How does Open Payroll calculate salary for first month/last month?

Question asked by Michael Beaver 11 years ago

I'm working with an employer who has a fair amount of employee turnover.

On previous systems, in calculating salary for the first or last months I would generally take annual salary divided by 260 x days actually worked in the month.

I have an example where an employee has a salary of 18,000 and terminated on 10th September. This is 8 business days. On my calculation I get £553.85 but Open Payroll calculates exactly £500.

This means that Open Payroll is taking calendar months. i.e. 18,000 / 12 / 30 * 8 = 500.

Is this standard or correct?

Cheers

Michael

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4 Replies

...just played around with the demo....

Annual / 12 / days in month * leaving date

Best answer
11 years ago

It really is open to interpretation. If the employee contract or staff handbook doesn't say anything specific just go with whatever you (or the employer) think's fair....which i'd say your method is.

11 years ago

You are right, I meant 10 days until termination date ... however. Is that how you would do it?

I've done loads of payrolls in the past and I've always used 260 working days per year (although some employers prefer 259 or 258).

11 years ago

I'm not sure how OP is handling it (it's not 18,000 / 12 / 30 * 8 as that would equal 400 not 500) but in reality, as i'm sure you already know, there's no 'correct' way of doing it. It's simply down to contract/staff handbook or alternatively any reasonable method as you've already specified.

11 years ago

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