What is locality pay area in SAP PSM-FM - Funds Management?

SAP Term: locality pay area

• Component: PSM-FM

• Component Name: Funds Management

• Description: The identification of an area for purposes of locality-based comparability payments.

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• Key Concepts: 
  Locality pay area is a term used in SAP Funds Management (PSM-FM) to refer to a geographic area in which the same pay rate is applied. This pay rate is determined by the government and is based on the cost of living in that particular area. It is used to ensure that employees are paid fairly for their work, regardless of where they live. 
  
  How to use it: 
  In SAP Funds Management, locality pay areas are used to determine the appropriate pay rate for an employee. The system will automatically calculate the correct pay rate based on the locality pay area associated with the employee's address. This ensures that employees are paid fairly for their work, regardless of where they live. 
  
  Tips & Tricks: 
  When setting up a new locality pay area in SAP Funds Management, it is important to ensure that all relevant information is entered correctly. This includes the name of the locality pay area, the applicable pay rate, and any other relevant information. This will ensure that employees are paid correctly and that there are no discrepancies in their paychecks. 
  
  Related Information: 
  SAP Funds Management also allows users to set up different types of salary structures, such as hourly rates or annual salaries. These salary structures can be used in conjunction with locality pay areas to ensure that employees are paid fairly for their work. Additionally, SAP Funds Management also provides tools for managing employee benefits and deductions, such as health insurance and retirement plans.