The Integrated Daily Wage (IDW) is a calculation of the fixed and variable earnings of every working day for an employee during a given period. The Social Security agencies use IDW to track activity on new hires and salary changes and calculate employee/employer Social Security contributions.
IDW is required for Social Security Affiliation reporting and calculation of the INFONAVIT Housing Fund. The IDW value is derived data used in the statutory reports and must appear in all DISPMAG reports.
The variable portion is based on:
Commission
Overtime
Any other variable earnings
You calculate the variable portion by adding all variable earnings paid during the 2 previous months and dividing them by the number of days of wage for the same months.
Employees with variable IDW changes are reported to the Social Security Institute at the end of a bi-monthly reporting period (end of February, April, June, August, October, and December).
Oracle maintains the variable earnings using the "IDW Variable Basis Eligible Comp" balance and the days of wage using the "Days Basis of Quotation 1". balance.
There are two methods for calculating the fixed portion of the IDW: Earnings method and Factor Table method.
This method derives the IDW from the earnings as you have defined them in HRMS:
Salary
Vacation Premium
Christmas Bonus
In this method, you calculate the fixed portion by adding all fixed earnings for the year and dividing by either 364 (for weekly/biweekly payrolls) or 360 (for semi-monthly and monthly payrolls). You can derive this value independent of a payroll run.
When configuring the legal employer, you specify the average days per month/average days per year for your organization. Oracle Payroll uses this override for IDW calculations.
See: Legal Employer: Entering Tax Registration Information
This method derives the IDW based on a factor. This factor is calculated based on a user table that defines an employee's days of Christmas bonus, vacation days, other earnings, and IDW factor based on their years of seniority. You then calculate the fixed portion by multiplying the employee's daily salary by the IDW factor.
Some benefits depend on Employee Seniority therefore every time the Employee's benefits change the IDW will change too. There are three start dates in the Person form that can be used for seniority purposes:
| Start Date | Description |
|---|---|
| Original Hire Date | Hire date when employee started working for the company. |
| Date First Hired | An example of when this field is used is when a company is acquired or merged with another company. The employee's Hire Date before the merge took place is entered here. |
| Adjusted Service Date | Used when an employee leaves a company for a period of time and returns to same company. If entered, the "Adjust Service Date" will be used to determine seniority. If no value is entered then "Date First Hired" will be used. If the "Date First Hired" field does not contain a value, then the value from the "Original Hire Date" field will be used. |
PAY: No of decimal places for Seniority (Two/Five) Profile Option
If the "PAY: No of decimal places for Seniority (Two/Five)" profile option is set to Five, then the Years of Seniority: From and To column in the IDW table must be set to the Five digit precision such as 1.00001 - 2, 2.00001 - 3 and so on instead of 1.01 - 2, 2.01 - 3.
The Integrated Daily Wage (IDW) fixed portion varies each time the seniority changes. The seniority may change anytime in the pay period and more often it varies in the mid of a pay period. Hence IDW also changes in the mid of pay period.
The Social Security Quota which is calculated on the basis of IDW will be prorated based on the change in IDW value.
For example, in a pay period from 1st January to 31st January, if seniority changes on 10th Jan, IDW also changes on same day. Hence PERIOD1 IDW will be IDW till 10th Jan and PERIOD2 IDW will be from 11th till 31st January. The normalized IDW will be calculated as:
IDW_NORMALIZED = ((PERIOD1_DAYS * PERIOD1_IDW) + (PERIOD2_DAYS * PERIOD2_IDW)) / (PERIOD1_DAYS + PERIOD2_DAYS)
The calculated normalized IDW value can be verified from the UI 'Social Security Quota' run result 'FIXED_IDW_NORMALIZED' .
When the application calculates the social security quota, it considers both salary and seniority changes in the same payroll period. The SOCIAL_SECURITY_QUOTA formula determines the Fixed IDW prior to the Anniversary Date, using the formula function GETIDW_BYDATE. The SOCIAL_SECURITY_QUOTA formula is used to calculate Normalized IDW.
The Element Design Wizard provides required fields in support of IDW. Populating these fields will satisfy IDW requirements.
The Element Design Wizard is the recommended method for IDW and element setup.
See: Defining Earnings and Deductions Elements
Oracle Payroll uses the Integrated Daily Wage element to calculate IDW in the payroll run. You should standard link this element to the assignments that need to compute IDW and Social Security imputations.
The Integrated Daily Wage element creates run results for fixed, variable, and combined salaries.
The Element Fast Formula is called: INTEGRATED_DAILY_WAGE.
Eligible compensation for Variable IDW is based on the Secondary Classification element.
The "IDW Variable Bases Eligible Comp" balance is composed of feeds from the following Secondary Classifications:
Earnings: Eligible compensation for IDW (Variable basis)
Supplemental Earnings: Eligible compensation for IDW (Variable basis)
Imputed Earnings: Eligible compensation for IDW (Variable basis)
The PQP_CONTRACT_TYPES user defined table is used internally in the IDW Calculation.
The following columns in the table will be used:
Annual Hours
This is the number of hours worked per year under this contract. It is used to convert rates to hourly rates.
Days Divisor
This is the number of days worked in a year under this contract. It is used to convert rates to daily rates.
Weekly Payroll Divisor
Monthly Payroll Divisor
The last two columns are the number of periods per year used to convert a periodic value into an annual value when you select "Periodic - Payroll Frequency" as the time dimension in the element definition and the employee has a payroll frequency of Calendar Month/Week respectively.
The PQP_CONTRACT_TYPES table contains two delivered rows:
WEEKLY PAYROLL: Used for Weekly/Bi-Weekly payroll IDW CALCULATION
MONTHLY PAYROLL: Used for Monthly/Semi-monthly payroll IDW CALCULATION
Oracle HRMS generates a row for each GRE or Legal Employer that has overrides specified for number of days in year/month. This row is generated, if required, during IDW derivation. The row is named "IDW CALCULATION (GRE: organization ID)" or "IDW CALCULATION (LE: organization ID)," where organization id refers to the organization_id of the GRE or the Legal Employer organization.
The MX_IDW_FACTOR_TABLES Lookup Type has been delivered to support the "Factor Table Method" to compute the IDW fixed portion.
A new function called GET_IDW is delivered, with various modes of functioning. Each mode is unique to the IDW calculation needs. Get_IDW is used in DISPMAG reporting and Social Security Quota calculation. The function is called in the following modes:
REPORT: For New Hire Report/Social Security Quota
BIMONTH_REPORT: For Bimonthly Reporting
CALC: For IDW Calculation in the payroll run
The IDW Audit Report provides an overview of the different components used in determining the IDW values in each payroll run for all employees under a legal employer.