Place the rotary encoder on the top side of the PCB before installing the plate and switches. It should click into place and might require a firm press. Look at the encoder from the side to see if it's seated correctly, then solder the five pins of the encoder.
If you'd like it to be extra rigid, you can choose to solder the side legs in place too, but it's not required.
You can choose to install up to one encoder per half in any of the three possible spots. You can install an encoder on the spots marked ENC1 on the top of the thumb cluster, ENC2 at the top of the outer column, and ENC3 on the innermost thumb cluster spot.