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.
Paying Exact Hours
There are circumstances where you may want to pay exact hours, rather than any of the default options.
If this is so, this can be changed from the Payroll Calculation Options.