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CTL's avatar
CTL
Trusted Partner
5 years ago
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Worker's Comp reduced to 65% of average earnings

I have a bit of a tricky scenario that I need some help with please.  We have an employee on worker's comp that has completed the first 26 weeks of average earnings payments.  I have now been instructed by the insurance company to only pay 65% of average earnings.  The average earnings is a combination of base hourly and overtime so when paid at the full rate, the payroll system currently picks up the base hourly for Superannuation Guarantee while on Worker's Comp.  My problem is how do I set up the system to pay only 65% of average earnings and only pick up the base hourly component for the Super Guarantee.

 

I think I might need a new payroll category that reduces by 65%.  If this is the case, will I need four new payroll categories to reduce base hourly, overtime 1.5, overtime 1.75 and overtime 2.0 by 65%.

 

Changing standard pay in the card file is not an option as we import payroll from our project management system.

  • Steven_M's avatar
    Steven_M
    5 years ago

    Hi CTL 

     

    Sorry I did slightly misinterpret the original enquiry based on the information that was originally provided.

     

    If you want the superannuation to be calculated on the reduced wage amount then you would be looking at creating a wages payroll transaction that has the employee linked to it which is based on the reduced amount. You would also need to ensure that calculation basis for your superannuation category is set to be x% of gross wages and have ensured that the new category is NOT exempt i.e. NOT ticked in the exempt window of that superannuation category.

     

    By doing this, you will have another payroll category on the employee's pay that you would place the number of hours against, which will pay them the reduced amount and have superannuation calculate on that reduced amount.

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  • Steven_M's avatar
    Steven_M
    Former Staff
    5 years ago

    Hi CTL 


    If I have understood the situation correctly, you basically want a payroll set up like the following pay:

    • Which is overall paying the employee $1,500 (across Base Hourly and Overtime)
    • But the employee is actually being paid 65% of that $1137.50
    • While still having the superannuation calculating on the full amount of Base Hourly

    I've removed PAYG for this particular pay to keep it simple

     

    The following has been achieved by:

    • Creating a deduction category for that employee. This deduction has the calculation basis of 35% of Gross Wages and can be created via Payroll>>Payroll Categories>>Deductions>>New. What this deduction category will do is reduce the employee's gross earnings to be 65%, by deducting 35% of it.
    • The superannuation category has been set up have the calculation basis of 9.5% of Gross Wages. I've exempted the categories that I don't wish to have been included in that calculation i.e. Overtime.
    • CTL's avatar
      CTL
      Trusted Partner
      5 years ago

      Hi Steven_M 

      Thanks for your reply.  Sorry, it appears my post was a tad confusing.  Here is the break down of the wages:

      Average wages:  $1,400.00 ($1,064.00 base hourly and $336.00 overtime).

      Reduced wages:  $1,400.00 x 65% = $910.00 ($691.60 base hourly and $218.40 overtime).

       

      How do I pay super guarantee on $691.60?  Can I reduce the original hourly rate of $28.00 x 65% = $18.20 or is there another way of doing it?  Thanks Steven, I appreciate your help with this.

      • Steven_M's avatar
        Steven_M
        Former Staff
        5 years ago

        Hi CTL 

         

        Sorry I did slightly misinterpret the original enquiry based on the information that was originally provided.

         

        If you want the superannuation to be calculated on the reduced wage amount then you would be looking at creating a wages payroll transaction that has the employee linked to it which is based on the reduced amount. You would also need to ensure that calculation basis for your superannuation category is set to be x% of gross wages and have ensured that the new category is NOT exempt i.e. NOT ticked in the exempt window of that superannuation category.

         

        By doing this, you will have another payroll category on the employee's pay that you would place the number of hours against, which will pay them the reduced amount and have superannuation calculate on that reduced amount.