Q: We are in the process of changing systems and one system calculations as per method A and the other as per method B.  The employer has advised what monthly pay is based on, I just don’t understand why the systems are doing 2 different calculations and not sure which is correct.

I can see in the NZPPA Payroll Practice Guide, it explains that OWP is calculated as follows which seems to be consistent with method A, however, this doesn’t really make sense because a monthly pay includes earnings for 4.33 weeks as you’ve stated, not 4 weeks.

Would you say that Method A is the correct method?

A: You must see these as two different things: weekly pay and leave pay

A salaried employee paid monthly should not be going through a 4 week average Section 8(2) as the week can be defined and that means payroll can use monthly gross /4.33 to define the week (this is not about taking leave), when the week cannot be defined (and they want to take leave) then and only then the 4 week average can be used but by law and employee on a monthly pay can only use gross/4 (so will inflate the leave rate).

Q: To clarify, the reason for the 4 weekly average calculation is because the employee receives varying amounts of commission payments each month along with their monthly salary.  This query is not related to the other query I have sent you. It is for a different client.

A: Well they are then stuck with using gross/4 and not gross/4.33 so it will inflate the leave rate.