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

getmore4less

Already did that earlier

52 week year with full statutory holidays of 5.6 week

38 weeks work is entitled to 4.5862 weeks statutory holiday.

can use any calc they want as long as it gives at least the statutory minimum prorta for 38 weeks work.

Still need to understand how to do part year as depending on holiday year people will have been overpaid or underpaid.

Tweetinat

getmore4less wrote: »

Already did that earlier

52 week year with full statutory holidays of 5.6 week

38 weeks work is entitled to 4.5862 weeks statutory holiday.

can use any calc they want as long as it gives at least the statutory minimum prorta for 38 weeks work.

Still need to understand how to do part year as depending on holiday year people will have been overpaid or underpaid.

Sorry for the snarky reply. Baby didn't let me get much sleep last night.

Thank you for explaining. I get it now (for full years).

For second part of your question; I'm not sure. Are you asking because we need the holiday year period to be able to work out how much to correctly pay for the rest of the year?

Let's assume holiday runs from 1st September to 31st August and they work 38 weeks within that. They will have worked 13 weeks this term (approx), so 27 left. Do I need to calculate holiday pay for remaining holiday period, and add that to the basic salary for this remaining period? Or is there something obvious I'm missing?

Tweetinat

Okay, I actually have another follow up question as more information comes to light....

One employee has started this year 1st October and has a one year contract, 1st October - 30th September.

Holiday year is 1st September, 1st October.

How much holiday pay should be calculated and added to salary in this instance? My head is swimming. Is it 11/12th's entitlement in this year? would there need to be a new calculation for the one month at the end of the holiday year, but before the contract expires?

Given that staff cannot take holiday in term time, and it is all paid as part of the salary, does it matter that they started mid-holiday year? They'll still need a monthly salary that includes 1/12th of their entitlement?

Sorry it's so complicated and been delegated to me to resolve

Tweetinat

Sorry - another follow up question. How do you calculate 4.5862 weeks statutory holiday?

I tried to do 5.6/52 * 38 but I get 4.0923? Would be good to know how I work that first step out so I can show every individual step, thanks.

getmore4less

For a 52 week year that's 5.6 weeks holiday, 46.4 weeks working.

5.6/46.4 is where the 12.07% comes from.

5.6 * 38/46.5 is where the weekly prorata comes from.

They are close to being the same.


As you are changing the contracts you need to decide if you are resetting the holiday for the full holiday year or are only go to do this from some date in the future(good idea to give notice).

What is the normal notice periods in the contract

Because a working year(1 Sept - 30 Aug) is made up of work, holiday and unpaid weeks when someone starts/ends in the year effects the average pay because the holiday/unpaid are not spread evenly the bulk being the end of the holiday year.

eg. someone who resigns and finishes at the end of the summer term should get the pay till the 31st Aug.

on a years contract the total will be the same anyway so can be done as a year base+holiday and adjusted if they leave early, should be in the contract


Do they get paid overtime you need to consider if holiday should accrue for that as well.

Tweetinat

Ahhh I see. Thank you. Yes that makes sense on the weekly pro-rata, cheers.

I've actually contacted the company they outsource payroll to, who have helpfully supplied a spreadsheet so the calculation for new joiners will be pretty straight forward for now.

notice period is 4 weeks.

Sorry I'm finding the part-year thing really difficult to get my head round.

Historically, everyone has joined the setting at the beginning of the academic year, and either continue to be with the pre-school, or have left at the end of their fixed term. Their salary has been calculated on an annual basis and then paid in 12 monthly instalments (including holiday pay).

In theory if someone should leave part-way through the school, then we would just pay until the end of their notice period. Musing out loud here, but wouldn't the holiday pay be correct in that it is in effect being accrued and paid monthly?

Sorry, I've just got this last hurdle to get over and then I think I get it!

getmore4less

With term time 12 equal pay period holiday does not accrue and get paid monthly equally that's the key.

After they have accrued all the holiday by working 38 weeks there is still July/Aug pay due for the summer break.

Tweetinat

Does it make a difference that we calculate salary by working out total hours contracted to work and then dividing by 12 to pay in equal installments throughout the year, irrespective of the actual working days and holidays in a particular month?

So in this example, employee A is contracted to work 7 hours per week, over 38 weeks at £11 an hour.

Gross salary is therefore 7 x 11 x 38 = £2962

this is then divided by 12 to give monthly pay of £243.83

Until now, they've calculated total annual hourly entitlement and added that upfront to the total annual hours and then multiplied by hourly rate to get annual salary.

I wonder if we're talking at cross purposes and hence why start/end date is less relevant?

Thanks again for your help

getmore4less

Annualizing is fine, people like equal payments.

Needs adjusting for starters/leavers that don't fit the standard year cycle.

I suspect if you do the pay accrued against paid as a weekly time line, people are mostly owed pay till the end of the year when the summer holiday mops up the money owed.

eg. each worked week earns 1/38th of the total but you only pay out 1/52.

Looking at my local school. Sept- Jan Autumn term + 1/2 term(1w and Xmas(2w).

rounded to weeks
School weeks 14 holiday 3 : accrued 14/38(0.3684) paid 17/52(0.2369)

if someone leaves at the end of term they are owed money.

Tweetinat

getmore4less wrote: »

Annualizing is fine, people like equal payments.

Needs adjusting for starters/leavers that don't fit the standard year cycle.

I suspect if you do the pay accrued against paid as a weekly time line, people are mostly owed pay till the end of the year when the summer holiday mops up the money owed.

eg. each worked week earns 1/38th of the total but you only pay out 1/52.

Looking at my local school. Sept- Jan Autumn term + 1/2 term(1w and Xmas(2w).

rounded to weeks
School weeks 14 holiday 3 : accrued 14/38(0.3684) paid 17/52(0.2369)

if someone leaves at the end of term they are owed money.

I get it, thank you so much that's been really helpful. Thankfully no one to now has ever left mid-way through the term year so I don't think they've ever owed people money but it is very good to know for the future. Thanks again.