Pro-rata mid-month salary, part time employee day rate calculation, 1/365 or 1/260th

f5morg

Hope whoever reads this has a pleasant day, would appreciate some assistance in demonstrating how I may be right or wrong regarding how my employer calculated my salary.

I had a query about my payslip when I started a job in 2019, when I asked about it HR never replied so I forgot. After recently looking for a certain email I was reminded again and checked with payroll as something still feels like it is wrong, however they said it was calculated correctly. It is not for a large amount, but it is the principle and I want to hope that when I leave they calculate my salary for a partial month correctly.

FOR EXAMPLE: - If the annual salary full time was £19890 and I was working 0.4 (weekends) so £7956 annually, £663 p/m. 
I started July 2019 and contract began on 6th. I worked all of the possible working days in that month for me.
They paid me £556 for that first month.
When I recently queried they said the monthly salary is calculated over the days in the month, i.e. 31 in July. From the email - "Monthly salary/days in month/days worked", i.e. ((7956/12)/31)*26).

This is wrong by my calculation, dividing an 0.4 salary by 1.0 equivalent days in the year doesn't make sense, or does it?
To get the day rate by 1/365 it would have to be calculated like for like, either £19890/365 calendar days (full time calculation) or £7956/146 calendar days (part time 0.4 calculation) - is that correct? After that you would multiply that answer by (26*0.4), which gets you 566 roughly, so it seems that if they were doing 1/365 then they still got it wrong.

However after checking my contract it says a days salary is 1/260th. This means that perhaps it is not just me that has been calculated incorrectly for a starting or leaving salary, unless they assume I will just forget and it was a one off mistake. So it would have been wrong whether 1/365 or 1/260. Plus this calculation wasn't detailed in payslip or when I first asked.

When calculating 1/260th for part time equivalent how do you do it? By my calculation it would be £19890/260 working days to get day rate of £76.50, then multiply by 8 for the 8 working days that I worked in July 2019 to get £612.

If you don't mind looking through to check my calculations that would be useful as I want to make sure I am right before I tell them what I believe may be wrong. I know it is from a while ago, but I don't want to be short changed again when leaving at least, that is if my suspicions are correct. Thank you

Dazed_and_C0nfused

Unless you post a link to your employer's staff handbook no one can help as, providing NMW rules are met, this is likely to be entirely down to your employer's own rules.

Personally I would say £556 is perfectly normal for the first month.

£19,890 = £1,657.50/month

£1,657.50 x 0.4 = £663

£663 / 31 days (July) = £21.387

£21.387 x 26 days = £556.06

TheSpiddalKid

As noted already, this very much depends on your handbook and contract. For example, in the NHS the Agenda for Change handbook has a clear definition of how to calculate a day, week, and month's pay. 

There is likely to be quite some leeway for the employer to define how it calculates this. What may carry some weight is the Apportionment Act 1870 and a case a few years ago relating to deductions due to strike pay, where it was found 1/365 was the correct calculation in that case. But I wouldn't place too much weight on this if your employer can show it's custom and practice has been different and has been consistently applied for a period of time. 

f5morg

Thanks for your replies; in terms of my paperwork:-

A section from my company’s intranet handbook - "Effect of leaving the company on annual leave...Where you have taken more or less than your accrued holiday entitlement in the final year of your employment a proportionate adjustment will be made by way of addition to or reduction from (as appropriate) your final gross pay, calculated at 1/260th of Full Time Equivalent salary for each day's pay (calculated pro-rata for part time equivalent), up to a maximum of 28 days (including bank/public holidays). If the reduction required is greater than your final gross pay, you will be requested to repay the balance."

From ‘remuneration’ section of my contract - "Your full time salary will be £19,890 per annum which in pro rata terms equates to £7,956 per annum…For the purpose of calculating any salary payment due to you for whatever reason (including holiday), one day’s pay shall be equal to 1/260th of your annual basic salary."

From pay and reward section of intranet handbook - "As part of the pay review process, the Company will commit to increasing the salaries of the lowest-paid employees to at least the Living Wage and London Living Wage (for employees in London) for that year. This increase will be applied with effect from 1 August each year."

If one day’s pay is 1/260th according to my contract (19890/260=76.5) then 8 working days is £612. £76.50 is what I got for a day’s annual leave and a day’s overtime. I’m not sure why the daily rate would be different for a partial month.

If you divide my monthly salary by 31 days and multiply by 26 then that’s assuming a day’s pay is 1/365 and that I work full time, or am I mistaken?

Marcon

f5morg said:

Thanks for your replies; in terms of my paperwork:-

A section from my company’s intranet handbook - "Effect of leaving the company on annual leave...Where you have taken more or less than your accrued holiday entitlement in the final year of your employment a proportionate adjustment will be made by way of addition to or reduction from (as appropriate) your final gross pay, calculated at 1/260th of Full Time Equivalent salary for each day's pay (calculated pro-rata for part time equivalent), up to a maximum of 28 days (including bank/public holidays). If the reduction required is greater than your final gross pay, you will be requested to repay the balance."

From ‘remuneration’ section of my contract - "Your full time salary will be £19,890 per annum which in pro rata terms equates to £7,956 per annum…For the purpose of calculating any salary payment due to you for whatever reason (including holiday), one day’s pay shall be equal to 1/260th of your annual basic salary."

From pay and reward section of intranet handbook - "As part of the pay review process, the Company will commit to increasing the salaries of the lowest-paid employees to at least the Living Wage and London Living Wage (for employees in London) for that year. This increase will be applied with effect from 1 August each year."

If one day’s pay is 1/260th according to my contract (19890/260=76.5) then 8 working days is £612. £76.50 is what I got for a day’s annual leave and a day’s overtime. I’m not sure why the daily rate would be different for a partial month.

If you divide my monthly salary by 31 days and multiply by 26 then that’s assuming a day’s pay is 1/365 and that I work full time, or am I mistaken?

The handbook is very clear: day rate is 1/260 of your Full Time Equivalent Pay, which is £19,890/260 = £76.50, as you say above. Trying to break it down month by month is a recipe for a headache, given months don't all have the same number of days!

If you haven't been paid at £76.50 per day work (or for a day's paid leave), go back to HR citing what the handbook says and asking them to reconcile their figures with those in the handbook. 

Savvy_Sue

It's possible for an employer to use either method: our payroll system uses one method, but our HR system has a different one. 

However, if your handbook says it's using the 1/260 method, then that's what the employer should use! 

74jax

If it is £76.50 per day and you work part time. Do you know how many days you have worked and what the salary paid is.

Do you get paid the same each month? 

f5morg

74jax said:

If it is £76.50 per day and you work part time. Do you know how many days you have worked and what the salary paid is.

Do you get paid the same each month? 

Yes, I was and I am part time, weekends only 0.4fte. I am paid a
salary, the same each month, which was £663 p/m at the time. The month in question where I got £553 was the month I started working there, july 2019, so only happened once. My contract started on the 6th july 2019. For that month I worked 8 days, all of the weekends in july. 
The reason I am questioning something years old is that I came across the email recently when hr didnt reply to me - the email where I asked about the calculation. So thought I'd challenge again so I can make sure they'll calculate correctly in the future if/when I leave mid-month. Also, I am potentially not the only person this has happened to.

f5morg

Savvy_Sue said:

It's possible for an employer to use either method: our payroll system uses one method, but our HR system has a different one. 

However, if your handbook says it's using the 1/260 method, then that's what the employer should use! 

Thank you, I have a feeling that I am right about this, but I guess there is always potentially a loophole I don't understand. How does that manifest using two different systems for payroll and HR? What is the other method? Which things are hr and which are payroll e.g. is that the difference maternity pay, sick pay etc and salary and holiday pay? Maybe this is similar to what my company is doing.

f5morg

Marcon said:

f5morg said:

Thanks for your replies; in terms of my paperwork:-

A section from my company’s intranet handbook - "Effect of leaving the company on annual leave...Where you have taken more or less than your accrued holiday entitlement in the final year of your employment a proportionate adjustment will be made by way of addition to or reduction from (as appropriate) your final gross pay, calculated at 1/260th of Full Time Equivalent salary for each day's pay (calculated pro-rata for part time equivalent), up to a maximum of 28 days (including bank/public holidays). If the reduction required is greater than your final gross pay, you will be requested to repay the balance."

From ‘remuneration’ section of my contract - "Your full time salary will be £19,890 per annum which in pro rata terms equates to £7,956 per annum…For the purpose of calculating any salary payment due to you for whatever reason (including holiday), one day’s pay shall be equal to 1/260th of your annual basic salary."

From pay and reward section of intranet handbook - "As part of the pay review process, the Company will commit to increasing the salaries of the lowest-paid employees to at least the Living Wage and London Living Wage (for employees in London) for that year. This increase will be applied with effect from 1 August each year."

If one day’s pay is 1/260th according to my contract (19890/260=76.5) then 8 working days is £612. £76.50 is what I got for a day’s annual leave and a day’s overtime. I’m not sure why the daily rate would be different for a partial month.

If you divide my monthly salary by 31 days and multiply by 26 then that’s assuming a day’s pay is 1/365 and that I work full time, or am I mistaken?

The handbook is very clear: day rate is 1/260 of your Full Time Equivalent Pay, which is £19,890/260 = £76.50, as you say above. Trying to break it down month by month is a recipe for a headache, given months don't all have the same number of days!

If you haven't been paid at £76.50 per day work (or for a day's paid leave), go back to HR citing what the handbook says and asking them to reconcile their figures with those in the handbook. 

Thanks, I plan to email again and try to write it clearly and in a polite way. Most people might write off such an old claim, but it was annoying me and need to know how pay works for when I leave. So, for all intents and purposes, daily rate, 1 day holiday pay, 1 day sick pay and 1 day of overtime (below full time hours for the week) should be equal? 1 shouldn't be 1/365th and the other 1/260th should they?

74jax

Could you email saying something like
January 4 days x 76.40 = xx, received xx
February 6 days x 76.40 = xx, received xx
Etc
Then list the year xx days at £76.40 = xx, received xx

And see at the end of the year what you are owed (if any).  That might be easier for them?