WFM UK: Rotas: Reviewing the Rota Wage Cost

Overview

A business can choose which pay elements are included in the Rota Wage Cost and which elements are displayed, in line with their own specific requirements. This article will explain how this is configured within the Wage Function setting. It is important to include as many elements as possible so as to narrow the gap between the Rota and Payroll Reports.

It is also important to keep rotas accurately updated as any payments for missing hours will not be included in the Rota Wage Cost. This can then contribute to a gap and may also impact flexible employees' holiday pay and entitlement.

Please note: Adding a Salaried holiday accrual will create a gap. Please read the article on how to set up a salaried holiday accrual: WFM - Salaried Holiday Accrual.

Also note: Since this article was first written, new functionality has been introduced to the system that allows salaried employee costs to be calculated based on the working days in a calendar month instead of Annual Salary/52/Actual days worked. Further details on this can be found in this section below: Rota Costs - Calendar Months.

What should be included in the Rota Wage Cost?

This is business-specific, however, the wage function setting can include:

• National Insurance for both Salaried and Hourly employees
• A holiday accrual for Salaried and Hourly paid employees
• Actual Holiday pay for Hourly Paid staff
• Payments entered via the Rota module in additional payments
• Tronc: this can only be included if using the Tronc Module (Not Tronc2)
• Fixed costs: If Fixed Cost Areas are in use
• Statutory Payments such as SMP, SAP, ShPP. This will include 100% of the cost paid out and will not reflect the 8% that is the actual cost to the business
• Statutory Sick Pay (SSP)
  
• Pension Accrual can be entered using Factor X
• Other payments entered using metrics, will be business-specific

 

Access Requirements

This area of this system requires the Admin login to access. 

 

Wage Function Setting Elements

• Go to Rotas > Administration > Wage Function Settings

Considerations before making changes:

• The page is a series of tick boxes that can be ticked or unticked as required
• The changes are global and will have an immediate effect

 

Headers

Wage Elements	This is the list of elements that may be included and impact the rota calculations.
Wage Cost	If selected the wage element will be included in the wage cost.
NI Calc	If selected the National Insurance will be included in the wage cost.
Hols Accrual	This will add an accrual based on the percentage at the bottom of the page. Hourly Holiday accrual will calculate on hours entered in the rota. Salaried Holiday accrual is calculated on the weekly cost in the rota and the cost of the employee when on holiday will be removed.
Other Accrual	This is an additional percentage (Factor X) that can be included in the wage cost, this is commonly used for Pensions
Display	This will determine if the Wage Element would appear on the Analysis page if selected.
Label	This will allow customers to rename fields to suit the business culture.
Help Text	Help Text can be used to explain what calculations are being included in the wage element.
Sort Order	This is the order the wage element will be displayed in. If set to 1, it will appear in the order of the wage function settings page.
Separator	A separator can be added to break up the Analysis page into sections by either dotted, solid or double lines.
Add Metrics	This is used for adding metric data to the analysis screen. Once they have been added the various headings as described can be applied to these metrics, e.g. holiday accrual.

 

Pay Elements

These are broken down into sections:

• Hourly pay
• Salaried Pay
• National Insurance
• Holiday and Tronc
• Additional Payments entered through the rota
• Fixed Costs, Overtime and Statutory payments

 

Hourly Pay

The cost of Hours or shifts (or both) can be included in the rota wage cost as required by the business.

The example in Fig.3 shows:

• Basic pay for hourly-paid staff included in the Rota Wage cost
• NI is being calculated on this pay element. This is at the standard rate for National insurance
• A holiday accrual is being calculated on the hours entered on the rota
• An additional accrual, Factor X, is being calculated on the hours entered on the rota
• The Pay Element is displayed on the Analysis page
• The Cost of Shift paid employees is not included in the Rota Wage cost

 

Salary Pay Elements

• Managers Lent: The cost of salaried employees working in different locations. This will display as a credit, as the full cost of the employee will show in ‘Salaried Total Pay’ for the home location
• Managers Borrowed: The cost of salaried employees that are employed at other locations
• Salaried Total Pay: The total cost of all salaries scheduled at that location (salary divided by 52)
• Absence Deduction for Salaried Employees: Removes the cost of a salary when an absence is entered, regardless of the configuration of the absence type. It is recommended that this is left un-ticked to avoid understating the Rota Wage Cost when salaried employees receive paid leave
• Total Pay: Displays hourly pay plus salaried pay and will include adjustments for managers borrowed and lent

The example in Fig.4 shows:

• NI is calculated on all Salaried pay elements
• A holiday accrual is not being calculated on Salary Cost
• An additional accrual (Factor X) is being calculated on the salary cost.
• The Pay element is displayed on the Analysis page

 

National Insurance Elements

The cost of National Insurance can be displayed separately if required.

Holiday and Tronc Pay Elements

• Holiday pay for hourly-paid employees with authorised holiday can be included in the Rota wage cost
• The calculation for this holiday will be based on the employees working unless the rota global setting to calculate holiday on Hours x Rate is enabled
• If employees are paid extra for Bank Holidays, this additional cost can be included if Statutory Days are set up
• If an accrual is being calculated, hourly holiday pay can be displayed but not included in the rota wage cost
• The cost of allocated tronc can be included if the Tronc module is being used (not Tronc2)

Additional Payments

• Where additional payments are entered through the Day Content screen in the Rota, these can be included in the Rota Wage Cost
• This may be used for Bonus Payments, Back Pay or Responsibility pay
• If an admin fee is applied to these payments, this can also be included in the rota wage cost

 

Fixed Cost, Overtime and Statutory Pay Elements

• Where Fixed Cost Areas are in use, these costs can be included in the rota wage cost and displayed on the Analysis page
• If Overtime functionality is set up, this cost can be included in the rota wage cost and displayed on the Analysis page. This information will only populate once the overtime has been approved
• MP, SPP, SAP and ShPP costs can be included in the rota wage cost but this will reflect 100% of the cost paid out in the Payroll module rather than the 8% actual cost to the business
• SSP entered in the Rota module is only an estimate and the cost will be associated with each absent day on the rota. The value of one days’ absence is defined within the wage function setting to allow an estimated cost of a sick day to be included in the rota wage cost. However, SSP is paid as a weekly amount in payroll and the rota cost will not reflect waiting days

NB SSP is no longer claimed back from HMRC.

 

Calculated Values

This section allows a business to decide the order in which the system calculates the costs. This enables NI to be included in holiday accrual calculations.

The Calculation Order column determines the order in which the pay elements are calculated.

• If the values are all set to 1, the system will calculate the pay elements on basic pay

 

• If the employer's NI is set to 1 and holiday accrual and other accrual are set to 2, the system will calculate NI before calculating holiday accrual and another accrual so that NI is included in the calculation

 

• The Wage Cost column must be ticked if NI, holiday accrual or other accrual are to be calculated by the system
• These elements can be displayed on the Analysis page
• Using the radio button(s) applies that percentage or calculation to that individual wage element. Rather than entering 13%, the order of the values can be changed and the percentage of 12.07% kept

Display Settings

The Display Settings control the information that is available on the Analysis page.

Percentage Elements

The amount that is added to an absence and the percentage for holiday accrual is controlled in the Display Costs section.

• Statutory Sick Pay Day Rate is the cost added to the rota when an SSP configured absence is entered

This is usually:
£92.05 divided by 5 = £18.41
or
£92.05 divided by 7 =  £13.15

• This is the percentage that calculates the Holiday Accrual. It is also used by the Holiday Accrual Journal in Payroll

Configuring Other Accrual

• To include an additional cost calculated on a percentage into the Rota Wage Cost, Factor X must be set up and the Other Accrual columns must be ticked (see Fig.2 & Fig.9)

This is most often used for Pensions.

The percentage value needs to be entered in each location and can vary by location if required.

• Go to Rotas > Administration > Configure Locations
• Select a Location
• Select Edit Factor X and Fixed Costs
• Enter a percentage value in the Factor X field

Fixed Cost

• Fixed Costs areas need to be set up to include a static cost into the Rota Wage Cost

The following guide explains how to set up and use Fixed Costs: WFM - Using Fixed Costs.

Salary Job Titles

For the Rota Wage Cost to accurately calculate, all Salaried Job titles associated with that cost must be included in the Rota Wage Cost. This can be checked in Configure Locations.
 

• Go to Rotas > Administration > Configure Locations > Select Location

• To include this cost, select Edit Job Title Salary and tick Include Salary?
• All Job titles can be included by selecting Apply

 

Rota Costs - Calendar Months

The following functionality allows salaried employee costs to be calculated based on the working days in a calendar month instead of Annual Salary/52/actual days worked.

A number of Fourth customers view costings on a monthly basis. Using this functionality can help avoid the large discrepancies between what is paid within Payroll and what is costed within the Rotas for Salaried employees.

 

Global Settings

Two Global settings need to be applied.
The functionality and an explanation of the Settings are detailed in the sections below. 

• To access the settings, go to Rota > Administration > Global Settings > Rota Settings > select Edit (Fig.17)

Fig.17 - Edit Rota Settings
 

• To calculate the weekly rate cost over 12 months instead of 52 weeks, tick the Calculate weekly rate cost over 12 months not 52 weeks box
• The Use FTE Days for weekly rate cost over 12 months setting will only be available to be selected when Calculate weekly rate cost over 12 months not 52 weeks is selected

Fig.18 - Global Settings

• Alternatively, select Use salaried employees actual days worked to calculate salary if required
  • By selecting this option, the system will take an employee's annual salary, divide it by 52 (to get a weekly salary), and then divide it by the number of days worked in that particular week to get the daily cost

Fig.19 - Use Salaried Employees Actual Days Functionality

It is not possible to select both Calculate weekly rate cost over 12 months not 52 weeks and Use salaried employees actual days worked to calculate salary settings, as they use different calculation methods.

 

Calculate weekly rate cost over 12 months not 52 weeks

If this setting is selected and saved into the Rota, the calculation of the salaried employee’s cost within a Rota will change to be based on their hourly rate, calculated as follows: 

Daily Rate

The monthly salary/actual working days in the month.

Working days are based on a Monday to Friday working pattern. The number of days can vary depending on the month. Below is a table of working days for each month based on a Monday-Friday working pattern for 2019. 

2019	Number of Days
January	23
February	20
March	21
April	22
May	23
June	20
July	23
August	22
September	21
October	23
November	21
December	22

 

Due to the varying number of working days in a month, this will result in variations of an employee’s daily rate depending on what month that day falls within. 

For example, an employee that is paid £20,000 per annum and works 8 hours a day would have a daily rate in June of £83.33. However, in July it would be £72.46.

This does not follow the standard 260 or 365 rule of Payroll. However, it will result in a closer reporting of costs within the Rota in relation to what an employee is then paid in Payroll.

Hourly Rate

The Hourly Rate calculation of an employee’s costs is as follows:

Contracted hours per week 5 

This will result in the number of hours an employee works each day.

 

Overtime

Employees that are salaried and entitled to overtime at Contract Level will have their Daily Rate calculated to incorporate the cost of this Overtime. 

This will only be included when an employee has worked more hours in total over a week than they are contracted to. This will then be added to their basic Hourly Rate. 

For example: An employee is contracted to 40 hours a week over 5 days. They work a total of 10 hours on the first day, which is 2 hours over what their contracted time for the day is. The daily rate will be capped at 8 hours based on the calculation outlined above. However, as the week progresses, if the employee goes over 40 hours for the week in total, then the Daily Rate for the first day will be recalculated with the cost of the extra hours based on their base Hourly Rate. 

 

Use FTE Days for weekly rate cost over 12 months

This setting can only be selected in conjunction with the Calculate weekly rate cost over 12 months not 52 weeks setting. 

Once selected the calculations will be as follows:

• Daily rate: (Monthly salary/actual working days in the month) x FTE value
• Hourly rate: (Contracted hours per week / 5) x FTE value

This will give the result for the number of hours an employee works each day.

Related Articles

WFM - Salaried Holiday Accrual

WFM - Using Fixed Costs