Payroll question - first/last month’s pay

[Agreatbighug]

I’m going to be handing my notice in and ive been trying to work out what my last pay would be, so we can budget. I’ve taken a moment to look back at my first wage slip as my salary earned to date seems a bit askew! And I’m worried they’ll use the same formulae for my last months pay and I’ll be missing out.

When I started my role, I started on the 12th of the month. It was a month of 31 days and I worked 3 full weeks. Instead of getting 3 weeks pay (before then going to monthly pay from the next month onwards), they took my monthly salary, divided it by 31 and then multiplied by how many days I was employed by, so 20 (inc first day). It was just under £200 less than what it should have been if they’d taken my annual salary, divided by 52 and multiplied by 3.

if they use the same formulae for my final pay, in the whole time I would have been employed, I will be down by quite a lot. And I’m keen not to be!

There is no HR department so no one knowledgeable in the area, but the formulae they are using doesn’t seem correct/fair?

Sadly that is how salaries, as opposed to weekly wages are calculated.

You get the same for February as October, 12th of your annual salary but one has more working days than the other.

The above formula is what I am used too. I haven't seen anywhere use the divide by 52 rule. Also companies have to be considered so they will have one "rule" & that will always be used.

Thanks for your comments. I suppose what I can’t get my head round is, if you work for 12 months you get a year/52 weeks pay. However when you start and leave during 12 months you don’t actually get the correct pay for what you’ve worked. For example in my case I will have been there for 28 weeks, but based on how much I’ve been paid and what I will be paid (with the above formula) for my last I’d actually be down by around £500, which is quite a lot.

I don’t necessarily agree with you, as my company use the same formula as yours. However, we did have an employee challenge this with ACAS using your logic, and we paid out just to stop it going further. You could give them a call and see what they say?

It’s hard as you need to use the same formula for everyone, and there will be winners and losers unfortunately.

In our workplace for a part month, we would divide your salary by the number of working days in the year (we use 260), then multiply it by the number of days you worked in the month.

The variable number of working days in a month does mean you get winners and losers for part year pay though. If you work in February you only work for 4 weeks but get paid for 4.33 weeks.

I also cannot see an issue. It is normal to do these things in days not weeks because people might not complete a week exactly also there are non working days in a week, so how would that be factored in? Days is the more precise calculation.

In your first month you were there for twenty days and you were paid for twenty days. You should expect similar in your final month and both are absolutely correct. You are not down at all, you are just convincing yourself you are.

Can you ask payroll when the cut off is?

You aren't weekly paid so it won't be calculated in weeks. Salaried staff don't necessarily work full weeks which is why this calculation is used

As others have said, this is normal if you are paid monthly.

@Agreatbighug the method you describe is known as 365. Many employers use it but it is very old and has many flaws and quirks that can be discriminatory or even unlawful. Many employers have known work around that they use if challenged.

The obvious tactic it to make your last day of employment the last day of the month e.g. 30th September. Another one is to make your last day a Monday so the include the Saturday and Sunday. If you are owed annual leave then ask them to calculate using 260 methodology not 365, they may use 261 which is fine. Challenge if the use 365.

Depending on your salary you may be able to show they breach NMW. For example NMW = £10.42, £25,000 pa for a 37.5 hour week is well above this. However, if 1st of the month is a Monday and you leave on the 5th they calculate your pay as £25,000 / 12 months / 30 days x 5 days = £347.23 if you divide that by 37.5 = £9.26 per hour which is well below NMW. Note: NMW is calculated on a pay period.

Thank you so much for this!