GOAL: To provide an overview of the considerations for depending on how you are paying out the settlement, calculating LTD premiums may change. Here are some possible ways to calculate LTD premiums. 

Note: Keep in mind that you need to adapt to your own processes of how you are paying out the settlements and the calculation/setup of deduction/benefit/pension.

Subject Entity Maintenance = "SEM" in this article

LTD (Possible setups):

Payroll > Group Data > Subject Entity Maintenance

**If you are adding any temporary Subject Entity Maintenance entries, don't forget to remove them after the pay is done.**

**SEMs only calculate on a going-forwards basis.  They won't affect pay records of pay periods that have already been confirmed in the past.**

To have LTD calculate on more than the annual salary & annual allowance (“Annual_Salary” and “Annual_Allowance” Entity Types in Subject Entity Maintenance (SEM)):

The screenshot below shows two separate possible setups.  

FIRST SETUP (TIMESHEET): If you are paying the retroactive salary increases by timesheet/recurring payment, see the first line.  

SECOND SETUP (ENTITLEMENT): If you are paying by Entitlements (i.e. changing the Salary & Allowance Grids and using the Salary & Allowance Update tool to update everyone, see the 2nd and 3rd lines).

  • Note: Only assign Salary Retro if you need LTD calculating on Salary Retro.  Only assign Allowance Retro if LTD needs to calculate on Allowance Retro.
  • SEMs are set up on a per-group basis, so set up the correct LTD calculations on each individual group.


Noted considerations:
  1. Keep in mind that if you are paying out the settlement’s retroactive salary increases on a Regular pay period, watch for anyone receiving Salary Retro or Allowance Retro that doesn’t pertain to the settlement’s retro increase payment (Ex. An EA’s position change is being inputted a pay period late so the “Retro” that HRP pays out will be the regular earnings that fall before the current pay period and the settlement’s retroactive salary increase).
  2. Regular LTD calculations. based on per-pay-period earnings in SEMs (not based on annual salary/allowance):

    1. If your SEM for LTD has Entity Type "Salary"/"Allowance" with the Entity Code "*", this will already encompass this settlement's Retro (and all other Retro" because "*" includes the regular earning code and the Retro.  If you already have this setting in Subject Entity Maintenance and you are paying the settlement Retro through Salary Grid Increase & Entitlements, then you won't require the SEM setup in the screenshot above.
    2. If your SEM's "LTD" Subject is based on the Entity Type "Salary" but the Entity Code = "[your reg. pay code here]" and you are paying through the Salary Grid Increase/Entitlements, then if you want LTD to be based on Retro you will need to add a new line with the Entity Type "Salary" and Entity Code "Retro" (and another line with the Entity Code "Allowance" if you need it based on Allowances).
  3. The LTD rate applied will always be the most current rate. If you have had LTD rate changes since the first year of the settlement, take this into consideration.

Benefit Overrides Screen:

        2. PAYROLL > EMPLOYEE > BENEFITS: Add benefit overrides to every employee. (Calculate your LTD premiums that only pertain to the settlement’s retro pay > Script it in as an “A” override so that the regular pay’s standard premiums are still calculated on the Annual_Salary and Annual_Allowance (if this is how your LTD is calculated)).

Non Stat Deduction Screen:

        3. New Non-Stat. deduction code (add new code > assign to everyone in the Group > assign a rate to the code as a % in the Deduction Rate Maintenance screen > define which earnings the Non-Stat. deduction code needs to calculate on.)
  1. Works if you don’t have a Board-paid share of the Benefit (Non-Stat. Deductions can only deduct employee shares).  If you have Board Shares of LTD, use the Benefits module (#2 above).


From the information Edsembli has received re. these retro payments, it may be a Pay Adjustment, so reported in the pay period in which it is paid.  However, you need to know your settlement terms and definitions for your own ROE maintenance.  Link to ROE instructions (See Annex 1 Summary Chart): How to complete the record of employment (ROE) form - Canada.ca