MYOB Payroll - reduction in payrate

[Leah_ChCh]

Hi all,

An employee has been asked to permanently take a 20% reduction in pay but is concerned that the 30 annual leave days owing at this stage will start to reduce in rates to reflect the deduction.  They are concerned that there will be 'double dipping' ie: rate say currently $40/hr annual leave but this will reduce over the coming weeks to $32/hr.  Is he correct with his reasoning?

Thanks for your time.

[jenniek · Accepted solution]

Hi @Leah_ChCh 

Your employee is correct. While his leave entitlement will stay the same - the average of the last 52 weeks pay will decrease over time - so his existing $40.00/hr will come down as time goes on. This is because annual leave is calculated at the average of the last 52 weeks gross earnings - when he takes annual leave - so it is a roving figure which changes every week. It will take a year to decrease fully - assuming he doesn't earn any overtime, bonues etc that may affect gross earnings.