SmoothPay can accommodate both employees paid by the hour and employees paid an annual salary.
The employee's remuneration is primarily configured under the Employment tab, within the Contract tab in the Staff screen.
The main settings involved are:
Wage type
Annual salary
Hourly rate
One week equals
Pay cycle
For detailed information about the individual fields, refer to:
Wage type
The available Wage type options are:
Waged
Variable salary
Fixed salary
Waged and Variable salary
Waged and Variable salary behave effectively the same way within SmoothPay.
Both allow full flexibility when entering the employee's Work and Leave transactions in the Payrun screen, including changing the units and rates where required.
The distinction can therefore be used to describe the employee's remuneration arrangement rather than substantially changing how their pay is processed.
For example:
use Waged for an employee normally considered hourly paid
use Variable salary for a salaried employee where you still want normal flexibility when processing their pay
A salaried employee does not need to use the Fixed salary Wage type.
Setting up a waged employee
For an employee paid at an hourly rate:
Go to the Staff screen.
Select the employee.
Select the Contract tab.
Select the nested Employment tab.
Set Wage type to Waged.
Enter the employee's standard Hourly rate.
Complete the employee's normal working week, including One week equals and Days per week as applicable.
Select the appropriate Pay cycle.
Save the changes.
The employee can then be paid using the applicable Work and Leave codes in the Payrun screen.
Even with an the employee not being on a salary, an effective salary is still displayed based on the hours and hourly rate entered
For example, an employee working 40 hours per week at $25.00 per hour has an effective annual salary of:
$30.00 × 40 × 52 = $64,200
This does not make the employee a salaried employee. It simply represents the annual equivalent of their standard hourly rate and working week.
Setting up a salaried employee
A salary can be established without using the Fixed salary Wage type.
For most salaried employees, Variable salary is recommended because it records the employee as salaried while retaining normal flexibility in the Payrun screen.
To configure a salaried employee:
Go to the Staff screen.
Select the employee.
Select the Contract tab.
Select the Employment tab.
Set Wage type to Variable salary.
Enter the employee's Annual salary.
Enter the number of hours that make up their standard week under One week equals.
Complete the remaining definition of their working week.
Select the appropriate Pay cycle.
Save the changes.
SmoothPay uses the annual salary and standard working week to establish the employee's effective hourly rate.
For example, an employee with an annual salary of $52,000 and a 40-hour working week has an effective hourly rate of $25.00:
$52,000 ÷ 52 ÷ 40 = $25.00 per hour
Their standard weekly salary can therefore be represented in the Payrun screen as:
40 hours Ordinary time at $25.00 per hour
This produces the employee’s normal weekly salary of $1,000.
Using a Template pay for salaried employees
For a salaried employee who normally receives the same standard pay each period, a Template pay can be used instead of Fixed salary.
For example, for an employee paid $52,000 annually, fortnightly, based on a 40-hour week:
Annual salary: $52,000
One week equals: 40 hours
Hourly rate: $25.00
Standard Template pay: 80 hours Ordinary time
When the employee is selected for a pay, their normal 80-hour transaction can be loaded automatically from the template.
You can then adjust the pay whenever their circumstances differ from normal.
For example, if the employee takes one eight-hour day of paid leave, the pay could be changed from:
80 hours Ordinary time
to:
72 hours Ordinary time
8 hours applicable Leave
This maintains the employee's normal salary basis while still allowing the individual pay to accurately reflect what occurred.
It also allows the pay to be reduced when appropriate, such as where unpaid time applies, or changed where the employee needs to be paid at another rate, or additional rates of pay.
For more information about creating template pays, refer to:
Fixed salary
Fixed salary works differently from Waged and Variable salary.
It is designed to force the employee's applicable Work and Leave transactions to produce the same salary value for the pay period, regardless of the total units entered.
When Fixed salary is used:
you only enter the units, rather than being able to adjust the hourly rate
SmoothPay calculates and adjusts the applicable rates automatically
the calculation considers the combination of applicable Work and Leave transactions
the resulting value is forced back to the employee's salary amount for the pay cycle by automatically adjusting rates.
For example, an employee earning $52,000 per year and paid weekly has a standard weekly salary of $1,000.
If only 1 hour were entered, SmoothPay would calculate a rate of $1,000 so that the total remains $1,000.
If 40 hours were entered, the calculated rate would instead be $25.00, again producing the same $1,000 salary value.
The purpose is not to preserve a particular hourly rate. It is to preserve the employee's fixed salary value for the pay period.
When to use Fixed salary
Fixed salary can be appropriate where the employee must always receive exactly the same salary value and there is no need to vary that amount during normal payroll processing.
However, it is not generally recommended for most salaried employees because it substantially reduces flexibility.
For example, if an employee takes unpaid time and their pay needs to be reduced, Fixed salary will still attempt to calculate the applicable Work and Leave transactions back to the employee's normal salary value.
Employees may also sometimes need additional payments, different rates, or other variations that are easier to manage using the Waged or Variable salary wage type.
For most salaried employees, the recommended approach is therefore:
Use Variable salary or Waged.
Record the employee's Annual salary and standard working week.
Create a Template pay representing their normal pay.
Adjust the template transactions in individual pays whenever required.
This provides the convenience of a repeatable salary while retaining full flexibility when the employee's actual pay differs from normal.