Any payroll experts out there?

[Infidelus]

I'm leaving my current job in about a week (2nd June) and I have just received my final payslip, and I think my company are diddling me (it's entirely likely I'm wrong and just don't know how it's worked out).

Some basics: I work 25 hours a week and get 25 days annual leave plus bank holidays. This year the company also started letting employees buy annual leave - a maximum of 1 week, so 25 hours for me, which is taken from my salary in equal monthly payments (I think this works as some sort of tax break as well).

I was expecting a full salary for my last month plus a few hours of leave. I have taken 15 days this year including bank holidays. My final salary is, however, less than a full month's salary whereas I was expecting a full month's pay and a couple of hours for unused leave.

What my pay slip shows is my full salary plus about 10 hours holiday then minus a couple of hundred quid for the annual leave purchase, which is where I'm confused. They took money from me each month and now they're taking the rest of what I would have paid over the year had I stayed. Surely they should have refunded the money I have paid (or worked that out in the background) and then just recalculated based on a 'normal' year, minus any tax incentives from the scheme. We have a basic annual leave calculator spreadsheet which I checked earlier and it said I would have been due a about 2.5 hours (without the A/L purchase), but as it stands I'm down probably £50 or £60 by my calculations.

As I said it's likely I just don't understand how it works but as it's a new scheme the Payroll team said they had to Google it too, and I'm just not confident it's right.

 

[new boy]

I assume your holiday is Jan - dec?

You get 25 days holiday a year

You will have worked about half that year when you leave

Thus you will be due about half the holiday, 12.5 days

You have taken 15 days so you owe them 2.5 days

Edit, oh the plus bank holiday thing changes it I guess. We don't do that so I don't really know how that works

 

[Mercenary Keyboard Warrior]

The payroll team had to google it? There is no exact rule on this, company rules can vary.

I assume your holiday is 25 plus bank hols for what you said so bank hols are irrelevant.

The additional leave I think you commit to the whole lot and its not pro-rata so they will deduct you the whole sum, making your annual allowance 30 days.
You should be entitled to 5/12 * 25 plus 5 days to have been taken by end of May (they tend to ignore part months) = 10.41 days holiday, plus 5 = 15.41 days due.

If you have taken 15 inc bank hols then they owe you a fair few days, but you owe them the remainder of the committed one week you have not yet paid for.

I would ask them for the calculation to see how they worked it out. People in payroll/HR aren't always that good at this stuff.
Bear in mind they typically pay holiday at 1/365 even though you only work 240ish (after hols) days a year.
Some will take 5 days and make it a week, paying you for weeks plus odd days.

It sounds like they may have (correctly) taken the money for the holiday you committed to buy, but not given you all the days you were owed as you in effect have now purchase all 5 days in full.

 

[Infidelus]

I assume your holiday is Jan - dec?

Knew I'd forget something. Yes, Jan to Dec.

I assume your holiday is 25 plus bank hols for what you said so bank hols are irrelevant.

They count bank holidays when they do the annual leave so you basically get 33 days leave in a year to take how you want. Obviously if you're corporate (I am) you take the bank holidays when they fall. Operational staff (shift workers) have to work 75% of bank holidays so they take them whenever.

Bear in mind they typically pay holiday at 1/365 even though you only work 240ish (after hols) days a year.

Yes, they do work it like that, and that's how their excel calculator works it out too.

It sounds like they may have (correctly) taken the money for the holiday you committed to buy, but not given you all the days you were owed as you in effect have now purchase all 5 days in full.

This is where I was confused. My brain says they're taking money they haven't given me. I bought 5 days but they didn't give me the holiday money on top of my salary; they are taking it from my salary each month and now it seems they're taking it twice as though they'd topped my salary up and are now taking it back (again, my brain at work). The Payroll manager did try to explain it to me but I'm none the wiser so clearly Payroll is not a job I should ever apply for .

 

[Mercenary Keyboard Warrior]

ok so you have 33 annual
5/12 * 33 = 13.75 +5 = 18.75
so they owe you 3.75 days and you owe them the balance of 7/12 of the extra week

they may have incorrectly apportioned 38 * 5/12 = being 15.833 days as your entitlement which would be incorrect if you are paying in full for the 5 extra days
this sounds quite likely from your explanation , they cant charge you for 5 days and not give them to you in full

 

[Infidelus]

Thanks again. I realised just as I was going to bed last night that I had made a mistake as I completely forgot to include the May bank holidays, so that makes it 17 days. D'oh!

I did speak to the Payroll Manager again today and he has sent me a written explanation. Slightly edited version follows:

1. Being part-time, you have a lower annual leave entitlement of 165 hours per year. This accrues throughout the year rather than being available in one go. This entitlement would pro-rate down further if you left part way through the annual leave year.
2. At the beginning of the annual leave year (January), you purchased 25 hours annual leave via a Salary Sacrifice, which was to be paid off in 12 equal monthly instalments. This isn’t accrued as you have immediate access to it on purchase and would not pro-rate down if you left part way through the annual leave year.
3. Despite both regular and bought annual leave being treated differently in instances of pro-rating, they form the same pot of annual leave entitlement when it’s being used. One isn’t used before the other.
4. There is no apportionment of the bought annual leave entitlement or payments based on what you have already paid when you leave the business as you had access to the entirety of the bought annual leave from day one. This is the same with the Bike2Work scheme as you still have the bike when you leave and must pay the remainder of the fees.
5. Prior to May’s payslip, you had made 4 payments, leaving 8 left to pay in May.
6. You took 85 hours annual leave (or 17 days).
7. Your leave date is 02/06/2024, pro-rating your regular entitlement to 69.5 hours to date.

If we agree on the information above, let’s move into what’s left at point of termination. Let’s assume that you didn’t buy anything:
69.5 (regular) – 85 (taken) = -15.5 hours (15.5 hours owed to the company)(no Salary Sacrifice payments made in year or to recoup)

We do know that you did buy extra annual leave and as described above, this is available immediately and is then part of the same pot of annual leave entitlement as the regular annual leave:
69.5 (regular) + 25 (bought) – 85 (taken) = 9.5 hours (9.5 hours owed to you)(Salary Sacrifice payments made in year with the rest to recoup)

This means that as there is no apportionment of the bought annual leave, you have been paid for the 9.5 hours of your annual leave entitlement (regular and bought) that you didn’t use but must still pay the remainder of the Salary Sacrifice and so your final payslip is correct.

I am glad I asked and think I mostly understand now, though Payroll is definitely a job I will never apply for! I'll stick with my GCSE maths and leave financial things to cleverer people than me

 

[Mercenary Keyboard Warrior]

Thanks again. I realised just as I was going to bed last night that I had made a mistake as I completely forgot to include the May bank holidays, so that makes it 17 days. D'oh!

I did speak to the Payroll Manager again today and he has sent me a written explanation. Slightly edited version follows:

I am glad I asked and think I mostly understand now, though Payroll is definitely a job I will never apply for! I'll stick with my GCSE maths and leave financial things to cleverer people than me

Yeah it seems they actually gave you a fraction more than I expected. If you take my example above and subtract another 2 days, it would have been 1.75 days, just under 9 hours. They seem to have included the 2 June days to increase it a fraction.
Working on whole months you would have 68.75 hours so the 2 days is giving the 0.75 hours extra it seems. (68.75 vs 69.5)

What he has said checks out.

 

[Infidelus]

Yes I think I'm slightly better off than I ought to have been so I'll stop complaining now .