Q: This is the final pay calculation report for leave. We are specifically looking at the 8% calculation for holiday pay owing on leave days employee had not yet become entitled to.

The auditor thinks we might be overpaying on this 8% Gross payment.

The specific employee below has an anniversary date of 3 July and according to the auditor the only earnings for the anniversary month that should be included in the calculation is the Gross for July / 31 days in the month X the 28 days (3 July to 31 July).

We are paying what IMS calculates automatically, at the moment. IMS includes the gross earnings for the entire month and does not take in account the specific anniversary date.

My question really is, should we be calculating this in accordance with what the auditor has advised, and do a manual calculation.

A: The auditor is right this is a common issue with payroll systems, they are not date driven so they just take the gross from the start of the pay period for the 8%.  The payroll system does not have the ability to work out the part days of gross for the 8%.

I find this just lazy for a payroll provider not to do this.  Most employers will just accept this because the employee gets more than the act provides.  But yes a manual calculation is correct if the payroll system can’t do this..