Deduction types

A deduction type defines the calculation method and processing order. An employee deduction is the separate assignment that identifies who it applies to, when it is due and any amount or balance. Creating a type alone does not deduct money from anyone.

Access needed

Access depends on your assigned permissions and workflow scope.

Read, filter and inspect deduction types: payroll.deductions.read
The workspace plan must include Payroll. Reading the catalogue does not allow changing it or assigning deductions.
Role and permission labels
Typical responsibility: Authorized deductions reader. Role names alone do not grant access.
Read payroll deductions
Create/edit types or change availability: payroll.deductions.manage
Browsing separately needs payroll.deductions.read. Date/state and open-assignment restrictions still apply; code stays fixed after creation.
Role and permission labels
Typical responsibility: Authorized deductions administrator. Role names alone do not grant access.
Manage payroll deductions
Inspect the calculated payroll effect: payroll.read
Calculated transactions use separate payroll-read access. Calculation or recalculation requires payroll.manage and a Processing period.
Role and permission labels
Typical responsibility: Payroll reviewer. Role names alone do not grant access.
Read payroll periods and results

Demo screenshots may show broader access than your account.

Review the catalogue

Open Pay configuration → Deduction types. Check the name, code, category, calculation, priority and status before creating another type. Use Filter and Sort, and include inactive types when investigating a missing entry.

Deduction type catalogue with built-in statutory and union types — Check existing entries before creating a new type.

Choose the calculation method

Method	What payroll uses
Fixed	The employee assignment's amount or next installment, for each due occurrence. A type-level default fixed amount is not used.
Manual	The employee assignment's amount or next installment, for each due occurrence.
Percentage	The type's percentage of gross pay, once per period; the employee assignment amount does not set this rate.
Formula	The type's arithmetic formula using gross pay, once per period.

For Percentage, enter the ordinary percentage in Percentage of gross pay: enter 2 for 2%, not 0.02. This form converts the displayed percentage for storage. The pictured percentage form is an unsaved example and was cancelled.

Unsaved Percentage deduction type form with rate2percent — This form was cancelled without saving a type.

Create a type

Open Add type
Enter a recognizable Name and unique Code. Name allows up to 200 characters and Code up to 50. The saved Code cannot be changed.
Set category and method
Choose the intended Category and Calculation method. Enter the rate or formula when required. Fixed and Manual amounts are set on employee assignments.
Check processing order
Review Processing priority. Lower numbers run first within the category; priority cannot be negative. Use the suggested priority where appropriate.
Review the remaining details
Choose Mandatory only when intended, add a Description within 1,000 characters, and an optional Accounting code within 50 characters.
Save and verify
Select Save deduction type once. Wait for completion, then open the saved row and verify its code, method, priority and status.

Fixed Demo Staff Club deduction type form — Fixed amounts are configured on employee assignments.

The fictional example creates Demo Staff Club, code DEMO-CLUB, category Voluntary, method Fixed and priority 100. It is optional and has no employee assignments. These settings are demonstration data, not an organization policy.

Saved Demo Staff Club type details with code and priority — No employee assignment was created.

Understand category and priority

Payroll applies active employee deductions by category first, then by lower priority within that category. The order is Statutory, CourtOrder, CompanyLoan, ThirdParty, Organizational, Voluntary, then Penalty.

Changing a type's category does not reorder existing assignments, because their category was copied when created. Changing the type's priority does affect existing assignments. Review the effect with payroll staff before changing a shared type.

Edit an existing type

Choose the row's Deduction actions → Edit. Review the saved code, then update the editable settings and select Save deduction type. The code remains fixed. Reopen the record to verify the result. Do not assume that changing an assignment's amount overrides a Percentage or Formula method.

Deactivate and reactivate deliberately

Choose Deduction actions → Deactivate type, then read the confirmation. This action is refused while Pending, Active or Suspended employee assignments exist. Cancel to keep the type available; confirm only when the intended catalogue change is allowed.

Deduction type deactivation confirmation warning about existing assignments — Cancelled; the fictional type remains active.

The pictured confirmation was cancelled; Demo Staff Club remains active. When a type is inactive, include inactive records in the list and use its activation action where offered. This changes catalogue availability; it does not automatically activate employee assignments.

Continue with Employee deductions to assign a type and review activation.

Verify the payroll effect separately

Assign only the intended type to the intended employee using the employee-deduction workflow. After approved source changes, recalculate an eligible Processing period and inspect its transactions. An existing issued payslip is not changed merely because a type was edited.

Troubleshooting

Problem	What to check
The code is already used	Check active and inactive types before creating a duplicate.
No fixed amount field is offered	Set the amount on the employee assignment; payroll does not use a type-level fixed default.
A mandatory type did not deduct anything	Check for an active, due employee assignment.
A changed assignment amount had no effect	Percentage and Formula methods use the type's settings instead.
A formula produced no deduction	Invalid or zero formulas can produce a skipped zero result; inspect the expression and calculation.
Deactivation is refused	Check Pending, Active and Suspended assignments.
Deductions continued after deactivation	Active employee assignments can still apply; manage their state separately.
Editing built-in statutory types changed nothing	PAYE and NASSCORP are calculated automatically outside these assignments.