Author Topic: Payroll for starting mid of month  (Read 567 times)

Tester

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Payroll for starting mid of month
« on: January 21, 2021, 08:27:34 PM »
What is the correct/legal way to compute pay for someone who starts for example on January 11 2021?
I think it should be based on working days, but right now I am being paid based on calendar days.
Basing on calendar fays means my first paycheck is 30% lower than if it would have been computed by working days.
For now the response was 'this is how we do it'.

jeroly

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Re: Payroll for starting mid of month
« Reply #1 on: January 21, 2021, 08:45:31 PM »
I don't think there's a standard single way to do it, and the most common approach may vary by country as well.
However, I am interested to hear about how you calculate a 30% difference...
Starting 1/11, using the calendar days method gives you 21/31 or 67.7% of a month's salary, and using the working days method gives you 15/21 or 71.4% of a month's salary, which is a boost of about 5% not 30%.
Moreover, knowing this is the way they do the calculation can allow you to 'catch up' on the end of employment side of things.  For example, if you leave on 5/3/2021, you would get 3/31 of a month's salary (9.7%) instead of 1/21 (4.8%).

alsoknownasDean

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Re: Payroll for starting mid of month
« Reply #2 on: January 21, 2021, 08:55:10 PM »
What does your employment contract state?

Tester

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Re: Payroll for starting mid of month
« Reply #3 on: January 21, 2021, 10:13:41 PM »
I am trying to find the contract....
Regarding 30% difference, I am paid twice per month.
Starting on 11, I was paid for 5 days.
As the calculation was done with 15 days total I am getting an amount which is 30% lower than in the case where I would count only working days.
You can do the calculation like this, like they do it:
(100(salary per half month)/86.7(total working hours in half month)) * 5(days worked) * 86.7(hours)/15(total days in half month) = 33.32
Or how I do it:
200(salary per month)*5(days)/21(working days in month) = 47.61

The difference is bigger than 30% of 33.32.

Will read the contract and I suppose nothing will change, as this is happening for everyone.
More, I don't remeber reading about this in the offer letter...

The wage for an entire year is correct, the wage for someone starting quarter month and finishing end of month is not "correct".

ender

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Re: Payroll for starting mid of month
« Reply #4 on: January 21, 2021, 10:20:22 PM »
When are your payroll pay periods?

Your paycheck should state this.

My paychecks normally have said some variant of how the wages were calculated (often hourly rate * number of hours).

Tester

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Re: Payroll for starting mid of month
« Reply #5 on: January 21, 2021, 10:30:05 PM »
Payroll periods are 1 to 15 and 15 to end of month.
The difference between what I was expecting and what I got is because 86 hours in half a month divided bt 15 days times 5 worked days gets to 28.8 worked hours.
I was expecting 40 worked hours.

Reading in more places I understand the way they are doing it is not unique...it is still unexpected for me as I am not understanding why would they count non working days.
What if I take an unpaid day off, do I reduce my working hours by 8 or by whatever the result of 86/15 is...
Anyway, I will see tomorrow and I don't expect changes...
Learned something new with this...
« Last Edit: January 21, 2021, 10:31:36 PM by Tester »

ender

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Re: Payroll for starting mid of month
« Reply #6 on: January 21, 2021, 10:35:33 PM »
Payroll periods are 1 to 15 and 15 to end of month.
The difference between what I was expecting and what I got is because 86 hours in half a month divided bt 15 days times 5 worked days gets to 28.8 worked hours.
I was expecting 40 worked hours.

Reading in more places I understand the way they are doing it is not unique...it is still unexpected for me as I am not understanding why would they count non working days.
What if I take an unpaid day off, do I reduce my working hours by 8 or by whatever the result of 86/15 is...
Anyway, I will see tomorrow and I don't expect changes...
Learned something new with this...

What shows up on your paycheck?

28.8 hours?

Tester

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Re: Payroll for starting mid of month
« Reply #7 on: January 22, 2021, 01:22:38 AM »
@ender  yes, 28.8 hours.
That is what threw me off, for the last 15 years I worked on 8 hours/day payroll as I was paid monthly.
« Last Edit: January 22, 2021, 01:29:44 AM by Tester »

Systems101

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Re: Payroll for starting mid of month
« Reply #8 on: January 22, 2021, 06:28:22 PM »
When I last left an organization, I was paid for 43.34 hours for working 5 days.  There were 10 working days that pay period, and the pay period is based on 86.67 hours per pay period (2080 hours per year, paid 24 times).

Paid twice a month, starting Jan 11 (thus with 11 working days that pay period) I would expect:
2080/24 * 5/11 = 39.4 hours of pay.

That being said (to show an alternative method to calculate it), assuming you're in the US, this article, and the items it links to are probably a good read for you:
https://www.wagehourinsights.com/2012/11/properly-prorating-salary-for-exempt-employees/

Tester

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Re: Payroll for starting mid of month
« Reply #9 on: January 22, 2021, 10:14:07 PM »
I was also expecting something really close to 40 hours. But as they divide by 15 (total days in pay period) and not by 11, I only got 28.8 hours...it only affects people who stay less than one year, but it is still counterintuitive to me.
I just hope that if someone takes unpaid days off they are using the same formula...

I read the article you linked.
Both methods there are talking about working days...
In my search I only found one article describing what happens in my case, where they use the calendar days and not the work days...
I sure miss much more than 71 USD because of this but I am not ready to go to court over this, especially as I am just hired plus I am not FIRE yet...

Getting this job is equivalent to a promotion for me and I like the scope of the work...

Who knows, perhaps when I leave I will try to ask more questions...
« Last Edit: January 22, 2021, 10:19:57 PM by Tester »