Pay oncosts are additional costs incur when paying payees’ wages that are not passed on to clients. Unlike bill oncosts, pay oncosts are not added to bill or pay amounts. Instead, they are applied for reporting purposes only, allowing agencies to understand their costs.
Pay Oncost Overview
Pay oncosts help agencies account for employment-related costs in situations where there is no client to bill.
Example:
In some Nordic countries, payees may be entitled to a guaranteed salary. This means a payee continues to receive pay even when they are not placed in a job. During these periods:
There is no client to pass employment costs on to.
The agency absorbs the cost of employing the payee.
By applying pay oncosts, agencies can factor these costs into margin calculations and reporting to ensure they recover employment costs over time.
Pay oncosts consist of an oncost header and one or more oncost rates. Each oncost rate includes a validity period, which determines when the rate applies.
How Pay Oncosts Are Applied
One or more pay oncosts can be linked to any pay code.
Pay oncosts are evaluated when the pay code is processed.
📌Note: Oncost values are used for reporting only. Pay oncosts do not increase the pay amount paid to the payee & increase the amount billed to the client.
Agreement Hierarchy Assignment
Each pay oncost rate must be assigned to a level of the agreement hierarchy, and a specific value at that level. This determines which job orders the oncost rate applies to.
Example:
If a pay oncost rate is assigned at the payee level and linked to John Smith, that rate applies only to job orders filled by John Smith.
📌Note:
For each pay oncost, only one oncost rate can be valid at a time for the same hierarchy level and value, based on the rate’s validity period.
If valid pay oncost rates exist at multiple levels of the agreement hierarchy, the system applies the rate at the lowest (most specific) level.
Supported Pay Oncost Rate Types
Each pay oncost rate must define how the oncost is calculated. The following rate types are supported:
Percentage: a rate of 10% applies a pay oncost equal to 10% of a payee’s gross pay.
Fixed amount: a rate of $2.50 applies a flat $2.50 pay oncost.
Linking Pay Oncosts Together
Pay oncost rates can be linked to one or more other pay oncost headers if the calculation of an oncost needs to include the result of another oncost.
Example:
Superannuation is defined as a pay oncost, and workers’ compensation insurance is calculated on earnings including superannuation.
Then the workers’ compensation pay oncost can be linked to the superannuation oncost so it is calculated on top of it.
📌Note: Linking pay oncosts together is supported only when the oncost rate type is percentage-based.