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Table of Contents
What are Pay Items?
Pay Items are payment methods used for both allocating or deducting payments to an employee's gross pay.
All monetary transactions within Indigo Payroll Leave are done through Pay Items, including basic pay, fringe benefits, bonuses, and so on. You can use them allow for the settlement of due payments, whether they are owed to or by employees.
A handy way to configure fringe benefits is by grouping pay items together. Learn how to do that by clicking the button below 👇.
Adding a new Pay Item
Go to Payroll & Leave > Pay Items.
Click on the Insert ➕ icon on the far left of the toolbar.
The Pay Items screen will open and is divided into three collapsible sections: Details, Options and Based On. These sections are covered in detail below.
Details
Details
Payment type
Payment type
Code: The code applicable for this Pay Item that must be unique within this company.
Description: Enter a short description of the pay item being set up. This will act as a friendly identifier for the specific contract, making it easier to search for and locate the pay item.
Amount allocation: Select where the monetary amount tied to the Pay Item is set.
Individual: Select this option when the Pay Item value is different from one employee to the next (such as salary, hourly rate, cash for use of car, charitable contribution, allowances). This type of Pay Item is set individually per employee and can be changed at calculation stage.
Please note, Fringe Benefit payment types should be set as Individual.
Fixed: This can be used in instances where the Pay Item is of fixed value. Some examples include union contributions and the sickness benefit rate deducted from salaries. These are all fixed amounts and are the same across all employees.
Fixed Amount Allocation cannot be changed during payroll calculation, although the user may be allowed to change the number of contributions affected at this fixed rate.
Adjustable: This option allows the amount to be modified during payroll calculation. The Pay Item can be applied to any employee and doesn't require a default value, as amounts may vary across payrolls and individuals. For example:
The Production bonus varies by payroll period and only applies to employees exceeding the standard production rate.
On-call allowances may have default values for specific employees but can still be adjusted at calculation stage if conditions change, such as exceeding the maximum number of support calls in a week.
Group: Select a Pay Item Group to group related Pay Items together, allowing the system to calculate payments based on their combined value. Groups can be created from the Pay Item Group support file.
Example: If an employee receives both a salary and a performance allowance, and the overtime rate is based on the total of these two Pay Items, grouping them ensures accurate calculation.
Analysis: Analysis is a Pay Item grouping method used for reporting purposes. It allows you to show pay items related to a particular analysis group in a separate column in the payroll report.
Fringe benefit category: Fringe benefit categories are categories set up by the IRD, which define different type of benefits. Kindly select the applicable category. The system will use the selected Fringe Benefit Category to work out any tax due on these values.
Payment basis: The system supports three methods for calculating the values or rates associated with each Pay Item during payroll processing.
Amount: Use it when the Pay Item represents a fixed value, such as government bonuses, specific fringe benefits (e.g., car allowance), or salary.
Contribution: Select it when the Pay Item is a fixed amount spread over a number of contributions per payroll. This method is suitable for items like union payments, recurring charitable donations, or injury/sickness (deducted based on the number of days an employee is absent).
Note: The SSC contribution is handled by the system from a different source.
Multiplier: Select it when the Pay Item is calculated by multiplying an existing Pay Item or Pay Item Group with a Pay Multiplier defined in the 'Based On' section.
Example: If you set up a Pay Item to multiply the basic pay rate by 1.5, it can be used to claim overtime hours at one and a half times the standard rate.
Default Amount: If the Pay Item has a default monetary amount, enter it here. This field is only applicable if Payment Basis is set to Amount or Contribution.
Options
Options
Reported as gross: When checked, this Pay Item is reported as gross in all information reports including the Payslip. This does not imply that the amount identified in the Pay Item is taxable. It is used for reporting purposes only. Pay Items that fall into this category include fringe benefits part of which is taxable and part is not such as cash allowances and use of own car.
Subject to FSS tax: When checked, this Pay Item will be included in the total taxable gross, when calculating any tax due based on; the current tax regulations and tax status of the employee. This can include Basic Pay and Overtime payments.
Subject to SSC: When checked, this Pay Item will be included in the basis amount on which SSC is calculated.
Is Due to 3rd Party: When checked, Pay Item is identified as due to 3rd parties. This is used for reporting purposes only. Examples include union contributions, contributions to charitable organisations, and transport expenses.
Based on (available with Payment Basis Multiplier)
Based on (available with Payment Basis Multiplier)
Pay multiplier: Pay Multiplier and the subsequent fields are only made available when selecting Payment Basis: Multiplier. Enter the factor by which the chosen Pay Item or Pay Group will be multiplied.
As an example, to set up overtime at time and a half enter 1.5 whilst double time requires a pay multiplier of 2.
Factor of: Pay Item: If the Pay Item value is calculated as a factor of another Pay Item, select the Pay Item here.
Factor of: Pay group: If the Pay Item value has to be calculated as a factor of a group of pay items, select a Pay Item Group here.
Editing an Existing Pay Item
To edit an existing pay item, highlight the entry by clicking once on the respective row and click the Edit button ✏️, or double-clicking the entry.
Deleting an Existing Pay Item
To delete an existing pay item, highlight it in the grid and then click on the Delete button 🗑️.
Tax Rates in Pay Items
To go to Tax Rates, click on the Tax Rates tab at the top right side of the screen.
Adding a new Pay Item Tax Rate
To create a new Pay Item Tax Rate, first highlight the Pay Item you would like to add a tax rate for, then click on Tax Rates followed by the Insert icon ➕.
Amount from: Enter the starting amount from which this FSS percentage rate applies.
Amount to: Enter the amount to which this FSS percentage rate applies.
Percentage subject to FSS: Enter the FSS percentage rate.
Pay Items for Expense Requests
A Pay Item can be used to submit Expense Requests. To do so:
Make sure you choose 'Overtime' or 'Adjustment' in the Payment Type field within the Details section and fill in the other fields and sections according to your needs.
⚠️ Important
Only people who are assigned the Pay Roll User role are able to see the Expense Request section in the Pay Item form.
The Expense Request section will be greyed out if you choose a Payment Type other than Overtime or Adjustment.
Don't tick any checkbox in the Options section, if you want to make the Pay Item a Post Tax Adjustment.
Scroll down to the Expense Request section and tick the Is available for expense requests checkbox.
👀 The Is available for expense requests checkbox is selectable only for Adjustment and Overtime pay items.
Tick the Requires file upload option to make attachments mandatory for the request. Without the file upload, the request cannot be submitted.
Define up to three maximum values:
Maximum annually: A yearly cap amount.
Maximum per request: A cap amount per request
Maximum per lifetime: A lifetime amount limit.
Click on:
The ✔️ Save button in the toolbar, to simply commit changes. Or;
The Save and configure employees button in the Expense Request collapsible section.
It saves your changes and automatically redirects you to the Expense Settings screen in the Approval System module, ensuring a smoother expense setup flow.
🧠 Good-To-Know
The system checks each expense request against annual, per-request, and lifetime limits. If any limit is exceeded, a ⚠️ warning message is shown to both the requester and approver. Despite these warnings, the request can still be submitted and approved, allowing for exceptions at the approver’s discretion.
If you set the maximum amounts to zero or you leave them blank, the claimable amount becomes unlimited.
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