Part Time Employee RAH

JO-ANNE_7327707

Hi All

have to set up a part time employee in RAH, never had one before.

Are the accrued hours for annual leave and sick leave the same as a permanent?

Acctd4

If you have leave accruals set as Every Hour, then yes ☺️

Kris_Williams

yes pro rata.

The number of weekly hours worked times 4

Divided by 52

Divided by the number of hours worked

It should always be .07694 per hour but I have done it like this for years

And under preferences - general change to Decimal instead of minutes, that isn’t necessary but easier to interpret

John Graetz

Kris, that is the formula which appears to have been adopted by Reckon and also by most others. However, it has a "fatal" flaw in it. This is because it assumes that a person is entitled to four weeks of annual leave after working 52 weeks or only 364 days, whereas there are either 365 or 366 days in a year. That means that after 4 years (with only 1 leap year), the employee ends up with an extra 6.78 hours (or almost an extra day) of leave that they are not entitled to under their Award. There is no award that I know of which states that you are entitled to 4 weeks of leave after only working 364 days, rather they stipulate one year instead. This "flaw" means that every employer who uses this formula is paying out more in annual leave than they are required to do. Some might label this a "penny pinching" but add up the cost for a large number of employees and you end up with a costly extra employment cost that the employer is not obligated to pay due to a shortcut being taken with the formula. John L G

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Kris_Williams

interesting @John Graetz

I used this formula long before Reckon when I used to accrue per pay, how do you work it out

Acctd4

@John Graetz It’s just because of rounding due to being to 5 decimal places. Throughout the payroll, you will find it adjusts by + or - 0.00001 - 0.00005 on some Paycheques depending on specific hours entered, so it all balances out ☺️

Leave accrues as hours are worked. The “Per Hour” calculation is far more accurate than “Per Pay” as that doesn’t work when an employee starts or leaves partway through a pay period, or if hours change 😬

John Graetz

Hi Kris. My calculation is based on the fact that an average year (over a four year period) has 365.25 days in it, rather than the 364 days (52 weeks) which tends to get used in most calculations. What this then boils down to is that using that factor (52 weeks) in calculations, means that over a four year period an employee is gaining an advantage by having leave hours accrue on an extra 5 days (5/7ths of a week) more than the true entitlement. It may not amount to a great deal, but the reality is that for every $100,000 of payroll in a year, I believe that the extra cost equates to something like $27.30 per year.

This incorrect factor has a far more dramatic effect when calculating the payment for a week's salary. To use an example. For every $100,000 of a salaries bill, using 52 weeks in a year means that the weekly salary equates to $1,823.777 per week. However, when recognising that there are actually 52.17857 weeks in an average year, the weekly salary becomes only $1,916.496 which is $6.58 per week less than the method which uses only 52 weeks in a year. Multiply that by just 52 weeks and you find that for each $100,000 of payroll in a year, employees are gaining something lime a bonus of $342.23 ($6.58 x 52). Now how many employers know that this hidden cost forms part of their annual wages bill because Reckon (and others) choose to say that there are only 364 days in a year (52 x 7) when they calculate a weekly salary figure? John L G

Acctd4

@John Graetz … But there are also some years where there is an extra week (53 instead of 52, or 27 fortnights instead of 26 !) - so as I mentioned previously - it balances out 😊

John Graetz

Sorry, Shaz. Your illustration does not change the formula but supports what I am saying. By splitting an annual salary over only 364 days (52 weeks) we end up with the following situation, using 2025 as an example with somebody starting work on say 15th January 2025. That means that at the end of 52 weeks, they will have received their annual salary by 14/1/2026, 1 day before their anniversary date. After another 52 weeks ending on 13/1/2027, they will have received 2 years of salary some 2 days before their anniversary date. In year three, the next 52 weeks arrives on 12/1/2028 which is now 3 days before their anniversary date. In year 4 (a leap year) they will have received their annual salary by 10/1/2029 which is now 5 days before their anniversary date. And so it goes on. After 8 years, they will have received their annual salary by 5/1/2033, being 10 days before their anniversary date, meaning that this method enables them to crib and extra 10 days of salary. Yes, there are years in which there will be either 27 fortnights paid or 53 weeks paid, but that is not a "balancing out" situation, rather it is a product of the fact that no year is restricted to 364 days. John L G

Acctd4

@John Graetz Your examples above are referencing monetary payment now, rather than leave 🤔 however they still support my explanation as to why leave should be set up “per hour” as worked, as it will then only accrue incrementally (eg if they’ve not yet worked a full year, they won’t yet have accrued the full year’s entitlement), regardless of which specific day they are paid.

The leave calculates on hours worked within the relevant pay period, not the date of payment. If you check any employee record, under their Leave tabs, you’ll see the Hours available as of … date is the end date of the last pay period (not pay date)

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