3501 PR.03 Payroll Obligations

Revision Date: 
July 22, 2022


1.     Overview

2.     Obligation Calculation

3.     Pay Components (Earnings) Eligible for Obligation

4.     Use of the Costing Allocation Hierarchy

5.     Obligation Adjustments

6.     Obligation Liquidations

7.     Common Terminology

1. Overview

Payroll Obligations is the process in Workday that obligates salary across the fiscal period for filled positions.  Obligation is a Workday term for an encumbrance. 

2. Obligation Calculation

Obligations are created based on the following criteria:

  • Base Year:  the first fiscal year of the obligation period is called the Base Year.  In the base year, obligations are created for all financial worktags.  The base year will change consistent with the current fiscal year.  For example, when the fiscal year is FY18, the base year is also FY18. 
  • Additional fiscal years of the obligation period are strictly for the Grant worktag.  Currently, only one additional fiscal year is obligated. 
  • Period Schedule:  the payroll and academic periods are established in HCM; obligations will only generate for period schedules that have been setup.  Period schedules are set well into the future to accommodate two fiscal years of data and are updated annually. 
  • Payroll Commitment Rules:  the payroll commitment rules are used to determine the pay components that will obligate.  Only those pay components listed in this document will be calculated.
  • Active, Filled Positions:  all active, filled positions that have a compensation plan are considered for the obligation process.  Workday assumes that an active, filled position will remain that way for the entire Base Year; therefore, it is important to ensure the proper levels of the costing hierarchy are in place for the entire Base Year.  
    • Position management positions must always have an active Position Restriction.  Position restriction costing allocations should not be end-dated unless charging instructions change.
    • Job management positions require a full fiscal year Worker Position level costing allocation, even if the individual in the position is not working for the full length of time.  A default allocation must be entered to fill any gaps out to June 30

3. Pay Components (Earnings) Eligible for Obligation

Earnings (pay components) that are eligible for use in the commitment rules include those that are part of Institutional Base Salary. 

Earnings (pay components) that are not supported for obligations:

  • PTO;
  • Absence plans;
  • Bonus, Overtime, Shift Differentials; or
  • Any other earning that is entered through input.

The following table shows the Earnings that are setup to obligate:


(Memo) Graduate Student Health
(Memo) Graduate Student Tuition
Academic Administrative Compensation

Chair Supplement

Fac Mort 2

Fac Mort 3

Faculty Education

Faculty Mortgage

FAS Faculty Special

Fellowship Teaching
Graduate Student Family Subsidy
Graduate Student Graduating
Graduate Student Stipends
Graduate Student Top Up Fellowship

Head of College Supplement

Interim Assignment

On Going Extra Comp

Other Student Earnings

Post Doc Fellowships

Regular Salary

Regular Salary Academic Pay

Research Assistant

Student Teaching Assist

Taxable Reimbursement

Time Entry Wage

YSM FAC Incntv

4. Use of the Costing Allocation Hierarchy

Workday Payroll uses the first effective costing override (allocation) found, searching in order (most specific to most generic):

  • Period Activity Pay
  • Worker + position + earning
  • Worker + position
  • Position restrictions

Because many active, filled positions that will be obligated are Job Management, it is important to have a Worker + Position costing allocation level for these workers, as there is no Position Restriction in place.  For example, Students paid Time Entry Wage that have a compensation plan, Union Leave and Interim Employment Pool positions require a Worker Position level allocation. 

Costing allocations for active, filled positions must be in place for the entire base year when obligations are initially created (July).  Costing allocations must start coincident with the first day of the payroll in the new base year, which may differ from the position start date.  For example, for the FY18, in July 2017, weekly workers must have a start date of June 25 or prior and must end no sooner than June 30, 2018. 

While Workday will validate the obligation budget date against the Grant award line from and to date (i.e., the start and end date of the award line), costing allocations should be maintained as funding support changes.  If Workday detects a change to the Grant start and end date in the Base Year, the Position Restriction will be used to replace the Grant obligation.  If Workday detects a change to the Grant start and end date in a future fiscal year, the Grant obligation will simply end. 

The Cost Center Payroll Costing Specialist is responsible for maintaining payroll costing allocations and ensuring a costing allocation exists for the full base year

5. Obligation Adjustments

Obligation adjustments are run daily, Monday through Friday, by the Payroll Costing Manager.  Costing allocation, as well as other changes, will be reflected in Workday after the adjustment process runs.  This process will run at 11:30 AM, with some exceptions such as holidays, inclement weather, or conflict with the timing of the payroll process.  Refer to the Common Terminology table for the events that create an obligation adjustment.

6. Obligation Liquidations

Obligations liquidate from the worktags present in the costing allocation on the payroll processing end date, with one exception.  If the account posting rules (the rules that indicate which ledger account and resulting worktags are used) change after the creation of initial obligations, there could be a mismatch.  Liquidations use the most current account posting rules, while the obligations will use the posting rules applicable at the time of the obligation creation. 

7. Common Terminology




Amount reserved for unfilled positions. Workday terminology for pre-encumbrance.

Yale does not commit unfilled positions.


Amount reserved for filled positions. Workday terminology for encumbrance.


Amount reserved for compensation.

Fringe Benefit

Amount reserved for burden (estimated employer expense).

Initial Obligation

Amount reserved at the beginning of a fiscal year for obligations.

Obligation Adjustment

Value that represents the difference between:

  • The previous commitment amount calculated for a position restriction.
  • The current amount calculated.

Examples include:

  • Mid-year compensation changes.
  • Mid-year costing allocation changes.
  • Hires.
  • Adding additional jobs.

Roles and Responsibilities

Cost Center Payroll Costing Specialist – responsible for keeping costing allocations for Earnings current; costing allocations are managed through the Assign Costing Allocation task. 

Payroll Costing Manager – in Finance Systems & Solutions, runs the initial Payroll Obligations and creates obligation adjustments.