This article will explain the difference between an earning code and a pay statement type.

An Earning Code is an identifier for the different types of pay an employee receives. They can be regular pay, overtime, sick, vacation and tips to name a few.

A Pay statement Type (PST) is what the system uses to define the criteria or the way pay is processed. Some common examples of pay statement types are regular, bonus and manual. 

A processor would use different pay statement types for different reasons. They can be set to only allow a paper check, or to calculate the supplemental tax rate, or to withhold certain deductions.

This pay statement type is used in a normal scheduled payroll.  Typically, any scheduled deductions, normal tax rates, and regular pay rates will be included in this pay statement type.

A Bonus is defined as being an extra pay. So keep this in mind that anytime you may want to add a second pay for an employee, on a second direct deposit or check  to use the bonus pay statement. This can be set up as a paper check, with special tax settings, or only to withhold 401K. 

A manual PST is basically a paper recording. This pay statement is used when something needs to be recorded to keep the employee and employer reports and taxes correct for the year. It may be an employer cuts a check on their end for the employee and the manual check is used to provide a payroll entry and move the taxes. 

A commission pay statement is used for any company that has employees earning commissions. It may be the employees request a special tax setting or no deductions. 

This pay statement type is used  to void a previous pay transaction. It may be an employee was not termed and the compensation they received was an error, and this PST type allows the system to reverse the transaction and correct any payroll tax withheld for the employer.