Pro rata hours auto calculated pay run

Previously, when a new employee started or, alas, an employee left, the hours to be paid for the employee had to be manually calculated and adjusted in the pay run. We’re happy to say that this is no longer the case. If an employee starts or leaves within the pay period, Employment Hero Payroll will automatically calculate the pro rata hours for you! No manual adjustments required!

Here’s an example of pro rata calculations in action

Let’s start with a new employee, Edward Norrington, who started employment on 12/7/18. He is part of the monthly pay run that runs from the start of the month to the end of the month. He is employed to work on a part time basis – 20 hours per week.

Pay Run Hours (Before)

The hours displayed in the pay run would be for the whole month, regardless of the fact Edward didn’t work the whole month. This is where a manual calculation and adjustment of hours was required:

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Pay Run Hours (After)

The hours calculated in the pay run now apply from the employee’s start date up to the end of the pay period. No manual calculation and adjustment of hours are now required:

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The logic we’ve used to automatically calculate the pro rata hours (using the above example) is as follows:

1. Number of days worked in the pay period / Total number of days in the pay period = 0.64516
2. Total number of hours the employee will be working in the pay period = 86.66667 hrs
3. 0.64516 * 86.66667 = 55.91387, or 55.91 hrs.

What is required to set up automated pro rata calculations?

In order for the pro rata hours to be calculated automatically in the pay run, the following needs to be setup within an employee’s pay run defaults screen:

• There are basic standard hours entered (ie the employee’s standard weekly hours). If ‘0’ hours are entered please don’t expect anything to happen in the pay run!; and
• The setting “Pay these earnings by default in a pay run” is ticked.

(N.B. This enhancement already existed for employees with advanced standard hours set up).

How to know the pro rata hours have occurred in the pay run?

We have added a warning in the pay run to highlight when an employee has pro rata hours in the pay run, as follows:

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As a result, this will:

1. Highlight new and terminated employees without having to keep reminder notes;
2. Allow for checking of the correct start/termination dates have been setup for the employee;
3. Ensure that any exceptional situations are double checked, ensuring accurate superannuation calculations are ready for the Payday Super reform.

How does this benefit businesses?

Have you had scenarios where:

• A new starter was included in the pay run but was overpaid because the hours weren’t adjusted to account for the employee not working the full pay period?
• A terminated employee’s hours weren’t adjusted to reflect the end date within the pay period and was consequently overpaid?
• Trying to calculate the pro rata hours required a calendar, calculator and extreme patience?

No one really wants to spend hours processing a pay run or making errors that can be avoided. This enhancement is another tool that will assist users in eliminating manual calculations and processes and getting closer to finalising that pay run!