April 1st 2024, Release Note: WFM UK | UK HR & Payroll: Including Pay Elements in Flexible Daily Rate Calculations

Release date: April 1st 2024

• Enabled by default? - Yes 
• Set up by customer admin? - No
• Enable via support ticket? - No
• Affects configuration or data? - no

What's Changing?

A new global setting has been added to the HR module which, when enabled, will allow for individual payment types to be flagged as included in the calculation of the daily rate that is paid to Flexible employees when they take holiday.

Reason for the Change

To allow customers to choose which payment types are included in the calculation of the holiday daily rate for Flexible employees.

Customers Affected

All UK HR and Payroll users.

Release Note Info/Steps

To enable the new setting,

• Go to HR > Administration > Global Settings > Edit Default Holiday Settings
• From the top of the page, select Holiday Calculations and then tick the box against Include payment types in the calculation of flexible holiday pay
• Scroll down and Save

Fig.1 - Include payment types in flexible holiday calculations

Once enabled, a new option will be available within the Payment Type setup which can be flagged for the payment to be included in the daily rate calculation.

• To include the payment type in the calculation of holiday pay, go to Payroll > Administration > Payment Types > select Payment Type
• Tick the box against Include this pay type in calculation of average earnings and then Save

Payments made to an employee under this payment type over the last 52 weeks will be added to the gross pay that is used in the calculation of their daily rate.

Fig.2 - Payment Type setting 'Include this pay type in calculation of average earnings'

The calculation of the flexible daily rate is as follows:

(holiday days taken in current period) x (average summary rate) x (hourly rate of pay)

To calculate the average summary rate:

((total pay over previous 52 weeks) ÷ (number of days worked over previous 52 weeks)) ÷ (hourly rate of pay)

The total pay over the previous 52 weeks will include the total for hours worked plus the total for the selected payment types.

Important Information

For customers using the Additional Holiday Pay functionality, it is advised to be cautious when selecting payment types to be included in the calculation of average earnings.

Payment types that are flagged to be included in holiday pay; i.e. included in the calculation of Additional Holiday Pay, should not also be included in the calculation of average earnings. Doing so will result in the payment type being used for both, and may mean employees are overpaid their holiday pay.

Fig 3. Payment Type Settings

The types of payments that may be included in the calculation of average earnings are those that only apply to flexible employees.