Ordinary Weekly Pay Calculation is incorrect

Contributing User Gillian_R
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Ordinary Weekly Pay Calculation is incorrect

On the Annual Leave rate calculation screen the calculation for Ordinary Weekly Pay (OWP formula) in Essentials is incorrect.
This calculation should be Gross Earnings for the last 4 weeks divided by Contracted hours for the last 4 weeks.
However Essentials is using the Gross Earnings for the last 6 weeks divided by the contracted hours for the last 4 weeks and thereby giving an hourly rate that is wrong and over inflated by 50%.

Eg instead of giving a rate of $40/hr Essentials is calculating the rate to use as $60/hr.

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MYOB Moderator Steven_M
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Re: Ordinary Weekly Pay Calculation is incorrect

Hi @Gillian_R 

 

The Ordinary Weekly Pay formula for an employee when taking leave in MYOB Essentials NZ is based off the value that the user has entered in the Employee details section for that employee. It will use the Hours per week over days function to determine the weekly hours and multiplies that by 4 to get the Ordinary Weekly Pay. For example, if the Employee record shows 10 hours per week x days, it will give you an Ordinary Weekly Pay: Total contracted hours for 4 weeks of 40.

 

If you are seeing an unusual value in that Ordinary Weekly Pay formula I would recommend navigating to the Employee detials>>Pay details section of that employee and reviewing the hours per week over days values.

 

Note: If changes are made to the Employees record don't forget to select Save after making that change.

Kind regards,
Steven

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Contributing User Gillian_R
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Re: Ordinary Weekly Pay Calculation is incorrect

Hi Steven_M

 

The employee records are set up correctly. On the Annual Leave Rate Calculation screen the hours are calculated correctly.

 

It is the Gross Earnings for the past 4 weeks that is incorrect. Essentials is using the gross earnings for the last 6 weeks, instead of using gross earnings for the past 4 weeks (In my case this is 2 pays as the employee is paid fortnightly).

 

In the attached example Gross Earnings should be $4,377.60 (2,175+2,202.60), not $6727.60.

 

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Re: Ordinary Weekly Pay Calculation is incorrect

Hi @Gillian_R 

 

The system is based on pay on date, so it will take 4 weeks from the current pay on date and work out the total gross earnings for that period. 

In your case, I would recommend going into the pay history for your employees and reviewing the actual payslips to get the paid on date (don't use the period dates). Once you have that, you can take the pays that fall in the 4 weeks period (between the current pay on date and the last fours weeks) to work out the Ordinary Weekly Pay formula.

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Steven

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Contributing User Gillian_R
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Re: Ordinary Weekly Pay Calculation is incorrect

Hi Steven_M

 

In the example I sent you the 'pay on date' for the pay being processed is 5Nov.

 

The pay on dates for the 3 previous pays as shown in the pay history are 22Oct, 8Oct and 24 Sep respectively. 

 

So the issue is that Essentials is incorrectly including the $2,350 that was paid on 24Sep.

MYOB Moderator Steven_M
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Re: Ordinary Weekly Pay Calculation is incorrect

Hi @Gillian_R 

 

Speaking with our NZ Payroll team, MYOB Essentials will actually take the To date as part of that calculation. What happens is, as Ordinary Weekly Pay is calculated on the 4 calendar weeks before the end of the pay period immediately before the calculation is made, the system will take the date prior to the To date of that pay as the basis of the calculation. While using the pay on date to determine when each pay fall.

 

For example with your situation:

The next pay you would process would be for the period 21 October to 3 November (paid on 5 November). Four weeks prior to the To date is 23 September. As the system uses that Pay on Date of the 24-September for that older pay it is including that pay as part of the ordinary weekly pay calculation.

Attachment2.PNG

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Contributing User Gillian_R
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Re: Ordinary Weekly Pay Calculation is incorrect

Hi Steven_M

 

Thank you for your explanation as to how MYOB is calculating the OWP formula incorrectly.

 

The ‘Paid on Date’ should be ignored as this is irrelevant when calculating the earnings for the previous 4 weeks.

 

To fix the error Essentials needs to be changed so the calculation takes the gross earnings for the previous 4 weeks. In my case this would be the earnings for the period from 23 Sept to 20 Oct, ie 28 days.

 

I note that in your chart that the OWP basis From Dates are wrong. The dates should be 12Aug, 26Aug, 9Sep and 23Sep.

 

What is the time frame for getting the OWP formula corrected?

 

Regards Gillian

MYOB Moderator Steven_M
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Re: Ordinary Weekly Pay Calculation is incorrect

Hi @Gillian_R 

 

My understanding of the Holiday Acts and other documentation, the Holiday Acts only dictates that the employee's gross earnings for is set to be the 4 calendar weeks before the end of the pay period immediately before the calculation is made. It doesn't go into how that 4 calendar weeks is interpreted i.e. whether it is based on pay on date or period. Generally speaking, for the majority of purposes pay on date is used as that is when the employee is receiving the funds.

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Steven

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Contributing User Gillian_R
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Re: Ordinary Weekly Pay Calculation is incorrect

Hi Steven_M

 

If MYOB only used Paid on Date then the wages paid on 22oct should not be included in the calculation as those wages are outside of the OWE basis to/from dates in your chart above.

 

The calculation is using both the period the wages are for AND the paid on date. This means it is picking up 6 weeks of gross pay and dividing it by 4 weeks of hours so the hourly rate is overinflated by 50% and obliviously incorrect.

 

Please transfer this issue to a Senior Moderator. Michael P who used to work on the Christchurch helpdesk would be great or someone else who has the same level of his payroll knowledge.

 

Regards Gillian

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Re: Ordinary Weekly Pay Calculation is incorrect

Hi @Gillian_R 

 

To my understanding and after this Employment New Zealand document on Ordinary Weekly Pay vs Average Weekly Earnings the process you would use is to on to the end of the last pay period before the holiday was taken (i.e. the To date on the last pay), from there, go back 4 weeks. Based on that information, the period of calculation is as follows - i.e. the From date is 11 August, 25 August, 8 and 22 September for your particular pays:

 

Attachment.PNG

 

Having said that, I have passed this case across to our dedicated NZ Payroll team to have a look at and make recommendations to the product team to review that calculation to ensure that MYOB Essentials Payroll is calculating in accordance with the Holiday Act and the guidelines specified. 

Kind regards,
Steven

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