Buddy's payroll calculations, especially when using AccuPay™, are designed to calculate hours as accurately as possible.
Users are still given additional settings to customise how hours are calculated and presented in payslips. To access these settings:
- Go to Company Settings
- Under Rules, Click Payroll.
Setting A
- When using timesheets always pay exact hours and not average hours. i.e. Do not use 173.33 hours for monthly payslips
This setting will allow you to edit base hours for all employees. If you Process Timesheets, the base hours will equal the hours worked and leave inputted before processing, excluding any overtime hours.
Setting B
- Pay newly engaged or terminated employees based on actual hours worked, not on an average calculation
This setting will allow you to edit the base hours only for employees who are terminated or engaged within that period. If the hours are not edited, the calculation will still be calculated pro-rata as to the Buddy Rule Book.
Setting C
- When using AccuPay™, Calculate Target Hours Based on Employee's Working Days
This third option will not directly impact the basic hours, but rather the Target Hours in the Process Timesheets functionality. When enabled, the Target Hours will utilise a formula of weekly hours divided by the number of weekdays, rather than enforcing a Monday to Friday, 8-hour daily standard.
This will impact overtime calculations as well as Under Hour results.
Setting D
- Round .33 hours to 1/3 and .67 hours to 2/3
This setting is used to enable or disable the use of a recurring number during payroll calculation.
When Rounding is applied, any value after 0.33x and 0.67x will be ignored.
Difference between Pay Exact and Variable Hours
When employees work different hours daily / weekly / monthly, the option to set these employees on Variable Hours will need to be enabled on Buddy from the employee's Salary Details.
Although you can pay the same base hours with either option, the difference comes when calculating elements like Holiday Pay and annual entitlements.
If the employee is set to fixed weekly hours in their Job & Salary, this information will be used for such calculations, regardless of the exact hours in the payslip. On the other hand, if the employee is set on Variable Hours, then the calculations will be pro-rata based on the worked and earned amounts.
Make sure to choose and select the best options for your payroll.
Pro-Rata Calculation of Basic Hours
The basic hours and pay of an employee who is terminated or engaged within the pay period will be calculated pro-rata. The pro-rata mechanism can be selected from:
- Settings
- > Payroll
- > Payroll Calculation
These include three options:
- Salary Mechanism (3 mechanisms available)
- Number of Weeks in a year
- Number of Days in a year (used for Calendar Days in Period)
Default Pro-Rata: % of Period Worked
The default mechanism is to take a percentage of the period work, based on the available working days.
For example, if an employee works a 40-hour week basis when paid monthly, this would amount to 173.33 hours.
However, if an employee on the same contract is engaged on 18th January 2021, then, the basic hours would be calculated as:
worked days ÷ working days in pay period x basic hours in pay period
In this case, then, this would be calculated as:
10 ÷ 21 x 173.33 = 82.54 hours
The same calculation would be applied to the basic pay value. If the monthly salary is equivalent to £2000, then this month's basic pay would be:
10 ÷ 21 * £2000 = £952.38
Days Worked Mechanism
The second option is to use the exact days worked.
If an employee worked for 5 working days at 40 hours per week, then their pay would be equivalent to 40 hours.
Calendar Days in Period Mechanism
The Calendar Days disregards the working schedule and pays the employees based on the number of calendar days.
If an employee worked from the 1st to the 15th of a month before termination, then Buddy will calculate 15 working days.
The day rate will be calculated based on the annual salary divided by the number of days in a year, which can use a constant (364, 365, 366) or set a variable based on the current year.