Salary & Holiday Pay Calculations

markh · PayPerShop Newbie Joined: 22 Jan 2008 Posts: 17

Afternoon all

I wonder if you can help me again

Where i currently work, if we need to pro-rate a salary or if we have starters and leavers mid month, our calculation method is based on every day of the month.

When paying outstanding holiday to leavers, we calculate using a 260th method.

Does anyone else calculate payments this way or are any other methods used?

Can anyone confirm if we are ok from a legal perspective too

Many thanks in advance

Mark

danhutson80 · Posted: Tue Jul 01, 2008 3:55 pm Post subject:

Hi Mark

In my old job they used the 260 method for holidays but then used calendar days in the month to work out part month payments/backdates etc.

In my current job we use the 260 method for everything.

I don't know of any legal requirement to use a specific calculation, I guess it comes down to how your system is set up. I think that as long as you're consistently using the same calculation for every employee there won't be a problem.

Dan

markh · PayPerShop Newbie Joined: 22 Jan 2008 Posts: 17

Dan

Thanks for this response. I too think we are ok as long as we apply it across the company but wanted to sound the forum out

Mark

Neiltonks · Posted: Tue Jul 01, 2008 4:28 pm Post subject: Lots of methods

There are lots of methods used for this, for example working days in month and '365ths' in addition to those you've quoted.

You can also work out pay by either paying for the days worked or paying a normal month minus an offset for the days not worked.

Whatever method is used, you do need to watch for anomolies thrown up when things change very near the start or end of the month.

For instance if you calculate based on calendar days in the month, then a Monday-Friday employee starting work on Monday 02/06/08 would be paid 29/30ths of a month's pay for June but has actually worked on every working day in the month and might feel hard done by!

The same would happen to a leaver whose last working day were Friday 29/08/08 - they would be paid 29/31sts of a month's pay but have actually worked on every working day.

There's probably no perfect way of doing these pro-rata calculations for monthly payrolls, as periods contain varying number of working days. In fact, in many ways the use of a 4-weekly payroll cycle often makes more sense.

Neil.

Ian Whyteside · Posted: Wed Jul 02, 2008 9:13 am Post subject: Apportionment of Pay

Might be worth remembering that the law does kick in on part period payments if the contract has no system for calculating it. Have a look a the Apportionment Act if it still in force.

It is right though, no method is completely fair but as long as the same method is used and it is clearly laid down in terms and conditions there can be no arguments.

Pity the poor payroll office not so long ago who'se employers made them use the 365ths rule to pay untaken holidays and the 260ths rule for reclaiming overpaid holiday, try explaining that to your customers!

Ian Whyteside

Ian Congreave · Posted: Thu Jul 03, 2008 7:32 am Post subject: Calculating daily rates

This subject has been discussed on the Forum in a number of other places, so you may find more information elsewhere. Have a look at http://www.paypershop.com/phpBB2/daily-rate-t369.html or do a forum search on "260".
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markh · PayPerShop Newbie Joined: 22 Jan 2008 Posts: 17

Would anybody be able to supply me with some contractual wording that we can use to highlight our calculation?