Pay Rate
A monthly salary has to be turned into a value for a single day before an absence can be deducted, and into a value for a single hour before overtime can be paid. The pay rate is where you say how that division is done, wage type by wage type.
What it is for
Two questions in every payroll implementation come down to this screen. A man was absent one day without leave, so how much comes off. A man worked three hours extra, so what is an hour of his pay worth.
The answer cannot be a single company wide number, because it depends on which parts of the salary count. Most clients deduct an absent day from the whole salary, some deduct it from basic only, and a few include basic plus house rent and nothing else. So the pay rate is a list of wage types, and for each one a share that counts.
The header then says how the division is done. Tick Calculate on Calendar Days and the monthly amount is divided by the number of days in the pay period itself, which means a day in February is worth more than a day in March. Leave it clear and the amount is annualised and divided by the day count you type on the line, so every day of the year is worth the same.
A wage type you do not list is simply not reduced for absence. That is the quiet one: if house rent is missing from the pay rate, a man who was absent five days loses five days of basic and his full house rent.
A pay rate is not picked on a salary record. It is named on the Employee Policy Profile, which is also where a second pay rate can be named for tax. The tax pay rate decides what share of each taxable wage type goes into the figure income tax is worked out on, and it is the reason a client can tax only part of an allowance.
Every field, in plain words
Basic Data
| Field | What it means | What to put in it | Notes |
|---|---|---|---|
| Pay Rate | The code you will pick on a policy profile | STAFF, WORKER | Required |
| Name | How the rate reads in a list | Staff - 26 day month | Required |
| Calculate on Calendar Days | How the monthly amount is divided into days. Ticked, it is divided by the days in the pay period itself. Clear, it is annualised and divided by the day count on each line | Clear at a client who works a fixed 26 day month, ticked at a client who pays by the calendar | This one tick changes every absence deduction and every overtime hour. Confirm it in writing with the client |
| Block | Stops the rate being picked on a new policy profile | Leave it clear | Tick it to retire a rate |
Condition
One line per wage type that takes part in the per day and per hour value.
| Field | What it means | What to put in it | Notes |
|---|---|---|---|
| Line # | The line number | Fills itself | Leave it |
| Wage Type | The wage type this line is about | 1000 Basic Salary | Required. Pick from the list. A wage type with no line here is never reduced for absence |
| Value % | What share of that wage type counts towards a day and an hour | 100 for the whole amount, 50 to count half of it | Leave it at 100 unless the client genuinely counts part of a wage type |
| Calculation hours | The hours in a working day. Used to turn a day into an hour for overtime | 8 | Needed on every wage type that overtime is worked out from |
| Calculation days | The working days in a year. Used only when Calculate on Calendar Days is clear | 312 for a 26 day month, 365 to count every day | Type the annual figure, not the monthly one. A 26 day month is 26 times 12 |
How to configure it
- Create the Wage Type records first. You cannot add a line without one.
- Open the screen, give the rate a code and a name, for example
WORKERand Worker - 26 day month. - Decide the Calculate on Calendar Days tick with the finance manager, and set it. At a factory paying a fixed 26 day month, leave it clear.
- On the Condition tab, add a line for basic salary. Value % 100, Calculation hours 8, Calculation days 312.
- Add a line for every other wage type that should shrink when a man is absent. House rent, medical, transport. Same hours and days, Value % 100.
- Leave out the wage types that should not shrink, for example a fixed canteen subsidy the client pays whether the man came in or not.
- Save, then name the pay rate on the Employee Policy Profile the staff are attached to.
- If the client taxes only part of an allowance, create a second pay rate holding just those lines with the reduced Value %, and name it as the tax pay rate on the policy profile.
Scenarios
"An absent day should cost a man one twenty sixth of his whole salary"
Leave Calculate on Calendar Days clear. Add a line for every wage type in his salary at Value % 100, with Calculation days 312. Each wage type is then annualised and divided by 312, and the absence takes one of those days off each line.
"An absent day should only come off basic"
Same rate, but one line only, for basic salary. The allowances are untouched because they have no line.
"Overtime is paid at the hourly value of basic plus house rent"
Give both wage types a line with Calculation hours 8. The hourly value the overtime screens use is built from the lines that have a Calculation hours figure, so a wage type left out of the rate contributes nothing to the overtime hour.
"February cannot cost more per day than January"
Leave Calculate on Calendar Days clear and set Calculation days to 365. Every day of the year is then worth the same. Tick the box instead and a February day is worth a twenty eighth of the month while a March day is worth a thirty first.
What it is connected to
- Needs Wage Type in place first.
- Named on Employee Policy Profile, once as the pay rate and optionally again as the tax pay rate. That is the only place it is chosen.
- Read by the payroll run for the per day value it deducts for unpaid absence, by Employee Overtime and Process Overtime for the hourly value, and by Leave Encashment.
- Changing a line changes the next run, not a run already produced.
If something looks wrong
- "A man was absent and nothing was deducted" - the wage types on his salary have no lines on his pay rate, so there is no per day value to take off.
- "Only basic was reduced for the absence" - the allowances are missing from the Condition tab. Add a line for each.
- "The overtime amount is zero" - the wage type behind the overtime has no Calculation hours on the pay rate line.
- "The per day amount is far too large or far too small" - Calculation days has been typed as a monthly figure. It is the number of working days in a year, so 312 or 365, not 26 or 30.
- "A day costs a different amount every month" - Calculate on Calendar Days is ticked. Clear it to make every day of the year worth the same.