Calculating Holiday Pay in Sage Payroll - The Book-keepers Forum (UK)

Barkers · Veteran Member

Calculating Holiday Pay in Sage Payroll

BackOfficeGroup · Guru

You don't have to use Sage to work out the holiday pay! I know a client who runs a catering business and they pay holiday pay according to how many hours that person would normally work, so if they work 40 hours in a week and they have a week off, they get paid 40 hours and so on. This is shown on the payslip as a different payment also.

With different shift patterns etc, that m,ay be the easiest option rather than trying to set up Sage to do it.

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Barkers · Veteran Member

Sorry if i'm being thick here i dont know why ive got such a mental block over this.

I see what you mean about paying the normal weekly hours - but would that just be for people who work the same hours every week?

There have only been 3 fortnightly payruns to date - first one he worked 39.67 hours, second one 2.5 hours, third one 61.25 hours. His calculated holiday entitlement to date is 8.25 hours according to Sage.

So when i'm being asked to pay for 1 week - where do i start?

BackOfficeGroup · Guru

If someone works casual hours, the way forward would be to work out holiday pay due as they go along.....all those hours adds up to 103.42 hours.

The multiplier here would be 12.07% so they would be entitled to 103.42x12.07% which is 12.48 hours.

You would need to keep a record of their holiday over the year to ensure you pay the correct holiday in future.

Hope that helps.

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attilabenko · Guru

Was that all together 3 payruns or 3 payruns in sage because you did not use it before?
I would average those 3 runs (6 weeks) but i am not a payroll genious - yet ;)
Some places only pay holidays what has been actually accrued so if the employee was working only 6 weeks he would not be entitled for a full weeks holiday pay. Maybe your system is set up like that?

Barkers · Veteran Member

I'm so sorry but it doesnt!!

Why is Sage wrong then? What is the 12.07% multiplier?

If i'm being asked to pay him for a week am i just paying for the holiday he has accrued so far or should i be working out his average weekly hours, paying for that and letting him effectively go overdrawn on his entitlement?

Cross posted with Attila there - its a brand new payroll, so purely the 3 runs.

-- Edited by Barkers on Wednesday 21st of July 2010 11:39:27 AM

BackOfficeGroup · Guru

the 12.07% multiplier is whats used to calculate holiday due for strange cases such as this.

statuatory entitlement is 28 days per annum or 5.6 weeks. The actual working time for the year is 52 - 5.6 = 46.4. The holiday entitlement for someone based on hours worked is 5.6 divided by 46.4 = 12.07. So their holiday is 12.07% of their worked hours.

this is what they are entitled to, what they get paid may well be a different matter.

You need to be careful with holidays, as Attila says, you should try to only pay what has been accrued as if they leave, you'll be lucky to claim the money back if you've paid over more than their entitlement.

You cannot pay him 1 week holiday as such as his hours are very different each week/fortnight. You need to explain to the client that he has accrued this much entitlement, how much do you want to pay him. His average working hours over the 6 weeks is 17, so not far off!

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attilabenko · Guru

I think it's the company who has to decide here what is the holiday policy. Pay only for accrued days or let them take more...in pubs/bars with employees working different hours and shifts every week and getting paid biweekly you would normally pay only for holidays accrued and as there wasn't 12 weeks yet work out their entitlement according to the policy and do the six weeks average.
That's what I would do but as I said I am not that good in payroll so take it as my opinion only, not advice :)

Barkers · Veteran Member

Thank you - that makes sense.

Should i not be trusting Sage with this then? It definitey thinks he's got 8.25 hours entitlement.

My husbands firm had a bit of difficulty with sage calculating the hours as they had nearly 5 months off so Sage thinks they are overdrawn by 100's of hours which they're not.

Rather than leaving it to calculate the averages then, should i just keep an excel spreadsheet of the hours they have worked and just keep topping the entitlement up so its based on what they have actually worked during the year rather than averages?

BackOfficeGroup · Guru

yes I would do that and not rely on Sage. I never actually use Sage to work out the holidays so not sure how good it is or accurate and most people who have static payrolls, the amount paid would not change as they would get paid the same amount so its basically just keeping a record of how much time they've had off.

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attilabenko · Guru

I can't give you an answer for that :(
I am sure you can do things to SAGE to make it work properly(not using a hammer),
but without seeing it....
In terms of efficiency you really should avoid double systems so try and check all settings in Sage and compare it to your manual calculations, you might even could give them a ring.

attilabenko · Guru

You see you can just use a spreadsheet but wouldn't it be nice if everything would just work fine?
I know it never happens...

Barkers · Veteran Member

I think i better do a spreadsheet from now on just for peace of mind.

I better take them off a holiday scheme though or it will be showing them possibly different holiday figures on their payslips.

So what do i need on this spreadsheet then - purely the hours worked x 12.07%, and any holidays they've taken?

BackOfficeGroup · Guru

in essence yes. you need to record the person, how many hours worked, calculate their entitlement and show how many hours they have been paid. You could also have a column to show current entitlement owing etc, depends how far you want to go with it.

not sure if you can record the dates of holiday in Sage without the calculations? maybe just by taking them off the holiday scheme would do the trick.

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attilabenko · Guru

Just a practical thing... If you decide to go with only allowing to take holidays accrued you should warn the company in terms of operations around the end of holiday year lot of employees will have holidays left what they will want to take what is not always possible so some employees will either loose some holidays or you pay them for those days. You see it is not possible in the last week of holiday year everybody is on holiday. And if your holiday year ends 31st of december, it can be even bigger problem...

Barkers · Veteran Member

Noted. You guys are a life saver. Thank you so so much. I was beginning to panic

BackOfficeGroup · Guru

Glad we could help!

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attilabenko · Guru

Vicky,

Don't panic. We are here to help and if we cannot we call in the FBI.
Only panic if you see Leland Palmer or Bob, in this case report it to Sheriff Truman :)
Welcome to Twin Peaks!

Barkers · Veteran Member

God i love Twin Peaks

Its on the brain as i've bought the DVD box set.

Phwoar what i'd do with Agent Cooper. *wink wink*

BackOfficeGroup · Guru

Hey I look like Agent Cooper! biggrin

attilabenko · Guru

Vicky,

I suppose you were watching Desperate Housewives with Dale Cooper as well?
Sadly the story line isn't as good as Twin Peaks

Barkers · Veteran Member

I certainly was but he looks better in Twin Peaks! The oddness of his character also makes him that bit more appealing. I dont know what it is with men with black hair?!

BOG -

semsley · Guru

Sorry to come into this late in the day but been on holiday!!!!!!

Sage allows you to input "holiday schemes" but this is always in terms of days worked rather than hours and then it calculates holidays on this basis.

The only way to keep accurate holiday records for people who work hourly and mixed hours (ie not the same each week) is by using the 12.07 method.