Salary Payment for New Starters and Leavers

Phil · ‎July 16, 2019

We have encountered a problems with Salaried Staff who join or leave in the middle of a pay period.

Example 1

Our pay periods are based on the Calendar month, and payments are made on the 25th

The employee left on the 15th of the month, and her final payment is due on 25th

In the Employee Centre we entered her leaving date, and said we had not yet made her final salary payment.

A message appeared saying that we would only be able to make a payment, if we adjusted the pay period so that she was still an active employee at the end of the pay period.

So we ran an unscheduled payroll payment for the leaver.

We set the 'end date as 15 (the day she left) and the payment date as the 25th

The payslip generated, by default covered a period of one month from 16/6 - 15/7, imported the hours for that period - including some that had already been paid in the June payroll, and paid her a full months salary.

On the payslip we changed the pay period dates to 1/7 - 15/7

The system then recalculated the hours and only imported the hours booked in July, but still paid her a full month's salary.

To correct the problem we had to calculate a manual deduction as an additional payroll item.

Example 2

A new starter joined the organisation on 22nd - and her first payroll payment on 25th - by default included a full month's pay.

This was also corrected by a manual adjustment.

Why does the payroll module not recognise that an employee joining or leaving the organisation may be paid for part of the month?

Is this a 'new and improved feature of the software'? - or is there a simple / better way of dealing with employees who start or leave during the pay period?

JessT · ‎July 21, 2019

I've read your original post, Phil. Thank you for explaining the scenarios in detail.

There isn't a secret. It's how QuickBooks calculates the pay of a salaried employee. The time will not matter because the annual salary is divided by the number of payrolls in a year.

Instead of adding a deduction item, you can get the amount equivalent to the number of days worked by the employee. Then, enter it in the RATE field of the Paycheque Detail.

Here's an example calculation for an employee with an annual rate of £720,000 and works for 11 days until he leaves the company.

Get the monthly rate by dividing £720,000 by 12. This will give you £60,000.
Get the daily rate by dividing £60,000 by 21.75 (usual working days per month). This will give you £2,758.62.
Get the hourly rate by dividing £2,758.62 by 8 (usual working hours in a day). This will give you £344.83.
Get the final pay rate by multiplying 11 by £2,758.62 (daily rate).

Please let me know if you still need help with your paycheques. Thanks!

View solution in original post

Ryan_M · ‎July 16, 2019

Hi @Phil,

Allow me to share the complete steps on how you can process a leaver in QuickBooks.

Here's how:

Click on the Employees menu, then select Employee Centre, and open up the employee record for the leaver.
Go to the Employment Info tab, and enter the leaving date in the Leaving Info section.
Once the leaving date has been entered, go to the Employees menu, then Payroll Centre and run an Unscheduled Payroll.
Enter the employee's leaving date in Pay period ends.
The Payment date can be any date desired to match the payroll.
Complete the payroll, then submit the FPS. This will inform HMRC of the employee's leaver status. Once submitted, the indicator for Payment after leaving will be marked as Yes.
To process P45, go to Employees, Payroll Forms, P45 Leaver Forms. It's here you can preview and print the P45 for the leaver.

For employees you've added in between a pay period, what you did was correct. You'll have to manually adjust the amount they'll receive on that period.

If you're looking to manage payroll and keep track of employee expenses, take a look at this article: Customise payroll and employee reports.

I'll be here to provide further assistance, whenever you need them. Leave a question in the comments below and I'll get back to you.

Phil · ‎July 17, 2019

When you follow the process you describe for a Salaried member of staff, Quick Books includes a full month's salary in their final pay - even if hey only worked one week.

A similar problem occurs with new starters, who receive a normal months pay in the first pay period - even when they joined in the middle of the month.

The pay calculated by quick books ignores the length of the pay period set on the 'pay employees screen'

I have not encountered this problem with previous versions of the software - and think it must be an 'improvement' for this year's version.!

John C · ‎July 17, 2019

Hi Phil

The Paysuite payroll, I think this is what you are referring to when you state previous versions of the software, allows you to select a Pro Rata method which will automatically calculate the wages in relation to an employees start/leaving date, when selected, however the online standard payroll does not have this function.

Our products are constantly evolving and to assist us with your requirements, and possibly get them implemented, we encourage you to leave feedback from within the product.

Phil · ‎July 21, 2019

We are using the DESKTOP product with Intuits built-in payroll module.

The software has evolved overtime - and I don't think we have encountered this problem before,

I really can't understand why the system does not respect start / leave dates entered for the employee. Is there a secret setting somewhere?

JessT · ‎July 21, 2019

I've read your original post, Phil. Thank you for explaining the scenarios in detail.

There isn't a secret. It's how QuickBooks calculates the pay of a salaried employee. The time will not matter because the annual salary is divided by the number of payrolls in a year.

Instead of adding a deduction item, you can get the amount equivalent to the number of days worked by the employee. Then, enter it in the RATE field of the Paycheque Detail.

Here's an example calculation for an employee with an annual rate of £720,000 and works for 11 days until he leaves the company.

Get the monthly rate by dividing £720,000 by 12. This will give you £60,000.
Get the daily rate by dividing £60,000 by 21.75 (usual working days per month). This will give you £2,758.62.
Get the hourly rate by dividing £2,758.62 by 8 (usual working hours in a day). This will give you £344.83.
Get the final pay rate by multiplying 11 by £2,758.62 (daily rate).

Please let me know if you still need help with your paycheques. Thanks!

Phil · ‎July 23, 2019

Jess

As you suggest we could edit the rate based on a manual calculation,but I very surprised and disappointed that the software ignores start / leaving dates in this situation.

It does not even give an alert that the rate may be wrong!

Rasa-LilaM · ‎July 24, 2019

Thanks for your quick reply, @Phil.

The start and leaving dates doesn’t affect how QuickBooks calculates for salaried employees. I know adding more functionality on the Payroll feature is convenient for your business.

On your behalf, I’m passing this one on my end for consideration in future enhancements. I don't want to leave you empty-handed, so I'm adding a link to keep you in the loop for new features added into the product: https://quickbooks.intuit.com/uk/blog/.

Rest assured, I'll let you know once I hear any updates about this feature.

Reach out to me if you have any other concerns or questions about QuickBooks. I’m here anytime to answer you.

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