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

Savvy_Sue

f5morg said:

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.

Over the years, our company has used a number of different payroll providers, and had to provide information in different formats to each one. The universal rule has been, however, that whatever method we use to calculate part months must be consistent.

• If we divide the annual salary by 260 and multiply that by days actually worked / not worked in the month for one person, that's what we must do for all. 
• Or, if we divide the annual salary by 12, and then by the number of days in that month, and multiply by total days up to the date of the change worked / not worked, then that's what we must do for all. 

Worth noting that the results can be very different - let's take the case of someone working M-F whose last working day is 17th September:

• 13 days worked in September, so multiply that by 1/260 of annual salary
• Or, 19 days worked / 11 days not worked, so multiply that by MONTHLY salary divided by 30 (because we always 'finish' people on a Sunday unless they do actually finish midweek). 

Holiday pay is then calculated by their hourly rate x number of hours holiday pay they are owed, and that hourly rate comes from their annual salary, divided by 260, divided by no. of hours worked in a day. 

Statutory pay - SMP, SSP, all the other S pays - are calculated by 'the system' and I have no control over them. COMPANY sick and maternity pay is a different matter, but again, I use the monthly pay divided by number of days in the month x no. of days worked / not worked. 

Now, I said our HR system uses a different method, ie no. of days x 1/260 of annual salary. So if someone is leaving, there will be a figure on the spreadsheet telling me what their final salary should be - and I ignore it. Well, I note it, and see if we're in the same ballpark, and tell the HR people what I've done, because that's not the system we've been using for the last couple of years. The HR system is new, the payroll system is more established. 

I don't know if that helps. 

f5morg

Savvy_Sue said:

f5morg said:

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.

Over the years, our company has used a number of different payroll providers, and had to provide information in different formats to each one. The universal rule has been, however, that whatever method we use to calculate part months must be consistent.

• If we divide the annual salary by 260 and multiply that by days actually worked / not worked in the month for one person, that's what we must do for all. 
• Or, if we divide the annual salary by 12, and then by the number of days in that month, and multiply by total days up to the date of the change worked / not worked, then that's what we must do for all. 

Worth noting that the results can be very different - let's take the case of someone working M-F whose last working day is 17th September:

• 13 days worked in September, so multiply that by 1/260 of annual salary
• Or, 19 days worked / 11 days not worked, so multiply that by MONTHLY salary divided by 30 (because we always 'finish' people on a Sunday unless they do actually finish midweek). 

Holiday pay is then calculated by their hourly rate x number of hours holiday pay they are owed, and that hourly rate comes from their annual salary, divided by 260, divided by no. of hours worked in a day. 

Statutory pay - SMP, SSP, all the other S pays - are calculated by 'the system' and I have no control over them. COMPANY sick and maternity pay is a different matter, but again, I use the monthly pay divided by number of days in the month x no. of days worked / not worked. 

Now, I said our HR system uses a different method, ie no. of days x 1/260 of annual salary. So if someone is leaving, there will be a figure on the spreadsheet telling me what their final salary should be - and I ignore it. Well, I note it, and see if we're in the same ballpark, and tell the HR people what I've done, because that's not the system we've been using for the last couple of years. The HR system is new, the payroll system is more established. 

I don't know if that helps. 

Thanks for your reply! It is interesting to get my head around to see where the error I am experiencing might be coming from.

So apart from government pay, at the moment you use the 1/365 model company wide at the moment? This includes for HR, but you have to convert it to the 1/365 manually, because it/they automatically does 1/260? 

The reason I am interested in this detail is because I am trying to work out if there is a precedent for the payroll being calculated automatically one way when it shouldn't, i.e. in my situation the contract says 1/260, but perhaps some software automatically worked it out another way. For example if they have always used 1/365, but my contract says another thing from a one-off error, what is most important to adhere to?

Can't HR systems cater to what you want instead of you having to do that conversion?

Is it common for the daily rate calculation system to change frequently? Must be hell if you have to change the contracts regularly!

Undervalued

f5morg said:

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.

If you only ever work weekends, what happens in a year when there is one extra (or one fewer) weekend, which I think can happen depending on which day of the week 1st January happens to fall?

Also, what happens if Christmas day and / or Boxing day fall on a Saturday or Sunday?

f5morg

Undervalued said:

f5morg said:

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.

If you only ever work weekends, what happens in a year when there is one extra (or one fewer) weekend, which I think can happen depending on which day of the week 1st January happens to fall?

Also, what happens if Christmas day and / or Boxing day fall on a Saturday or Sunday?

There is allowance in my annual leave for bank holidays so it would be used as auto-annual leave. Otherwise it is a salary so it is the same every month. Using salary calculation is probably easier for them instead of doing hourly timesheets each month for hourly pay and they probably save money because of what you mentioned.

The reason I highlighted the daily rate is because it is useful to know it when calculating partial months, but it is not by daily rate each month. The only time it has affected me is the first month's pay, which is why I am protesting at them using a method which is against my contract and also pays me less. I want to iron it out before I potentially leave.

If there is one extra or one less weekend then it benefits one way or the other. Using the 1/260th model isn't totally exact I think for that exact reason, so I think anyone on that calculation does work for free one day a year at some point.

Undervalued

f5morg said:

Undervalued said:

f5morg said:

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.

If you only ever work weekends, what happens in a year when there is one extra (or one fewer) weekend, which I think can happen depending on which day of the week 1st January happens to fall?

Also, what happens if Christmas day and / or Boxing day fall on a Saturday or Sunday?

There is allowance in my annual leave for bank holidays so it would be used as auto-annual leave. Otherwise it is a salary so it is the same every month. Using salary calculation is probably easier for them instead of doing hourly timesheets each month for hourly pay and they probably save money because of what you mentioned.

The reason I highlighted the daily rate is because it is useful to know it when calculating partial months, but it is not by daily rate each month. The only time it has affected me is the first month's pay, which is why I am protesting at them using a method which is against my contract and also pays me less. I want to iron it out before I potentially leave.

If there is one extra or one less weekend then it benefits one way or the other. Using the 1/260th model isn't totally exact I think for that exact reason, so I think anyone on that calculation does work for free one day a year at some point.

How long have you worked there?

If you raised it initially then let it lie for six years (five in Scotland) it would be statute barred with no legal means of making them pay!

f5morg

Undervalued said:

f5morg said:

Undervalued said:

f5morg said:

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.

If you only ever work weekends, what happens in a year when there is one extra (or one fewer) weekend, which I think can happen depending on which day of the week 1st January happens to fall?

Also, what happens if Christmas day and / or Boxing day fall on a Saturday or Sunday?

There is allowance in my annual leave for bank holidays so it would be used as auto-annual leave. Otherwise it is a salary so it is the same every month. Using salary calculation is probably easier for them instead of doing hourly timesheets each month for hourly pay and they probably save money because of what you mentioned.

The reason I highlighted the daily rate is because it is useful to know it when calculating partial months, but it is not by daily rate each month. The only time it has affected me is the first month's pay, which is why I am protesting at them using a method which is against my contract and also pays me less. I want to iron it out before I potentially leave.

If there is one extra or one less weekend then it benefits one way or the other. Using the 1/260th model isn't totally exact I think for that exact reason, so I think anyone on that calculation does work for free one day a year at some point.

How long have you worked there?

If you raised it initially then let it lie for six years (five in Scotland) it would be statute barred with no legal means of making them pay!

Thanks for that. Started there July 2019. Because I didn't chase it up at the time, I am mostly accepting it as a loss. The ironing out is making sure I would get the right rate if leaving mid-month in the future and also, if they recognise that the calculation has been wrong and accept their error, hopefully they rectify it with others past and present if it was used company-wide.