09 define legal entities for hcm

Partner Boot Camp - Fusion HCM Global HR

Define Legal Entities for HCM Instructor Guide

August 8, 2013

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CONTENTS

Lesson 1: Define Legal Entities for HCM ......................................1 Lesson Objectives ................................................................................... 1 Legal Entities Overview ............................................................................ 2 Legal Entity Role ..................................................................................... 3 Legal Entity Considerations ....................................................................... 4 Demonstration: Managing Legal Entity HCM Information ................................ 5 Legal Entity and its Relationship to Divisions ................................................ 7 Instructor Note: Legal Entities and Divisions ................................................ 8 Legal Entity and its Relationship to Worker Assignments and Legal Employer..... 9 Legal Entity and Payroll Reporting ............................................................ 10 Legal Entity and Legal Reporting Units ...................................................... 11 Instructor Note: Storage Tables ............................................................... 12 Legal Reporting Units Overview ............................................................... 13 Define Legal Entities for HCM Review Question 1 ........................................ 14 Define Legal Entities for HCM Review Question 2 ........................................ 15 Define Legal Entities for HCM All Questions and Answers .............................. 16 Lesson Highlights .................................................................................. 17

Lesson 1: Define Legal Entities for HCM

Copyright © 2013, Oracle and/or its affiliates. All rights reserved. 1


Lesson Objectives

After completing this lesson, you should be able to:

Define legal entities for HCM


2 Copyright © 2013, Oracle and/or its affiliates. All rights reserved.

Legal Entities Overview

Define a legal entity for each registered company or other entity recognized in law for which you want to record assets, liabilities, expenses and income, pay transaction taxes, or perform intercompany trading.

A legal entity has a separate legal identity and therefore conducts aspects of your business for the following reasons:

Facilitating local compliance Complying with corporate taxation within local jurisdictions Preparing for acquisitions or disposals of parts of the enterprise Isolating one area of the business from risks in another area. For example, your

enterprise develops property and also leases properties. You could operate the property development business as a separate legal entity to limit risk to your leasing business.



Legal Entity Role

Role of your Legal Entity The contracting party on any transaction is always the legal entity. Individual legal entities:

Own the assets of the enterprise Record sales and pay taxes on those sales Make purchases and incur expenses Perform other transactions

Legal entities must comply with the regulations of jurisdictions in which they register. To support local reporting require ments, legal reporting units are created and registered. The following screenshot is the Legal Entity page for InFusion Corp USA1.



Legal Entity Considerations

Oracle Fusion Applications support the modeling of your legal entities. If you make purchases from or sell to other legal entities, define these other legal entities in your customer and supplier registers, which are part of the Oracle Fusion Trading Community Architecture. Legal entities can be identified as legal employers and therefore, are available for use in Oracle Fusion Human Capital Management (HCM) applications.



Demonstration: Managing Legal Entity HCM Information

Demonstration Background Review the HCM information for your legal entity. Demonstration Scope Review key fields in the HCM information for the InFusion Corp USA1 legal entity. Demonstration Steps

Sign in is hcm_impl or hcm_impl1.

Start Here Setup and Maintenance work area

1. In the Search region, in the Name field, enter Manage Legal Entity HCM Information.

2. Click the Search button.

3. In the Manage Legal Entity HCM Information task row, click Go to Task.

Location: Manage Legal Entity HCM Information page

4. In the Legal Entity Name field, select InFusion Corp USA1.

5. Click Search.

6. In the Search Results region, click on the name InFusion Corp USA1.

Location: Legal Entity: InFusionCorp USA1 page

7. Use the Work Day Information section to define the standard working hours for

each worker assignment in the legal entity. Note: You can also enter work day information at the enterprise, department, and position level.

8. In the Legal Employer Information section, use the Salary Level field to select

the level at which salary can be specified, for example Assigment or employment



terms.

9. Use the Worker Number Generation field to specify whether the application generates a number for each worker. Note: By default, worker numbers are not used. If you enable worker numbers

for the enterprise, then only you can specify worker numbers for the legal employer.

10. In the Allow Employment Terms Override at Assignment field, specify

whether to allow override or not.

11. Use the People Group Flexfield Structure field to select the flexfield that enables you to record people group information and assign people to specific groups such as unions or working groups.

12. Use the Employment Model field to select either a 2-tier or 3-tier model for the legal entity.

13. Click Done.

You have demonstrated how to manage legal entity HCM information.



Legal Entity and its Relationship to Divisions

The division is an area of management responsibility that can correspond to a collection of legal entities.

You can aggregate the results for divisions by legal entity or by combining parts of other legal entities.

Define date-effective hierarchies for the cost center or legal entity segment in the chart of accounts to facilitate the aggregation and reporting by division.



Instructor Note: Legal Entities and Divisions

How can I link a legal entity to a division without using the ESC tool? You can use the Manage Legal Entity task in FSM to associate a legal entity with a division.



Legal Entity and its Relationship to Worker Assignments and Legal Employer

Legal entities that employ people are called legal employers in the Oracle Fusion Legal Entity Configurator.

You must enter legal employers on worker assignments in Oracle Fusion Human Capital Management.



Legal Entity and Payroll Reporting

Your legal entities are required to pay payroll tax and social insurance such as social security on your payroll. You can register payroll statutory units (PSUs) to pay and report on payroll tax and social insurance on behalf of many of your legal entities. For example, if you are a multinational, multicompany enterprise, then you register a payroll statutory unit in each country where you employ and pay people. You associate a legislative data group (LDG) with a payroll statutory unit to provide the correct payroll information for workers. As the legal employer, you might be required to pay payroll tax, not only at the national level, but also at the local level.

You meet this obligation by establishing your legal entity as a place of work within the jurisdiction of a local authority.

Set up legal reporting units to represent the part of your enterprise with a specific legal reporting obligation.

You can also mark these legal reporting units as tax reporting units, if the legal entity must pay taxes as a result of establishing a place of business within the jurisdiction.



Legal Entity and Legal Reporting Units

Create and register legal reporting units to support local reporting requirements. When you first create a legal entity, the Oracle Fusion Legal Entity Configurator automatically creates one legal reporting unit for that legal entity with a registration.



Instructor Note: Storage Tables

A HRW table represents a template configuration object. The actual table that stores all our setup is spread around in multiple product tables. For example Legal Entities are parented in XLE_ENTITY_PROFILES and have a lot of HCM specific detail stored in other tables like HR_ALL_ORGANIZATION_UNITS. We typically present a simplified view called PER_LEGAL_EMPLOYERS that helps us get an HCM specific view of the legal employers.



Legal Reporting Units Overview

A legal reporting unit is the lowest level component of a legal structure that requires registrations. You use it to group workers for the purpose of tax and social insurance reporting or represent a part of your enterprise with a specific statutory or tax reporting obligation. Define legal reporting units by: Physical location, such as a sales office. Logical unit, such as:

Groups of employees subject to different reporting requirements. Human Capital Management (HCM) system where you use your legal reporting

units to model your tax reporting units. A tax reporting unit can be used to group workers for the purpose of tax reporting.

Plan and define your legal reporting units at both the local and national levels if you operate within the administrative boundaries of a jurisdiction that is more granular than country. For example:

If the legal entity establishes operations requirements for each local area in a country that requires reporting of employment and sales taxes locally as well as nationally.

If you need more than one legally registered location to meet this legal entity's reporting requirements in each local area.

Legal entities in Europe operate across national boundaries, and require you to set up legal reporting units for the purposes of local registration in each country.



Define Legal Entities for HCM Review Question 1

Your legal entities can be identified as legal employers and therefore, are available for use in Human Capital Management (HCM) applications.

1. True 2. False



Define Legal Entities for HCM Review Question 2

You must enter legal employers on worker assignments in Oracle Fusion Human Capital Management. 1. True 2. False



Define Legal Entities for HCM All Questions and Answers

1. Your legal entities can be identified as legal employers and therefore, are available for use in Human Capital Management (HCM) applications. True 2. You must enter legal employers on worker assignments in Oracle Fusion HCM.

True



Lesson Highlights

You should have learned how to:

Define legal entities for HCM

09 define legal entities for hcm

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