8% Gross Amount incorrect for Termination Pay

[Tenua]

I have sent this email to support but was wondering if others had the same issue....... I am running both MYOB Business Payroll while still running ACE Payroll. I have done a final/termination pay for an employee and the pays are drastically different. (About $360 different on a $450 pay). The difference in calculations is due to the 8% gross calculation. The finishing employee has taken 18.555 days in advance and is finishing just prior to his 2nd anniversary. In ACE the gross calculation EXCLUDES payment for days already taken and paid, but in MYOB Business the gross calculation INCLUDES holiday pay already paid in advance. (So this would result in paying 8% holiday pay on to holiday pay already paid). On the Employment New Zealand website they state........ "Pay 8% of the employees‘ total gross earnings since their annual holidays anniversary date (LESS any amount paid for taking any of this year’s annual holidays in advance or paid on a pay-as you-go basis)".... On this basis, the gross amount in the "Quantity" column in MYOB Business is incorrect. Has anyone else found this?

[Princess_R]

Hi @Tenua,

Thank you for your post, and my apologies for the late response.

In MYOB business, when an employee's holiday leave is paid in advance, the total amount paid will be subtracted from the total holiday pay of 8% (final pay). If the employee's anniversary date happens to fall within their final pay period, the holiday pay calculations might lead to an overpayment. This is because the “gross earnings this pay run” will include the entire pay run, not just the gross earnings earned from the anniversary date onwards. For a more detailed information, please refer to our Help article: Preparing a Final Pay in New Zealand.

Please let us know if you need any further assistance.

Cheers,

Princess

[Tenua]

As previously stated the employee finished just prior to his 2nd anniversary, so his anniversary date didn't fall within their final pay period.  ACE calculated his gross excluding payment for days already taken and paid (which is correct), but MYOB Business calculated the gross INCLUDING his holiday pay already paid in advance (resulting in paying 8% holiday pay on to holiday pay already paid during the year). Had I not been running ACE Payroll side by side to MYOB Business I wouldn't have picked up the error and the termination pay would have been drastically overpaid.     

[Princess_R]

Hi @Tenua,

Thank you for your response.

When processing a final pay in MYOB business, it's important to ensure that all the necessary steps in Processing a final pay are followed correctly. Could you kindly verify whether the leave that was paid in advance has been inputted during the final pay process? This will help us better understand the issue.

Cheers,

Princess

[Tenua]

Hi @Princess_R 

I can confirm that I followed the necessary steps as instructed in "Processing a final pay".  The employee had taken leave in advance but as per Step 9 the correct amount did not automatically get entered into the Total Amount Paid box (or Leave paid in Advance($) as showing on my screen).  I calculated the amount and entered it manually.  Unfortunately over the period of the week where I was continuing adding then deleting his final pay to try and get it correct I never took any screen shots.  I have since gone into another employee that is also in advance of his leave entitlement to get an example of the different calculations between the two different payroll systems.  In this example ACE would have me paying the employee $191.53 for his final holiday payment.  MYOB Business has me paying $330.21.  As you can see from the ACE printouts their Gross used for percentage calculations is LESS the holiday pay already paid ($25,254) whereas MYOB Business has the Gross Quantity of $27,083 which includes $1,828 of leave paid in advance.  This results in paying 8% on to holiday pay already paid.  MYOB Business deducts the holiday pay paid AFTER the calculation of Gross is done. (So in theory this would result in getting holiday pay on holiday pay would it not?). 

[Princess_R]

Hi @Tenua,

Thank you for your response, and I regret the delay in my response.

I understand your concern about the discrepancies between the final pay calculations in ACE and MYOB Business, especially regarding the leave paid in advance. In MYOB Business, the Gross Quantity includes the leave paid in advance, which is then deducted after the calculation of Gross is done. This might result in higher final pay compared to ACE, which deducts the holiday pay already paid before the Gross calculation. This could indeed result in what you referred to as "holiday pay on holiday pay". I suggest reviewing your payroll reports and consulting with your accounting advisor to ensure accurate reporting and meeting all compliance obligations.

Please feel free to reach out if you require further assistance.

Cheers,

Princess

[Tenua]

Hi @Princess_R 

I will continue running the two payroll systems as it is obvious to me (without needing to contact my Accountant) that MYOB Business is incorrect and MYOB ACE is in fact correct.

Please refer to the attachment from Employment New Zealand where I have highlighted that it states that you "Pay 8% of the total gross earnings since their annual holidays anniversary date LESS any amount paid for taking any of this years annual holidays in advance".

May I suggest you forward this to your development team. 

[Princess_R]

Hi @Tenua,

Thank you for your response, and my apologies for the delay in getting back to you.

I can see your point and understand the inconsistency in the MYOB business calculation. I truly value your patience and understanding in this matter. I will be passing on this information to the appropriate team for a more in-depth investigation. Please be assured that our team will thoroughly examine this issue. I will also make it a point to keep you informed as soon as I receive any updates from the team. 

In the meantime, please feel free to start a new post if there's anything else I can assist you with.

Cheers,

Princess