Algorithm for system calculation of part month salary

If an employee earning a salary of £48k leaves after working five days of a thirty one day month that started on a Monday they would be paid 5/31 X £4,000 = £645.

If the same employee leaves after working five days in February, when it doesn't start on a Monday, they would be paid 7/28 X £4,000 = £1,000. That's 55% more, just because of the date on which they gave notice.

Bonkers.

That is a very strange thing. I can kind of understand the 4 or 5 week thing meaning in effect you are paid more per day in a four week month than you are in a five week month, but including days you aren't contractually required to work in calculating earnings makes no sense.

Can we calculate overtime based on those rules? I don't think so! If someone works a Saturday who usually only works Monday to Friday, should we take their salary for the month and divide by the number of calendar days in the month, and then pay them that (times 1.5 or 2 or whatever) for the extra day??! I'd like to see the manager brave enough to try. The day rate used for overtime should be the same as the day rate used for part months shouldn't it? What logic can there be for them being different?

I don't dispute what you're saying, but it has the potential for a few employee relations issues. I wonder what the trades unions think about it?

Or better still, have alternative options in settings, so users can pick the method that matches contracts and/or established practice (which as you know becomes contractual!)

I think you're correct, the most important thing is that system users know which method is being applied. Perhaps when an automatic part month calculation has been inserted on the payslip a warning box could pop up at the top, in the usual CB style?

Hi Stephen - yes, CB has always worked out daily rates in this way and I agree it's unconventional, why should someone working 5 days in June be paid more than another, on the same salary, working 5 days in July?

All of my clients use the 260(1) method you quote and so overwrite CB's calculation.

The problem is that without a statutory method (and I don't think AE solves this?) individual employers can use whatever method they wish and CB could never satisfy all of them.

Ideally, I'd much prefer the 260 rule as being the standard but CB's stuck a bit as there would be grief from employers who have aligned terms of employment to the current method.

Perhaps the system just needs to highlight the method whenever it calculates pay in this way, it would save confusion?

OK, have worked out what it is doing. An employee left on the 11th, so it is paying them 11/31 of a normal month's salary. I don't think that is a great method however, as someone who worked F, M, & Tu would get paid exactly the same as someone who worked a full week Mon to Fri! Also if the month has fewer than 31 days you get paid more. When someone is paid an annual salary there is no intention for the rate at which that salary is earned to vary through the year, it is merely convenience that it is paid in twelve equal amounts regardless of how many days are worked in the month.

I'd much rather use a method based on 260 (261?) paid days in a year for a 5 day week contract (working days plus holidays, of any variety). What do my accountant friends on here think?