Payroll - 52 Week Average Holiday Pay

This article explains how to configure and use the 52 Week Average Holiday Pay feature within the system. This feature calculates an employee's holiday pay based on their average earnings over the previous 52 paid weeks within the last 104 weeks, in accordance with holiday pay regulations.

It contains the following sections:

• Configuration Steps
• How the 52 Week Average is Calculated

• Holiday Pay in the Payrun Process

• Pay History

Configuration Steps

To enable and use the 52 Week Average Holiday Pay feature, you need to configure settings in two main areas:

1. Absence Plan Type Payroll Settings:

• • Navigate to the settings for the relevant Absence Plan Type used for holidays.
  • On the Payroll Settings screen for the plan, ensure the checkbox ‘Use for Holiday Pay’ is ticked.
  • Fill in the Working Hours Per Day field.

2. Payroll Settings - Pay Code Mappings:

• • Go to the Pay Code Mappings section in your Payroll settings.
  • Assign a specific pay code to the ‘Holiday Pay Code’ drop-down menu. This pay code will be used when generating holiday pay in a payrun.

How the 52 Week Average is Calculated

Cezanne calculates the average hourly rate for holiday pay based on the employee's pay history.

• The calculation uses the latest 52 weeks in the employee's Pay History that fall within 104 weeks of the start date of the holiday period being paid.
• The Hourly Rate is calculated using the formula:

Sum of Hours Worked (from the 52 relevant weeks) / Sum of Amount Paid (from the 52 relevant weeks)​

• The total holiday pay for a specific holiday period is then calculated based on this average hourly rate and the hours attributed to the holiday.

 

Holiday Pay in the Payrun Process

Payroll Summary Report

When the Payoll Period has started and the Summary Report has generated, any 52 Week Average Holiday Payments can be found in the Absences section >> Average Holiday Payments tab. 

To see a breakdown of the calculation and / or override the Total Holiday Pay, click on the row to open the slideover:

To override:

1. Tick the 'Override Total Holiday Pay' option.
2. Enter the 'Total Holiday Pay Override Value'.
3. Click Save.

Payrun

When processing a payrun that includes holiday taken by an employee configured for 52 Week Average Holiday Pay:

• A payline for the calculated Holiday Pay is automatically generated with the value calculated within the Payroll Summary Report (or override value if overridden).
• The payline uses the pay code assigned in the Pay Code Mappings configuration.

After Finalising the Payrun

When the payrun containing the calculated holiday pay is finalised, the corresponding holiday entry in the employee's record is automatically marked as paid.

Pay History

The Pay History screen (People >> Payroll >> Pay History), is used to enter and display an employee's weekly pay history. This history is crucial for the 52 Week Average calculation.

Populating Pay History

Pay History can be populated in two main ways:

1. Using the Import: You can import historical pay data into the system.
2. From a Payrun: If the option ‘Populate Pay History from Payrun’ is ticked in Company Payroll Details, the system will automatically generate Pay History rows after a payrun is finalised.

Generating Pay History from a Payrun

The data used to populate Pay History from a payrun depends on:

• The pay period type of an employee's Pay Schedule
• The 'Populate Pay History Using Timesheet' option against the employee's Pay Schedule

(Payroll >> Company Payrolls >> Company Payroll Details >> Pay Schedules tab)

Pay History can be populated using the following methods:

 

1. Automatically using Working & Scheduled Time data (Pay Period = Weekly & 'Populate Pay History Using TImesheet' = Not Ticked):

If an employee's Pay Schedule is set up with these options, their Pay History will be automatically recorded after a payrun has been finalised. The Pay History columns will be populated as:

• Week Start / Week End: The Payroll Period Start / Payroll Period End dates.
• Amount Paid: The total amount of Pay Lines in the payrun where the Pay Code has ‘Use for Holiday Pay’ ticked.
• Hours Worked: The ‘Worked Hours’ for the relevant Weeks as recorded in the employee’s Working & Schedule Time record at the Pay Date.

2. Automatically using Timesheets data (Pay Period = Weekly, Fortnightly, Monthly, Four Weekly & 'Populate Pay History Using TImesheet' = Ticked):

If an employee's Pay Schedule is set up with these options, their Pay History will be automatically recorded after a payrun has been finalised. The Pay History columns will be populated as:

• Week Start / Week End: Weeks (Sunday – Saturday) covering the dates of any timesheets processed within the payroll period.
• Amount Paid: The total value from Approved Timesheet Payments where the pay code has ‘Use for Holiday Pay’ ticked.
• Hours Worked: The total hours from Approved Timesheet Payments where the pay code  has ‘Use for Holiday Pay’ ticked.

3. Manually using the Pay History Import (Pay Period = Fortnightly, Monthly, Four Weekly & 'Populate Pay History Using TImesheet' = Not Ticked)

If an employee's Pay Schedule is set up with these options, their Pay History will not be automatically recorded after a payrun has been finalised. Instead, you will need to export the data and import it using the Pay History Import.

This is because for the Fortnightly, Four Weekly and Monthly options, Cezanne doesn't know how to split up an employee's pay into each week in the month. 

If you need to use this option, you need to export the Pay Lines that have Pay Codes which are set to 'Use for Holiday Pay' and allocate the correct amount to each week and populate the columns as:

• Week Start - Sunday of the week to match HMRC Tax Weeks.
• Week End - Saturday of the week to match HMRC Tax Weeks.
• Amount Paid - The Amount Paid allocated to that week.
• Hours Worked - Amount of Hours worked. If you need to work that out from the amount, you can divide the pay by the employee's Base Hourly Rate from Regular Pay.