I was hoping you could help with a wages calculation.
We pay month in hand i.e. you are paid for January's hours at the end of Feb. One of our employees is entitled to 2 x weeks of statutory paternity pay on his next wage so we will reduce his standard gross accordingly i.e. so he receives 2 x weeks of SPP and the rest of the month his standard wage.
His standard working week is a 4 x day week (mon-thu).
What is the best way to work out the gross pay he should receive from the company to make up his full month (2 x weeks of SSP + gross wage from company) of wage ?
I would work out his gross pay for the month, deduct the amount that he will receive in SPP and enter that figure into your payroll software along with the SPP.
That supposes that your company make the SPP up to the level of his ordinary wage? It does depend on what your company policy is.
If you use Sage Payroll, it will do the calculations for you.
Our company doesnt make the SSP up to normal wage, which is my sticking point! e.g. in a 4 month week the employee would received 2 x weeks of SPP plus 2 x weeks of their standard gross wage and end up with a shorter wage that month. But clearly the months dont fall into 4 weeks so neatly so it isnt that straight forward.
You have to work out what to pay them for the days they worked in the month. Then you add on the SPP, so really the SPP of itself is irrelevant to the real problem.
In principle this is no different to paying someone who starts or leaves in the middle of the month. Either the contract specifies how part months worked should be paid, or you use a "reasonable" method for calculating it. Because months don't have consistent numbers of weekdays all methods can create bizarre anomalies.
The most common method used in payroll is 260ths. Take the normal monthly pay and multiply it by 12. Divide the result by 52 x the normal number of working days in a week (usually 52 x 5 = 260, hence the name of the method). That is the value of a single day's work. For a 5 day week employee = annual salary / 260.
Then pay the employee for the number of days worked x the value of a single day. Either that or take their normal monthly pay, and subtract from that the number of working days they were away x the value of a single day. The two methods will give different answers and you should be consistent over the months about which way you do it, not just pick the cheaper answer every time.
Note, In your case, with a 4 day working week you'd multiply the standard monthly gross by 12 and divide it by 208 to arrive at the notional value of a single day.
