Pro rata hours now auto calculated in pay run

Pro rata hours auto calculated in pay run

Previously, when a new employee started or, alas, an employee left, the hours to be paid for the employee had to be manually calculated and adjusted in the pay run. Sorry about that... On a positive note though, we're happy to say this is no longer the case. If an employee starts or leaves within the pay period, we will automatically calculate the pro rata hours for you! No manual adjustments required!

I hear what you're saying but an example would be great!

Who doesn't love a before and after shot! Rather than seeing the amount of weight lost (or gained) this example will highlight the amount of time you will now save in the pay run.

So, there is a new employee, Edward Norrington, who started employment on 12/7/18. He is part of the monthly pay run that runs from the start of the month to the end of the month. He is employed to work on a part time basis - 20 hours per week.

Pay Run Hours (Before)

The hours displayed in the pay run would be for the whole month, regardless of the fact Edward didn't work the whole month. This is where a manual calculation and adjustment of hours was required:

Pro rata hours

Pay Run Hours (After)

The hours calculated in the pay run now apply from the employee's start date up to the end of the pay period. No manual calculation and adjustment of hours are now required:

Pro rata hours

The logic we've used to automatically calculate the pro rata hours (using the above example) is as follows:

  1. Number of days worked in the pay period / Total number of days in the pay period = 0.64516
  2. Total number of hours the employee will be working in the pay period = 86.66667 hrs
  3. 0.64516 * 86.66667 = 55.91387, or 55.91 hrs.

What employee settings are required for this magic to work?

Magic always has it's hidden secrets. In this instance, we won't keep them hidden from you. In order for the pro rata hours to be calculated automatically in the pay run, the following needs to be setup within the employee's pay run defaults screen:

  • There are basic standard hours entered (ie the employee's standard weekly hours). If '0' hours are entered please don't expect anything to happen in the pay run!; and
  • The setting "Pay these earnings by default in a pay run" is ticked.

(N.B. This enhancement already existed for employees with advanced standard hours set up).

How will I know the pro rata hours have occurred in the pay run?

We have added a warning in the pay run to highlight when an employee has pro rata hours in the pay run, as follows:

Pro rata hours

As a result, this will:

  1. Highlight new and terminated employees without having to keep reminder notes;
  2. Allow you to check the correct start/termination dates have been setup for the employee;
  3. Ensure you double check the hours are correct for any exceptional situations, for eg if the employee did start on the 12th but only worked 2 days in that first month, you can easily change the hours in the pay run.

How does this benefit me as a payroll officer?

Have you had scenarios where:

  • You simply forgot there was a new starter in the pay run and so overpaid them because the hours weren't adjusted to account for the employee not working the full pay period?
  • You accidentally forgot to adjust the hours of a terminated employee whose end date was earlier than the pay period end date and consequently overpaid the employee?
  • Trying to calculate the pro rata hours required a calendar, calculator and extreme patience?

No one really wants to spend hours processing a pay run or making errors that can be avoided. This enhancement is another tool that will assist users in eliminating manual calculations and processes and getting closer to finalising that pay run!

Dimitra Karas

Follow me on:

LinkedIn

You might also like...

Image of Bertie with employees alongside a symbol of a stack of coins and a note illustrating that users can schedule future pay rate changes for employees in advance with KeyPay.
September 24, 2020

Schedule future pay rate changes for employees in advance

Users can record, in advance, any future pay rate changes against an employee and the system will update the earnings in the pay run automatically.
Product
Bertie with a magnifying glass illustration on a piece of paper. KeyPay's Timesheet Interpretation Context Panel feature provides clarity on how timesheets have been interpreted each pay run.
September 1, 2020

Calculation transparency with the Timesheet Interpretation Context Panel

KeyPay has introduced a Timesheet Interpretation Context Panel feature that provides clarity on how timesheets have been interpreted each pay run.
Product
Illustration of a Kiwi bird holding a New Zealand flag alongside dollars and coins with the KeyPay logo. NZ businesses can now process Schedular Payments for contractors in KeyPay.
August 10, 2020

New Zealand’s Schedular Payments can now be processed in KeyPay

NZ businesses can now process Schedular Payments alongside regular payroll, in a fuss-free way that saves them significant time and money.
Product
Automation illustration

Not using KeyPay yet?

Try it free for 30 days

Learn more