Pay Items
Pay items specify all of the income and deductions that make up each employee's pay. Pay items are set up on the Pay Items (MP.PP.22.10) form.
Pay Item Types
- Increase - pay items that add to employee's pay, e.g. income, allowances.
- Decrease - pay items that subtract from an employee's pay, e.g. deductions.
- Nil - pay items that have no impact on net pay, but are calculated as part of a pay, like employer superannuation or entitlement accruals.
Calculating Pay Items
- Amount - a specific amount paid on a given frequency.
- Rated - based on a rate per unit (e.g. per hour or per day).
- Percent Of - calculated as a percentage of another pay item, a Pay Item Rollup or a custom group of pay items.
"Amount" Pay Items
Pay items with the "Amount" calculation method pay a set amount over a specified frequency. This calculation method is commonly used for salaries or allowances of a fixed amount, e.g. union membership fees. The amount can be entered when setting up the pay item (for pay items where the amount will be the same for all employees), or it can be left at $0.00 and edited when the pay item is added to an employee (for items that can differ between employees, like salary).
The frequency selected for the pay item does not have to match the frequency of pays it is used in. If a pay item's frequency is different from the frequency of the pay that the pay item appears in, it will be applied proportionately, e.g. if the pay item specifies an amount per fortnight and appears in a weekly pay, the value will halved; if the pay item specifies an annual salary and appears in a monthly pay, the amount will be divided by twelve.
If an item represents hours worked, like salary, then the amount of hours represented by the selected frequency can be specified. This amount may be used in other calculations."Rated" Pay Items
Pay items with the "Rated" calculation method pay an amount per unit each pay. This calculation method is commonly used for wages, and allows for different wages to be paid each pay period, depending on the hours worked.
The unit is commonly hours or days, but you can use generic "pieces" or "units" if the pay item applies to a different kind of unit. The rate at which units are valued can be one of the rates set up for employees on the Employee Pay Groups (MP.PP.22.50) form, or you can enter a custom rate. The number of units is usually entered in the Current Pay, but you can enter a number in the pay item itself. Alternatively, you can derive the units from one or more pay items or pay item rollups.
"Percent Of" Pay Items
Pay items with the "Percent Of" calculation method pay an amount per pay that is calculated as a percentage of other pay items. This calculation method is commonly used for deductions, e.g. child support or superannuation, that are legislated to be a set percentage of employees' net pay.
- Gross Taxable Income
- Income eligible for Superannuation - AU only
- Income eligible for Payroll Tax - AU only
- Item qualifying for Work Cover - AU only
- Income eligible for KiwiSaver - NZ only
- Income eligible for Relevant Daily Rate (RDR) - NZ only
- Item qualifying for Holiday Pay - NZ only
- Income eligible for ACC Levy - NZ only
- Gross Earnings
The system will automatically select all pay items that apply, based on the options ticked for each pay item on the Liabilities tab of the Pay Items form.
Alternatively, you can select "Selected Pay Items (Summed)" and manually select one or more pay items or pay item rollups - the sum of all items you select will then be used to calculate the percentage.