Overview
Benefits and Allowances that are given to employees in their position may need calculating pro-rata based on engagement, termination or other circumstances. This article outlines how the Benefits and Allowances are calculated when this happens.
Permissions
In order to see the details of an employee's remuneration information, you will need the permission View Salary & Benefits or Manage Employment Position History over the relevant employee. You will also need the permission Manage Payroll in order to see the result in the employee's payslip.
How are Benefits and Allowances calculated pro-rata?
Benefits and Allowances are given to employees in their position. When this happens there are instances where such allowances would need to be calculated on a pro-rate basis. These instances include:
- Engaging a new employee
- Terminating an employee
- Giving an allowance during a specific time period during employment
Within the employee position, there is a date range next to the Benefits and Allowances given to the employee. When these are left empty, the position date range will be used as the period for which these will be given:
This means that in the case of engagement or termination, you do not need to specify a date range for these benefits or allowances. The payroll module will calculate these based on the employment dates. Below is the calculation used.
Calculation
((Annual Benefit or Allowance Amount / Payrolls) / Working Hours ) * Hours Worked
|
Term |
Definition |
| Annual Benefit or Allowance Amount |
This is the amount of the given Benefit or Allowance as reflected in the employee's position when selected as a per year amount. If the amount is given as a per payslip amount, then this would replace "Annual Benefit or Allowance Amount / Payrolls" within this calculation. |
| Payrolls |
The number of payrolls within the year.
|
| Working Hours |
The number of hours during the payroll period that can be considered as working hours had the employee worked the whole payroll period. This is based on the employee's Job Schedule. |
| Hours Worked |
The number of hours during the payroll period that can be considered as worked hours according to the days actually worked during the payroll period. This would exclude hours of unpaid leave. |
Case Examples
Let us consider the above calculation with some case examples:
-
When a new employee is engaged, their position will be given a start date. It is common that this does not fall on the same start date of the next payroll period. This means the benefits and allowances would need to be calculated pro-rata.
In the employee's position, the dates for the benefits and allowances have been left as blank, meaning the system will calculate this pro-rata based on the position start and end dates.
Using the calculation above, in the January payroll, the benefit and allowance would be calculated as follows:
((Annual Benefit or Allowance Amount / Payrolls) / Working Hours ) * Hours Worked
((€1200 / 12) / 184hrs ) * 144hrs = €78.26 -
When an employee is terminated, their position will be given an end date. It is common that this does not fall on the same end date of the next payroll period. This means the benefits and allowances would need to be calculated pro-rata. In the termination process, there is a checkbox to specify any benefits and/or allowances the employee has should be calculated pro-rata according to the termination date.
In the employee's position, the employment dates will be updated to now include a position end date.
As for the benefits and allowances, these will also have been given the same end date.
Using the calculation above, in the July payroll, the benefit and allowance would be calculated as follows:
((Annual Benefit or Allowance Amount / Payrolls) / Working Hours ) * Hours Worked
((€1200 / 12) / 184hrs ) * 88hrs = €47.83 -
There may be a circumstance where an employee is given a benefit or allowance for a specified period of time during their employment. The below employee is employed for the whole of 2024.
However, as for the benefits and allowances, these will be given during a specified period during this employment period.
Using the calculation above, in the July payroll, the benefit and allowance would be calculated as follows:
((Annual Benefit or Allowance Amount / Payrolls) / Working Hours ) * Hours Worked
((€1200 / 12) / 184hrs ) * 120hrs = €65.22
Related to