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Payroll leave calculation 2018.1

Contributing Cover User WaimeaJenny
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Payroll leave calculation 2018.1

MYOB Payroll does not seem to calculate annual leave rates in the dual calculation as per advice from Employment NZ website, that says:

Annual holidays are paid at whichever rate is the higher of:

  • the employee’s ordinary weekly pay at the beginning of the annual holiday, or
  • the employee’s average weekly earnings for the 12 months just before the end of the last pay period before the annual holiday.

Nelson Weekly now uses Xero so Helen and I have been comparing the two systems. The annual leave rate are calculated differently for the MYOB and XERO payrolls. Because our sales people get sales commission at the end of each month, their ordinary weekly pay is not their default ORD rate.  MYOB calculates a leave rate based on average weekly earnings.

 

How does MYOB calculate an employee’s ordinary weekly pay? Thanks

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Ultimate Partner jenniek
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Re: Payroll leave calculation 2018.1

Hi @WaimeaJenny

MYOB uses the normal hours per day, normal days per week (on the leave details screen) x rate of pay to get normal weekly pay. Commissions etc are not part of normal weekly pay. The annual leave is average of the last 12 months earnings divided by normal hours per week as above - if this is greater then this rate is used. Hope this helps.

Regards,
Jennie Kingma
JK Business Systems Ltd, Hamilton, NZ
Email: jennie@jkbusiness.co.nz
Contributing Cover User WaimeaJenny
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Re: Payroll leave calculation 2018.1

Thanks for your reply. I have been getting mixed messages about whether commission payments make up the ‘ordinary weekly pay’, OWP. I have been told any regular incentive based payments make up OWP, but you say otherwise. Do you know where I can find information for my employees from official NZ payroll advice telling them what payments to them make up OWP. Thanks

 

MYOB Moderator Steven_M
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Re: Payroll leave calculation 2018.1

Hi @WaimeaJenny

 

The Employment New Zealand: What is a regular payment for Ordinary Weekly Pay (OWP)? should be able to cover what should be included in that value.

 

In terms of commission payments, my understanding is it comes down to how regular the employee receives that payment. If it is a payment they would likely receive each weekly pay then it would be included in OWP, if it is a one-off payment i.e. for a year's work then like it will not be.

 

If you are unsure best to consult Employment New Zealand or a similar organisation.


Kind Regards,
Steven
MYOB Client Support
Contributing Cover User WaimeaJenny
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WaimeaJenny
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Re: Payroll leave calculation 2018.1

Hi Steve, thanks for your reply. MYOB gives you a leave rate based on average weekly earnings. But if regular commission payments are included in OWP, as per Employment NZ, then why doesn't MYOB payroll assist me to calculate the second leave rate based on the last month of OWP?  At the start of an employees leave period two calculations need to be made and then the higher of the two rates are used.

MYOB Moderator Steven_M
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Re: Payroll leave calculation 2018.1

Hi @WaimeaJenny

 

MYOB Payroll (Desktop) will use the Average Weekly Earnings or Ordinary Weekly Pay whichever one is higher. You can see what individual values that make up those values through the Leave option on the Enter pays window and selecting the button with three dots for the Annual Leave due line. This will bring up a window similar to:

 

Attachment2.PNG

 

Note: The buttons with the three dots allow you to drill in further on those values.

 

 

In terms of Ordinary Weekly Pay, if you wish for a value to be included in that you would need to navigate to the Pay Defaults/Totals tab of their Maintain Employee record, ensure that you have entered a quantity and rate.


Kind Regards,
Steven
MYOB Client Support
Contributing Cover User WaimeaJenny
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WaimeaJenny
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Re: Payroll leave calculation 2018.1

Hi Steven, thank you for this. You say "In terms of Ordinary Weekly Pay, if you wish for a value to be included in that you would need to navigate to the Pay Defaults/Totals tab of their Maintain Employee record, ensure that you have entered a quantity and rate".  I am not sure what you mean.  My payroll is every 2 weeks, sales staff get a base rate every two weeks and then at the last payroll of the month I enter monthly commssion amount under a separate code 'month commission'.  This 'month commission' amount is not being included in the OWP calculation for leave, so how do I get MYOB to automatically include this monthly payment in the OWP total for the leave rate calc? Do I have to use a ORD code?

MYOB Moderator Steven_M
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Re: Payroll leave calculation 2018.1

Hi @WaimeaJenny

 

There are two ways in which the Ordinary Weekly Pay is calculated it is either based on the Normal Weekly Pay Rate or the Pay Defaults*, whichever is higher. These can be seen by selecting the button with three dots on the Leave Rate Calculation window accessed through the Leave option mentioned in my previous post.

 

When Pay Defaults is used is it based on the pay codes that you have included in the Pay Default tab of that employee. For example, if you regularly pay your employees ORD and overtime you would enter those two values in the Pay Defaults/Totals tab. This will flow through to the second option in the Ordinary Weekly Pay calculation:

 

Attachment2.PNG

 

*There is a third option to calculate the Ordinary Weekly Earnings if the other values are unclear, such as if the employee works varying hours or a large value that is not paid each pay but might be included in their Ordinary Weekly Pay calculations. This is Average Weekly pay and used the last 4 weeks of Gross Earnings to calculate that rate. This can be used by selecting that Use Average Weekly pay option in the Ordinary Weekly Pay window.


Kind Regards,
Steven
MYOB Client Support
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