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How payroll is calculated

 Summary

A pay cycle calculates each employee’s basic pay from their employment pay type, then applies any additional income and deductions. Employees who are not hourly are paid using salary, Worked/Working Days, and the schedule Pro Rata Rule, while hourly employees are paid using Payrate × Total Worked Hours.

Other income, overtime, statutory pay, court orders, student loans, and pension contributions are then applied where relevant.

In this article

  • Before you begin
  • Opening the pay cycle
  • See how basic pay is chosen
  • See extras that change the total
  • Reviewing the result on Salaries
  • Frequently Asked Questions (FAQ)

Before you begin

You must have an active Payroll add-on to access and use Payroll features.

You need:

  • Company Money access
  • View Pay Schedules permission
  • Start Payrun permission

Payroll must be included in your organisation’s contract.

Before starting the pay run, make sure you have:

  • An Active location and Active pay schedule
  • Employees assigned to the schedule with their tax and pay details completed
  • Employment Pay Type set to Daily or Hourly
  • Attendance, approved timesheets, and approved time off correct for the period
  • Pay codes, benefits, expenses, and pension membership up to date

There is no separate Calculation tab. Payroll calculations are built when you Start Pay run or select Recalculate.

Opening the pay cycle

Log in to Plumm and open the 9-dot menu.

Under Money, select Company Money.

Open an Active location and select Pay Schedules.

Open an Active schedule.

On the required period tile:

  • Select Start Pay run for a Current or Unlocked period.
  • Select Continue Pay run for a Draft period.
  • Select View Pay run for a Completed period.

The pay cycle follows:

Updates → Salaries → Review → Process → Complete

If you see We noticed there's been some changes to this pay cycle, select Recalculate before reviewing the figures.

See how basic pay is chosen

Payroll uses the employee’s employment Pay Type to determine how basic pay is calculated for the period.

Hourly

When Pay Type is Hourly, basic pay is calculated using:

Payrate × Total Worked Hours

Hours are taken from attendance first.

If there is no attendance for that part of the period, Payroll uses approved timesheets linked to project tasks.

Worked Days is disabled on the Income sidebar for hourly employees.

See Hourly pay calculation for more information.

Not hourly (salary)

When Pay Type is not Hourly, Payroll follows the salary calculation.

The employment Pay Type list contains Daily or Hourly, so salary employees follow the Daily path or any employment that is not Hourly.

Basic pay uses:

  • Annual salary
  • Worked/Working Days
  • Salary Basis
  • Pay schedule Pro Rata Rule

Salary Basis on Salaries can be:

  • Monthly
  • Weekly
  • Biweekly

You can edit Worked Days for salary employees before processing the pay run.

If an invalid value is entered, Plumm displays:

Days Worked must be a positive number.

If an employee is on minimum pay, Payroll uses the period salary as current cycle income instead of the Worked Days calculation.

If salary changes during the period, Payroll splits the period into separate slices, calculates each slice, and adds them together.

See Salary pay calculation for more information.

See extras that change the total

After calculating basic pay, Payroll applies other income and deductions relevant to the employee and pay period.

Other income

The Income tab displays:

  • Other Income
  • Taxable Other Income
  • Non Taxable Other Income

Other income can include pay-code additions for the cycle, default pay codes such as overtime and statutory pay, and approved expenses where Payment Method is Pay via payroll.

Overtime

Overtime is treated as other income.

It does not change Working Days.

An overtime line on the Income sidebar displays:

  • Amount
  • Rate
  • Hours
  • Hourly Rate
  • Description

For hourly employees, overtime hours are removed from Total Worked Hours before basic hourly pay is calculated. The overtime amount is then added separately as other income.

This prevents the same hours from being paid twice.

See Overtime in Payroll for more information.

Statutory pay

Approved leave linked to statutory pay can create statutory pay amounts in the cycle.

This includes:

  • SMP
  • SPP
  • SAP
  • ShPP
  • SPBP
  • SSP

Updates can display Statutory Pay Validation or Statutory Pay Calculation.

See Statutory pay for more information.

Court orders

Pay codes can be marked as Attachment Order.

Court-order deductions are calculated against attachable pay.

If there is not enough disposable income, Payroll can reduce the deduction and carry the remaining amount forward.

See Court orders for more information.

Student Loan and Postgraduate Loan

When Student Loan or Post Graduation Loan is configured on the employee’s tax details, applicable deductions are included in the pay cycle.

The Deductions sidebar displays:

  • Student Loan
  • Postgraduate Loan

See Student Loan and Postgraduate Loan for more information.

Pension

When an employee is Enrolled or Re-Enrolled in a pension:

  • Employee pension is included under Deductions.
  • Employer pension is included under Employer Cost.

Other pension statuses include Not Enrolled, Deferred, and Opt-out.

See Pension Auto-enrolment for more information.

Reviewing the result on Salaries

Open Salaries in the pay cycle.

The heading is Review and edit employee salaries and the status tag is Draft.

Plumm displays:

Please ensure that all the details are correct before clicking on 'Continue'.

Use the following tabs:

  • Summary
  • Income
  • Deductions
  • Employer Cost

Income

The Income grid includes:

  • Employee
  • Salary Basis
  • Worked/Working Days
  • Salary
  • Current Cycle Salary
  • Other Income
  • Taxable Other Income
  • Non Taxable Other Income
  • Total Income

Current Cycle Salary is the employee’s basic pay for the period.

Total Income combines basic pay with applicable other income.

Deductions

Deductions can include:

  • PAYE
  • Employee Pension
  • Employee NI
  • Student Loan

Open an employee to see additional details, including Postgraduate Loan where applicable.

Employer Cost

Employer Cost includes gross income and applicable employer costs, including:

  • Employer Pension
  • Employer National Insurance

Editing an employee

Open an employee from Salaries to review their pay details.

Depending on the employee and your permissions, you can:

  • Edit Worked Days for salary employees.
  • Add income when you have Add Income in Payrun permission.
  • Add deductions.

Select Save after making changes.

The available pay cycle buttons include:

  • Back
  • View History
  • Continue

After Process Pay Run, the cycle becomes Completed.

If a Completed pay cycle needs correcting, correct the source data first. If you have Undo Payrun permission, undo the pay run and process it again.

Frequently Asked Questions (FAQ)

  • Where do I see how pay was built?
    Open the pay cycle in Company Money and go to Salaries. Income shows Current Cycle Salary and Other Income, while Deductions and Employer Cost show the other amounts affecting payroll. Daily attendance information is available in Attendance rather than Company Money.
  • Why is Worked Days disabled?
    The employee’s Pay Type is Hourly. Their hours are calculated from attendance or approved timesheets. You cannot enter hours on Salaries to override the calculated total.
  • Does overtime increase Worked Days?
    No. Overtime does not change Working Days. It is added separately as other income.
  • What if warnings appear on Updates?
    Check the Type column. Updates can include Attendance, Timesheet, Statutory Pay Validation, Statutory Pay Calculation, Pension, and other changes. Correct the relevant source information and select Recalculate.
  • Can I change pay after Process Pay Run?
    Not directly on a Completed cycle. Correct the source record first, then undo the pay run if you have permission and process it again. Undo requires a replacement FPS.
  • What if I cannot see Pay Schedules?
    You need View Pay Schedules permission. You also need Company Money access and the Payroll add-on.