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BASE HOURLY RATE INCORRECT ON PAY ADVICE

North

Attached are two pay advice for one employee which contain errors and we ask for your assistance in sorting out this problem.

Pay advice dated 15 July shows an incorrect rate for the base hourly - resulting in the employee being slightly underpaid. All other info on that pay advice is correct.

Pay advice dated 9 September shows an incorrect base hourly rate ($46.940 instead of $30.46) and incorrect hours (14.8 hours instead of 22.8) though the dollar amount is correct.

This employee has been paid weekly since 1 June 2015 with no problems.

His card is set up with a standard pay of 38 hours (7.6 hours per day) plus RDO accrual, 5 fares.

The different thing at the moment is that he is on partial Workers Compensation each week.

Workers Comp payroll category is set us as user entered for $ and hours as both vary each week. This is not a new payroll category and has not caused problems with other employees. (copy set up attached)

WC is paid on an 8 hour day no RDO.

This has happened when he has received both WC and RDO.

Any insight you can provide will be much appreciated.

Many thanks

Catherine

Workers Comp payroll category set up.png

9 sept.pdf

15 july.pdf

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Accepted answers

Tracey_H

Hi @North

If you have ticked Automatically Adjust Base Hourly or Base Salary details the software will do the required adjustments to make sure the gross wage is the same as the standard pay. To do this it adds up all pay categories except Base Hourly, deducts that figure from the gross amount and then divides that figure by the hours allocated to Base Hourly. This gives the calculated rate.

Example 1:

employee's Base Hourly rate is $20, gross standard pay is $760
Automatically Adjust Base Hourly or Base Salary details is not ticked
Work Cover has a Fixed Hourly rate of $25

As Automatically Adjust Base Hourly or Base Salary details isn't ticked the software doesn't need to keep the gross pay at the standard pay amount. So Base hours are calculated at the Base hourly rate and gross and net wages amount increases.

Example 2:

the only difference from example 1 is that Automatically Adjust Base Hourly or Base Salary details is ticked

The software needs to keep the gross wages amount at $760, so it deducts the work cover amount from gross wages, $760 - $250 = $510. $510 divided by 28 hours is $18.21 calculated rate.

Example 3:

Automatically Adjust Base Hourly or Base Salary details is ticked
I've changed the Work cover Fixed Hourly Rate to $22

The calculated rate has changed because $760 - $220 = $540, $540 divided by 28 hours = $19.29 calculated rate. But the gross and net amounts are the same as example two.

How you set up your Work Cover payroll category depends on whether you want the gross wage to stay the standard pay or if the employee is paid extra. If they are being paid extra you can use a Fixed Hourly Rate, just don't have Automatically Adjust Base Hourly or Base Salary details ticked. You don't need to change the standard pay, when you process the pay just manually change the Base Hourly hours.

I hope that clarifies it for you.

Please let me know if you need further help.

If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.

All comments

North

Thank you for your reply, we will untick automatically adjust base hourly but we still need clarification re payment of Workers Compensation.

Our employees have one pay rate for everything (base hours, personal leave, annual leave etc) except Workers Compensation.

WC is paid at a different rate for each employee. The rate is set based on their PIAWE.

The payroll category choices are regular rate (which it never is - the rate is always higher than their regular rate)

or Fixed Hourly rate - and you're saying that we shouldn't use FRH as that will cause the software to automatically adjust the calculated rate.

So am I correct in saying the solution for us is - if an employee is going to be paid WC we must remove the standard pay before we start the pay run.

Thanks for your asi

Tracey_H

Hi @North

Thanks for your post and the screenshots. Having a look at the Workers Comp payroll category you've got Automatically Adjust Base Hourly or Base Salary details ticked. When this is ticked and you record hours and amounts to that payroll category the base hourly payroll category will be adjusted so that the gross amount is equal to the standard pay at that time. You've also got Fixed hourly rate selected which will cause the software to automatically adjust the calculated rate.

For example:

A normal pay, the standard pay is Gross $1335 - Base Hourly 38 x rate of $32.50 and Unpaid Breaks 5 hours x $20ph

A pay with Personal leave. The Personal leave payroll category is set up with a Fixed Hourly rate of $25 and Automatically Adjust Base Hourly and Base Salary details is ticked:

The Calc Rate isn't the hourly rate, it's the calculated rate to get to the required amount. So the software adds all categories except Base Hourly then deducts that figure from the standard pay amount. This gives the base hourly amount that needs to be paid to keep the gross pay at the standard pay amount:

Unpaid Breaks $100
Personal Leave $190

Equals $290

Gross (standard) pay $1335 minus $290 equals $1045.

$1045 divided by 30.4 hours equals calculated rate of $34.38

If Automatically Adjust Base Hourly or Base Salary details is not ticked the Personal leave amount is just added to the gross pay so no adjustments are required:

I hope that makes sense. Please let me know if you need further help with this.

If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.