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Third-Party Sick Pay

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Overview

Third-party sick pay, a disability benefit paid to an employee in place of wages lost due to illness or non work-related injury, can be handled with a choice of two options in Avionté depending on the entity that will be issuing the employee's W2 for the payments. The two options are W2 Issued by Insurance Company and W2 Issued by User - Third-Party Sick Pay Transaction. 

 

Options

W2 Issued by Insurance Company

If the third-party sick pay is paid by an insurance company, the insurance company can issue a W2 for those wages. If the insurance company agrees to issue the W2, nothing needs to be done in Avionté.  

W2 Issued by User - Third-party Sick Pay Transaction

Alternatively, users can create a specific paycode in Avionté to report third-party sick pay.

Note: Using this method, employer taxes will be deducted from the sick pay and that action cannot be changed. 

 

 

Setup

Initial setup for the Third-Party Sick Pay process requires three actions in Admin Tools:

  • Create a Paycode
  • Create a Deduction
  • Create an Employee Extra

 

Create a Paycode

  1. From the Start Page, select Admin Tools from the Actions menu or select the Admin Tools shortcut button to open the Admin Tool Main window.

  2. From the System category, double click on Transaction Type.

  3. Select Add New to begin the process to create a paycode for the taxable wages.

  4. Enter data into the Transaction Type Details fields.


    Field Description
    Name Enter "SickPay" in the Name field. The name will automatically populate in the SystemName field.
    Description Enter a general summary of the SickPay transaction type into the Description field.
    Type Select PayCode from the drop-down menu.
    Deduction Type Leave this field empty.
    Vertex CMP Code Select Cash from the drop-down menu.
    W2 Box Leave this field empty.
    W2 Label Leave this field empty.


  5. In the Shared By area, check the box to the right of each staffing supplier (branch) that will be able to use the new transaction code.

  6. Select Save. The transaction type is now ready for use.

  7. Close the window

 

 

Create a Deduction

  1. From the Start Page, select Admin Tools from the Actions menu or select the Admin Tools shortcut button to open the Admin Tool Main window.

  2. From the System category, double click on Transaction Type.

  3. Select Add New to create the deduction for the net pay received by the employee using the same process as used to create the paycode.

  4. Enter data into the Transaction Type Details fields.

     
    Field Description
    Name Enter "SickPay" in the Name field. The name will automatically populate in the SystemName field.
    Description Enter a general summary of the SickPay transaction type into the Description field.
    Type Select Deduction + Contribution from the drop-down menu to add a contribution to the total. Otherwise, select Permanent Deduction.
    Deduction Type Choose any deduction type from the drop-down menu.
    Vertex CMP Code Leave this field empty.
    W2 Box Leave this field empty.
    W2 Label Leave this field empty.
      

  5. In the Shared By area, check the box to the right of each staffing supplier (branch) that will be able to use the new deduction. 

  6. Select Save. The deduction is now ready for use. 

  7. Close the window.

 

 

 

Create an Employee Extra

  1. From the Start Page, select Admin Tools from the Actions menu or select the Admin Tools shortcut button to open the Admin Tool Main window.

  2. From the System category, double click on Config Choice to configure third-party sick pay as an Extra item.

  3. Select Add New.

  4. From the Category drop down menu, select EmployeeExtra.

  5. Enter "Third-party Sick Pay" as the Choice Code.

  6. Enter a description.

  7. Check the box marked Select. 

  8. Select Save

  9. Close the window.

 

Add Deduction and Extra to Employee

After paycode, deduction, and extra are setup in Admin Tools, follow these steps to add the deduction and extra to the employee.

Add Deduction

  1. From the Front Office Main Menu, select Employee.

  2. Search for the employee receiving the third-party sick pay.

  3. From the Employee submenu. expand Payroll.

  4. Select Deduction.

  5. Select New Deduction to add the deduction to the employee.

  6. Use the Deduction Type drop down menu to select the new sick pay deduction.

  7.  Select Fixed Amount or Percentage. Typically, users will choose FixedAmount rather than Percentage.

  8. Complete the other fields as appropriate for the deduction, ensuring that the Start Date and End Date fall within the calendar year in which the third-party sick pay was received.

  9. Select Save Deduction to finalize. 

 

Add Employee Extra

  1. Select Extra from the Employee submenu. 

  2. Under Enter New Here, select Third-party Sick Pay from the Label drop-down menu.

  3. Enter True in the Value column. This will indicate third-party sick pay in Box 13 on the employee's W2. 

  4. Press the Tab key to enter the third-party sick pay deduction.

 

 

Enter Paycode

To complete the process for reporting third-party sick pay, create a new batch and run payroll.

 

Create a New Batch

  1. From the Back Office menu, select TimeEntry.

  2. Select New Batch to add the third-party sick pay transaction for the employee.

  3. Select Finish to close the New Transaction Batch window.

  4. From Sheet View, right click on the employee receiving third-party sick pay.

  5. Select Insert Transaction Type. 

  6. Select the box next to the SystemName SickPay.

  7. Select Insert Items.

  8. Locate the row associated with the employee's sick pay.

  9. In the Pay Unit column, enter the number of pay units equivalent to the amount of third-party sick pay that is taxable.

  10. Select Verify Batch.

  11. Approve or resolve any errors and select Verify Batch

  12. Select Close Batch.

 

Run Payroll

  1. From the Main Menu, select Payroll.

  2. Select New Batch.

  3. From the Check Date drop down menu, select a date within the year the compensation was paid.

  4. Select Ignore Permanent Deduction Setup.

  5. Select Finish.

  6. From the Homepage, click Select Transaction.

  7. Select the Category.

  8. Select the transaction.

  9. Click Save & Close.

  10. Select View Paycheck.

  11. If necessary, use the icon in the Edit column to adjust tax amounts. 

  12. From the Homepage, select Process.

 


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