Overpaid employee, contract states correct hourly rate, but incorrect annual salary

getmore4less

Got it wrong once how sure you have it right now?

38 weeks work is entitled to 4.5862 weeks statutory holiday.

If the full 5.6 week was allocated to the annual salary you have effectively overpaid by just over 1 weeks pay

Fix the contracts and move on or you may lose any goodwill you have from these employees

getmore4less

Holiday pay should be identified on the pay slips separately from the normal pay.

You also need clear when the holiday year starts and ends.

how do you work out salary adjustment for part years when people start and/or finish mid holiday year?

chances are that is messed up as well.

Tweetinat

TELLIT01 wrote: »

You know your staff better than we do, but I can see a problem in convincing some of them at least that their annual pay was entered incorrectly rather than the hourly rate. I certainly don't think there is any basis to claw back the overpayment, but you do need to get legal advice as it has the potential to go badly wrong.

I'm not worried about that. They can clearly see what their hourly rate is and their contracted hours, so the difference is just the holiday pay calculation. Whilst they may object to being asked to re-sign contracts out of principle, we can very clearly show the !!!!-up and how it was made.

Tweetinat

Xbigman wrote: »

I think the contract is very badly worded. It should clearly state hourly rate, holiday entitlement and total salary. By putting in a catch all term that holiday pay is in line with the working time directive might seem clever but in reality is meaningless to most people.

I agree a clawback is not a good idea but the correct salary being paid going forward should be acceptable.

Are you dealing with a union or individuals? A union will want legal advice and if they do get legal advice so should you.


Darren

Yes, I agree. I've no idea who wrote the contracts but I'm hoping that as part of the correction process, we can change them to be a lot clearer! We're dealing with 5 individuals, 3 of whom I know will sign the new contracts and the other two I don't know how they'll take it. They're the least impacted though (region of £100 per year) so hopefully they will be accommodating. I'm calling the Preschool Learning Alliance this morning for further advice.

Tweetinat

getmore4less wrote: »

Got it wrong once how sure you have it right now?

38 weeks work is entitled to 4.5862 weeks statutory holiday.

If the full 5.6 week was allocated to the annual salary you have effectively overpaid by just over 1 weeks pay

Fix the contracts and move on or you may lose any goodwill you have from these employees

I'm very confident it's correct now. Using the HMRC calculator and have had it double checked by an HR professional.

Yes, we have no intention of reclaiming back the overpayment.

Tweetinat

getmore4less wrote: »

Holiday pay should be identified on the pay slips separately from the normal pay.

You also need clear when the holiday year starts and ends.

how do you work out salary adjustment for part years when people start and/or finish mid holiday year?

chances are that is messed up as well.

We contract out payroll to a company so they are responsible for payslips. We don't have joiners part-way through he year so not been an issue.

getmore4less

Tweetinat wrote: »

I'm very confident it's correct now. Using the HMRC calculator and have had it double checked by an HR professional.

Yes, we have no intention of reclaiming back the overpayment.

How much holiday is being allocated for the 38weeks work?

Tweetinat

getmore4less wrote: »

How much holiday is being allocated for the 38weeks work?

It varies according to how many hours each employee works, but it's accruing at 12.07%.

Annual salary is working out at hourly rate X 1.1207 x hours per week x 38 weeks

Also used this calculator to cross-check: https://www.gov.uk/calculate-your-holiday-entitlement/y/annualised-hours

getmore4less

12.07% still overpays as that is a round up %

that calculator say

This calculation isn't suitable for term-time workers

.........
The 12.07% comes from rounding 5.6/46.4 = 0.1206896
you can use a smaller % as a year is more than 52weeks.

Tweetinat

getmore4less wrote: »

12.07% still overpays as that is a round up %

that calculator say

This calculation isn't suitable for term-time workers

.........
The 12.07% comes from rounding 5.6/46.4 = 0.1206896
you can use a small % as a year is more than 52weeks.

Perhaps you'd like to tell me how to work it our correctly rather than try to prove me wrong? I'm trying to help a friend out here with a problem they've just discovered, I'm not an HR expert and they have no money to pay for any advice. If you know the correct way to work out holiday pay entitlement for term time workers then please do let me know.