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Automate employee allowances using Rule Sets

SOLVED•by QuickBooks•3•Updated September 14, 2023

Learn how to use pay condition rule sets to automatically apply allowances for employees. The scenarios we'll be focusing on below are:

  1. Meal Allowance (using overtime hours)
  2. Tool allowance (using Tags)
  3. Cold work allowance (using Work Types)
  4. Site allowance (using locations)

Notes:

  • Pay condition rules work by interpreting timesheet data into the pay run so, if you aren't using timesheets the rules won't/can't do anything.
  • These steps can only be done on QuickBooks Online Advanced Payroll powered by Employment Hero.

Step 1: Configure Pay Categories

  1. Select Payroll, then select Payroll Settings.
  2. Select Pay Categories under Pay Run Settings.
  3. Select Add to create a new pay category, called 'Allowance' (or similar).
  4. Ensure that the Units dropdown shows Fixed. Depending on type of allowance, the other settings are varied:
    • For meal and tool allowances, select PAYG Exempt and enter the Super rate as 0%.
    • For site allowances, do not select PAYG Exempt and do not change the Super rate.

Step 2: Configure Work Types

You'll also need to create a work type so employees can indicate that they are due an allowance via timesheets. We are going to create one for the 'Cold work' allowance scenario. 

  1. Select Payroll, then select Payroll Settings.
  2. Select Work Types under Pay Conditions.
  3. Select Add, then name it 'Work under 0 degrees' (or related to your allowance).
  4. Enable this work type for full time, part time and casual employees.
  5. In the Work maps to section, select Pay Category and select the Permanent Ordinary Hours pay category instead of the allowance pay category because the rules will apply it as needed.
  6. Select Save.

Configure Tags (if preferred)

You can apply tags to specific employees, and then use them in rule sets as a way of specifying individual or groups of employee in which a specific rule should apply.

In the case of allowances, we can use a tag to decide whether an employee gets a specific type of allowance or not. 

  1. Select Payroll, then select Payroll Settings.
  2. Select Tags under the Pay Conditions section, then select Add.
  3. Name the tag something like 'Uses own tools' (or similar to your situation).

Step 3: Configure the rule sets

  1. Select Payroll, then select Payroll Settings.
  2. Select Rule Sets under the Pay Conditions section.
  3. If you want to add the rule in addition to an existing rule set/award, select the rule set/award you want to use and select Edit Rules. Otherwise, select Add on the top right of the page and name the rule set, then select Save and select Edit Rules.
  4. Follow the scenario below that best suits your situation.

This setup means after a particular amount of overtime, you receive 1 unit of meal allowance.

  1. Select Add Rule and name it 'Meal allowance'.
  2. Under WHEN, select 'Time worked' then select 'in a day'.
  3. Select the cog icon on the right side of the screen and select Add 'Where'.
  4. Under WHERE, select 'Pay category', then select 'is one of', then select the pay category where the hours the meal allowance should be based off (such as OT Clearing).
  5. In the dropdown below, select 'is greater than', and enter 1.5 hours (e.g. when using overtime clearing, but if you are using an 'ordinary hours' pay category, you might want the meal allowance to be triggered after 38 hours).
  6. Under THEN, select 'add allowance' and enter 1 unit of 'meal allowance' per shift.
  7. Select Save.

This is what the configuration should look like:

allowances1_qbop_au_ext_261121.png

  1. Select Add Rule and name it 'Tool allowance'.
  2. Under WHEN, select 'Time worked', then select 'in a week'.
  3. Select the cog icon on the right side of the screen and select Add 'Where'.
  4. Under WHERE, select 'Tags', then select 'has any of' and enter 'Uses own tools' in the tags field (or similar tag created earlier).
  5. In the dropdown below, select 'is greater than', and enter 0 hours.
  6. Under THEN, select 'add allowance', then enter 1 unit of 'Tool Allowance' per shift.
  7. Select Save.

This is what the configuration should look like:

allowances2_qbop_au_ext_261121.png

In regards to the order of the rules, in this case it doesn't really matter where it sits as it is independent and will not impact on any other rules within the rule set. 

Employees that work in cold conditions (freezers for example) are entitled to a cold work allowance per hour worked in those conditions.

This is why we have created a work type earlier for this allowance, as it allows the employee to enter a timesheet for the hours worked in those conditions so that the system will know how many hours it needs to pay the allowance for. 

  1. Select Add Rule and name it 'Cold work allowance'.
  2. Under WHEN, select 'Time worked', then select 'in a shift'.
  3. Select the cog icon on the right side of the screen and select Add 'Where'.
  4. Under WHERE, select 'Work type', then select 'is one of' and enter 'work is under 0 degrees' (or similar work type created earlier).
  5. In the dropdown below, select 'is greater than', and enter 0 hours.
  6. Under THEN, select 'add allowance', then enter 1 unit of 'Cold work allowance' per hour worked.
  7. Select Save.

This is what the configuration should look like:

allowances3_qbop_au_ext_261121.png

In this scenario, the employee will still be paid their normal earnings for the work, but in addition to that will be the cold work allowance to the time that they use the work type. 

A site allowance is usually a prescribed rate for working at a particular job to reimburse the employee for certain conditions that they have for working on site.

A business that uses this allowance usually will have multiple locations set up (does not have to be geographical) that link to each specific site/job. These locations are then utilised in the rule set to pay the allowance.

  1. Select Add Rule and name it 'Site allowance'.
  2. Under WHEN, select 'Time worked', then select 'in a shift period'.
  3. Select the cog icon on the right side of the screen and select Add 'Where'.
  4. Under WHERE, select 'Location', then select 'is one of' and enter the location.
  5. In the dropdown below, select 'is greater than', and enter 0 hours.
  6. Under THEN, select 'add allowance', then enter 1 unit of 'Site allowance' per hour worked.
  7. The rate multiplier comes in handy here because it allows you to pay different rates according to the location. E.g. you might want to pay double time at location A, and triple time at location B. If that is the case, you can create multiple rules for each location and repeat the above process. 
  8. Select Save.

This is what the configuration should look like:

allowances4_qbop_au_ext_261121.png

These 4 different scenarios can be applied to other allowances (e.g. first aid, clothing) as required. 

Testing the rules

You can check how the rule plays out with other rule sets or awards you have:

  1. From the Rule Sets page, select the rule set you want to test.
  2. Select Test Rules, then enter the period dates you want to check.
  3. Select Import, then select the employee whose shifts you want to test.
  4. Select Import, then scroll down to the bottom of the page and select Run Test.

Once each day's earnings are displayed you can expand the day you want to check and click on the question mark to show you the list of rules that have been triggered by that shift.

Then you can go check each rule that was triggered and see how/why it has been applied to that shift.

Keep in mind that rules are applied in order from top to bottom so a rule that's triggered may be overridden by another rule further down the list.

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