Contract definition-based overtime limits and target hours calculations

You can use an employee’s contract definition, as defined in their employment terms Legal contracts between employer and employee. When scheduled to work hours differ from the hours in their contract, the pay rules of the employees determine the impact on pay., as the basis for calculating their overtime limits and target hours The difference between actual and target hours for employees who work according to employment terms. Example: A contract employee is paid for the target 40 hours a week even if they work fewer or more actual hours. (without having to use a fixed contract schedule pattern). This option gives you the ability to:

  • Calculate target hours based on contractual hours defined in an employee’s contract definition. Managers can track employee’s projected hours against target hours in the timecard Target Hours add-on.
  • Trigger overtime based on contract-definition computed work hours limits.

This can help compute target hours and work hours limits for flextime contract employees. For an example, see Target Hours Example.

  1. Define the employee's contract definition (Application Setup > Employment Terms > Employment Terms > Contract Definition).
  2. For more information, see Employment Terms.
  3. Configure an Overtime Rule (Application Setup > Pay Policies > Overtimes) with the following settings:
    • For Reset, select Date Pattern.
    • Select the Use Employee Work Hours Definition option.
    • Define any other necessary overtime rule configuration options.
  4. For more information, see Overtimes.
  5. Create a new or edit an existing employment term (Application Setup > Employment Terms > Employment Terms). On the Work Hours Definition tab select an Overtime Rule and define any other necessary employment terms configuration options.
  6. The overtime rules available in the list are only those that have the reset option of Date Pattern selected in their configuration. When an overtime rule is selected, the Date Pattern is the pattern selected in the overtime rule configuration and is read-only from the employment terms. To change the Date Pattern, edit the overtime rule.
  7. For more information, see Employment Terms.
  8. For the employees that require contract definition-based target hours and overtime limits calculations, ensure that they are assigned these employment terms in their person record.

You can prorate period target hours that are computed from the work hours definition to account for situations such as a hire date or termination date that occurs within an evaluation period.

To prorate period target hours, enable the following global system setting by entering an effective date (Application Setup > System Configuration > System Settings > Global Values):

global.WtkTotalizer.DateToEnableProratingOfWorkHoursDefinition

Prior to the effective date, hours are not prorated for the computed hours amounts derived from:

  • Contract definition-based Percent of Contract
  • Contract definition-based Percent of FTE
  • User Specified Amount

As of the effective date, the computed hours amount is prorated to account for an employee’s hire date or termination date within the evaluation period, change of contract, or fixed length contract that only spans part of the evaluation period.

Three employees are hired to work a contract for the month of June, all with a total amount of hours per week set to 35. The other details of their contracts are all slightly different. To calculate the monthly target hours for June (with June 1 being a Wednesday), the following equation is used:

(Hours per week employee can work)/(Days per week employee can work) × Days per month employee can work

Employee 1 contract definition:

  • Hours per week: 35
  • Legal week start day: Monday
  • Working days: all are selected (hours per day is not specified)
  • Target hours calculation:
  • 35/7 x 30 = 150:00

Employee 2 contract definition:

  • Hours per week: 35
  • Days per week: 5
  • Legal week start day: Monday
  • Working days: all are selected (hours per day is not specified)
  • Target hours calculation:
  • 35/5 x 24 = 168:00

Employee 3 contract definition:

  • Hours per week: 35
  • Days per week: 5
  • Legal week start day: Monday
  • Working days: Monday, Tuesday, Thursday, Friday, Saturday (hours per day is not specified)
  • Target hours calculation:
  • 35/5 x 21 = 147:00