically. Excessive off-cycle runs put extra strain on your payroll team and can introduce room for error. Before opting for an entire off-cycle run, consider whether a manual adjustment or waiting for the next regular cycle might be sufficient.