WFM UK: Rotas: Salaried Holiday Accrual

Overview

This article explains the Salaried Holiday Accrual functionality and how to enable it in the Wage Function Setting. The Wage Function Setting determines how the Rota wage cost is calculated and is only available on the Admin (master) login.

This setting is used to add an accrual and remove the cost of a salaried employee when they are on holiday, enabling the Location to cover the employee without increasing their operational wage costs.

Holiday still needs to be accounted for manually on the P&L, and any actual holiday moved to the balance sheet.

How it Works

The Rota calculates the weekly cost of the salaried employee (salary divided by 52).

The Rota global setting determines how this weekly cost is split across the week.

• Go to Rotas > Administration > Global Settings
• Find the setting Use salaried employees actual days worked to calculate salary
  • If applied – the weekly cost will be split across seven days (recommended)
  • If not applied – the weekly cost will be split across the number of days the employee is scheduled on the rota
  • To change this, use the orange drop-down arrow, select Edit Rota Settings, and then tick/un-tick the relevant box
  • Scroll down and Save

Please note: If a salaried employee is not scheduled, their cost will not be included in the rota wage cost.

The examples below show the daily rate and accrual cost for the two different settings.
 

Fig.1 - 7 days

When an employee has holiday that has been input through the HR module, the system removes the cost for that day. The cost for the week varies depending on the rota setting.
 

Reconciling Payroll

Configuration

To reconcile payroll, holiday needs to be split out on the payslips. This then displays in the super journal.
 

A new Calculated Payment Type needs to be created for this.

• Go to Payroll > Administration > Payment Types > Add New Calculated Payment Type
• The new Calculated Payment Type should be configured as shown in Fig.5

Fig.5 - Payment Type Configuration

A global setting in Payroll also needs to be changed. 

• Go to Payroll > Administration > Global settings > Holiday Pay
• Apply settings as shown in Fig.6
  • Select Shown on payslip with other pay elements altered accordingly
  • For Daily Rate Pay Element select Holiday Salaried
  • For Nominate Paul Elemnet To Adjust select  Monthly Salary

Do not select the 'Applies to salaried staff only' option. 

Process 

• Access the Rotas module and select a rota
• Select the Analysis button

The Holiday Accrual figure will display on the Analysis page and should be manually accounted for on the P&L. This is the holiday ‘Pot’.

When holiday is taken, its cost will be displayed on the Super Journal, which can be transferred from the P&L to the balance sheet, effectively reducing the pot.

Calculation when Splitting Across 7 Days

When the salary is split over seven days, the day rate may be lower than expected. See system calculation below. 

Example

An employee has a salary of £30,000 and works 5 days a week.

Rota weekly cost = £576.92 
Rota Day rate = £82.42 

This is not the actual cost of the day as the employee would not be working seven days a week. It is designed to spread the cost evenly, effectively lowering the day rate but with the weekly cost correct.

Accrual is (weekly cost) x 12.07% = £69.63

• The employee will be scheduled for 46.4 weeks as they will take 5.6 weeks holiday a year
• The annual cost calculated on the rota will be (weekly accrual) x 46.4 (52-5.6 weeks) = £3230.77
• This ‘Pot’ divided by the number of days taken (28) = holiday rate of £115.38 per day
• This Holiday Day rate will match the Actual cost of the employee on the Super Journal

Actual Day rate

Wage Function Setting
 

• To configure the Wage Function Setting, go to Rotas > Administration > Wage Function Setting
• To enable the Holiday Accrual functionality, tick the boxes Hols Accr. column for Managers Lent, Managers Borrowed and Salaried Total Pay - see Fig.7

 

• In the Calculated Values section, tick the boxes against Holiday Accruals (based on %) for Wage Cost and Display
• Choose a calculated order by selecting a number from the Cal. Order drop-down
  • The Calculated Order will determine in what order the system will calculate holiday accrual in terms of the Employer's NI and other accruals
    When set to:
    • 1 - Holiday Accrual will be calculated on basic pay only
    • 2 - Holiday Accrual will be calculated on basic pay and elements set to 1
    • 3 - Holiday Accrual will be calculated on basic pay and elements set to 1 & 2
• Type a Label in the provided field

This will display the Holiday Accrual on the analysis page. It will include Hourly Paid Holiday Accrual if it has been included in the Wage Function Setting.
 

• Ensure the Holiday Accrual % is correct (found under the Display Costs heading)
• A recommended percentage would be 12.07% as this is the rate that holiday is accrued
• Select Save