Final Pay

Mildmanneredman

Hello guys,

Just helping someone out with final pay calculations and could do with some opinions. 

Annual Salary 32k  = Monthly £2666.67 Gross

Final pay received =  £1333.33 Gross

We queried this as they were expecting about 75% of full months pay due to having took one week off unpaid since last pay cut-off which is mid month. 

We got the following answer:

'You are salary paid so you wages was worked out as follows: 2666.67/30 days in April x 15 days worked = 1333.33'

We then queried this again as it seems to suggest you would have to work 30 days to get full pay - They work a 40 hour 5 day week across 7 days. Clearly they would never have received a full pay in any previous month if that was correct as you don't work every single day.

We suggested the day rate should be calculated as follows:

32000/260 (working days in a year) x 15 days worked = £ 1846.15 Gross (about what we expected before any sums)

OR

32000/12/21.66 (number of working days in a month) x 15 days worked = £1846.72 (more or less the same)

We got the following reply:

"So, based on your calculation below, you left on 15th April, so that would give you 10 working days based on 260 which is a Monday-Friday calculation:



32000/260*10 = 1333.33

OR 

32000/12/20 working days in April  = 2666.67 / 21.66 x 10 = 1333.33

OR 

32000/12/21.66 X 10 = 1231.15

So which way would you like us to calculate this as based on the above if we do it the way you request on working days in a year then you have been overpaid by £102.56 or £102.18"

Are we missing something here? How can it change from 15 working days owed to 10 working days owed. Surely the starting point is, how many days you are owed and then what is the correct formula to get the day rate and x by the days owed...Changing how you calculate the day rate isn't going to change how many days are owed is it? So how can they say 15 days worked then say 10 days..? Cut off point is mid-month salary paid in arrears last day of the month not sure of precise date for cutoff (will try and look up from previous correspondence, but 15 days worked since end of last cutoff sounds about right.

Sorry for epic!

Moderately annoyed mild mannered man

Altior

Even though it's salaried, there is an implied hourly rate. Annual gross / 52 / contracted weekly hrs = hourly rate.

Once you have the implied hourly rate, simply multiply this by the implied hours worked after the payroll cut off.

The implied hourly rate is quite often included on the payslip. 

Altior

A footnote to that is that they could also be accruing AL along with that, right up to leaving date, though if they have taken unpaid leave, that may well not be the case.

TheSpiddalKid

This reply from me comes from another thread with a similar questions

TheSpiddalKid said:

The legal default for a day's pay is to use 1/365th, this is set out in the Apportionments act. A case related to it was in the Supreme Court a few years ago, it related to the deduction of a day's pay owing to strike action and how the deduction should be calculated.

https://www.hcrlaw.com/blog/calculating-deductions-salary-response-strike-action-supreme-court-provides-clarification/

Other methods can be used but the method of calculation should (heavy emphasis on should) be part of a contract or agreement.

In reality, it is often not but is based on custom and practice. 

Savvy_Sue

I'd use their method: monthly salary / days in month / days to leaving date.

I don't like it, but it's applied consistently. 

tizerbelle

Mildmanneredman said:

Are we missing something here? How can it change from 15 working days owed to 10 working days owed. Surely the starting point is, how many days you are owed and then what is the correct formula to get the day rate and x by the days owed...Changing how you calculate the day rate isn't going to change how many days are owed is it? So how can they say 15 days worked then say 10 days..? Cut off point is mid-month salary paid in arrears last day of the month not sure of precise date for cutoff (will try and look up from previous correspondence, but 15 days worked since end of last cutoff sounds about right.

What are you meaning by payroll cutoff?  Usually cut-off means the date you have to have you timesheets/claims in to be included in the current pay period.  Of itself it has no relation to the period you are being paid for.  We had a cut-off date of the 12th of April but April pay (paid in arrears on 28 April) covered pay for the period 1 April to 30 April.  

If the week unpaid they took off was after the cut-off period in March(?) does that mean they were paid for those days in March pay and so needed to be deducted from April's pay to correct it?

Mildmanneredman

Savvy_Sue said:

I'd use their method: monthly salary / days in month / days to leaving date.

I don't like it, but it's applied consistently. 

Hi Sue,

Unless I'm not getting something, that method has never been used before. If 15 days pay = half of the months pay, then you would need 30 days worked to get a full months pay, but you don't work 30 days do you, so you could never get paid a full months pay if you did it that way..?

Thanks

Mildmanneredman

tizerbelle said:

Mildmanneredman said:

Are we missing something here? How can it change from 15 working days owed to 10 working days owed. Surely the starting point is, how many days you are owed and then what is the correct formula to get the day rate and x by the days owed...Changing how you calculate the day rate isn't going to change how many days are owed is it? So how can they say 15 days worked then say 10 days..? Cut off point is mid-month salary paid in arrears last day of the month not sure of precise date for cutoff (will try and look up from previous correspondence, but 15 days worked since end of last cutoff sounds about right.

What are you meaning by payroll cutoff?  Usually cut-off means the date you have to have you timesheets/claims in to be included in the current pay period.  Of itself it has no relation to the period you are being paid for.  We had a cut-off date of the 12th of April but April pay (paid in arrears on 28 April) covered pay for the period 1 April to 30 April.  

If the week unpaid they took off was after the cut-off period in March(?) does that mean they were paid for those days in March pay and so needed to be deducted from April's pay to correct it?

Well as far we are aware each pay packet received at the end of the month, isn't actually covering to the end of that month, it's for work done up to the last cutoff point paid in arrears. That would about match the fact that payroll said 15 days work due to be paid, but as you can see that 15 days was suddenly changed to 10 days in order to keep the lower amount owed.

Again, surely you are either owed 15 or 10 days THEN you choose the most appropriate formula to calculate day rate..the formula itself surely can't change how many days work you are owed?

It's possible It could be as you said, that each pay packet covers the 1st to last day of the months - though that doesn't seem to have been the case in the past..In which case then it would be 10 days, but why they are stating 15 days then 10 I'm at a loss.

Mildmanneredman

Regards the unpaid week. That would be taken after cutoff like this:

Paid end of March for mid-Feb to mid-March..Took unpaid week ending 15th April - Pay end of April to cover Mid-March to Mid-April - So the unpaid week should be deducted at the end of April yes..Hence expecting to receive aprox 75% of pay and not half of it..which again corresponds to approx 15 days as opposed to 10 days owed...

Again, it could be as you said that pay period doesn't follow cuttoff, we were under the impression it does, and them saying 15 days then changing that to 10 seemingly as it suits to pay less is causing confusing. Unfortunately the payslips don't actually state what period they are covering..But I know that when they started there it was mid month and they didn't get paid anything at the end of that month..

tizerbelle

I think you need to double check the pay period. Salaried, paid monthly in arrears normally means paid at end of the month for that month.   If there is a gap between the period worked and the pay date - that would be being paid "a week/fortnight/month in-hand.   I would be very surprised if the normal pay period was anything other than a calendar month.  Payroll cut-off dates are generally there to give the payroll team time to calculate payroll.   

The fact that payroll initially said 15 days out of 30 in April and then changed that to 10 out of 30 makes me think that when they said "worked" in the first explanation was just a slip and they meant to say employed - you were employed to the 15th but you only actually worked 10 days.  

So they either calculate on calendar days employed monthly salary / 30 calendar days in April * 15 days employed in April
£2,666.67 / 30 * 15 = £1,333.35

OR, they calculate based on days actually worked = annual salary / 260 * 10
£32,000/260 * 10 =  £1,230.77

Both calculations are correct/acceptable as long as you end up being paid no less than NMW/NLW

tizerbelle

Mildmanneredman said:

But I know that when they started there it was mid month and they didn't get paid anything at the end of that month..

That's normal, if someone joins a company mid-month, they won't be paid at the end of that month quite simlpy because they missed the cut-off point to be included in that month's pay.  But I bet they would have received more than 1 month's pay the next month as they were paid for the part month that they joined in and then the next month in full.