Wage calculation based on actual days and hours
The wage calculation in Profit is by default based on the (actual) days and hours in the relevant period. This, for example, means that a different number of days and hours is processed for a full-time monthly paid employee every month depending on the number of days and hours to be worked in that month. The employee each month of course receives the same salary, but works more days and hours in one month than in another month. This is in contrast to dated methods in which averages are used as the basis for performing calculations. This method involves an average number of days determined on the basis of the total number of ‘SV’ days in a year. For monthly paid employees, this average is always based on 260, 261 or 262 days. One of the drawbacks in this respect is that the result, in terms of days, never is a whole number, while employees in actual fact of course worked a whole number of days.
A calculation based on (actual) days and hours in the relevant period is therefore always cleaner. The ‘Loonheffing’, for example, is a case in point. In certain situations the daily table may be applicable. When you work with averages, you may be calculating too much or too little ‘Loonheffing’. Indeed, the daily table requires you to use the table per day, not for part of a day (in a calculation based on the average number of days, the result is almost always a number with decimals). Furthermore, the difference is no longer reconciled, because the ‘Loonheffing’ cannot be recalculated and certainly not every employee submits an income tax declaration.
Examples of allowances that are calculated on the basis of actual days:
- Daily meal allowance
- Workwear and footwear per day
- Daily travelling costs
Examples of deductions that must be calculated on the basis of the (actual) number of hours:
- Reduction in salary in relation to parental leave
- Reduction in salary in relation to unpaid leave
- Reduction in salary in relation to long-term absence
According to the CLA, many of these allowances are only paid if the employee is actually working and not when the employee is sick (the workwear and footwear allowance comes to mind here). Since you are registering sickness in Profit HR, Profit automatically calculates the remaining number of days worked during that period and consequently the proper amount for the allowance. If the calculation were to be based on the average number of days, a manual correction would be required in order to be able to process the correct allowance. Indeed, the average can have decimal places, while the CLA provides for the allowance to be paid for each day worked.
There are pension schemes that require the part-time percentage to be determined on the basis of the actual hours worked in relation to the timetable hours (for example the pension fund for the Beverage industry). As a consequence, each period the actual part-time percentage for that period must be used for the calculation of the pension premiums.
By law, all ‘SV’ days are always whole days. This is true even if someone works a half day; the half day in that case counts as a whole ‘SV’ day.
Often you will also interface with actual reality, for example a time recording system (which does not produce averages).
Example:
The following example demonstrates how a calculation based on averages does not produce the desired result. The example assumes a 261-day year.
- Average number of days per month: 21.75
- Average number of hours per month: 174
In hours (a full-time employee working 8 hours per day):
February has only 20 ‘SV’ days = 160 hours. Suppose that an employee is sick for 8 hours and has taken 152 hours of unpaid leave. This would mean that 174 - 8 - 152 = 14 hours would be considered as work, although the employee did not work at all that month. Neither can you convert the sick day or the unpaid leave into averages, because this would produce results with decimals.
In a month, such as January (generally 23 ‘SV’ days = 184 hours), things work in reverse. In fact the salary becomes negative, because if an employee takes 176 hours of unpaid leave and is sick for 8 hours, this means that this employee worked 174 - 176 - 8 = negative 10 hours and therefore would receive the associated (negative) salary.
In days:
In a year with 261 days the average number of days per month is 21.75. However, February only has 20 ‘SV’ days. Suppose that an employee is sick for 1 day and has taken 19 days of unpaid leave. This would mean that the 21.75 - 1 - 19 = 1.75 days would be considered as work, although the employee did not work at all that month. Neither can you convert the sick day or the unpaid leave into averages, because this would produce results with decimals.
In a month, such as January (generally 23 ‘SV’ days), things work in reverse. In fact the salary becomes negative, because if an employee takes 22 days of unpaid leave and is sick for 1 day, this means that this employee worked 21.75 - 22 - 1 = negative 1.25 days and therefore would receive the associated (negative) salary.
The situation described above is therefore created because you enter data that reflects reality (this is necessary because sick days, for example, must always be processed as whole days), but make your calculations using averages.
In other words: if there are no daily allowances or salary deductions, it would appear at first sight that it would be convenient to work with averages, because each hour can then be multiplied by the average hourly wage. However, as demonstrated by the example, things go awry as soon as there are deductions from the monthly salary that can even cause the salary to go negative or when there are deductions consisting of the entire or almost the entire period.