Query on formula used to calculate unpaid leave

fuzzycycle · 31-08-2016 01:11PM #1

Hi there,

I'm not sure if I'm in the right place, so apologies if this is posted in the wrong forum....

I have a query please about "Unpaid Leave" I have recently taken due to Parental Leave. This month I took 6 Days as Unpaid Parental LEave.

My monthly Gross Salary is 2833.33
The Unpaid Leave amount for 6 days was deducted from my Gross Monthly Amount.

The figure I'm being deducted for 6 Days is €832.65.

I am totally confused that it is this high. I have worked out that I get paid only (approx) €91.40 daily. (If I take 2833.33 and divide by 31 days in the month).

However, according to our accountant calculations she makes out that I am paid: €138.77 daily.

So I have asked her how she came to this figure and this is what she has advised me:

Takes Annual salary * (multiplies this by) number of days unpaid leave / (divides this by) number of working days in the year - (and subtracts) the number of public holidays in the year.

So she has taken:

€34,000 (annual salary)
*
6 (unpaid Leave days)
= €204,000
/
253 - 8 [245] (working days in the year - 8 Public Holidays)

= €832.65 --> Amount to be deducted...

Can anyone tell me if this makes sense to them at all - this sounds completely bizarre way of calcuatling this and I think I'm being deducated too much.

Many thanks

davo10 · 31-08-2016 01:33PM

fuzzycycle wrote: »

Hi there,

I'm not sure if I'm in the right place, so apologies if this is posted in the wrong forum....

I have a query please about "Unpaid Leave" I have recently taken due to Parental Leave. This month I took 6 Days as Unpaid Parental LEave.

My monthly Gross Salary is 2833.33
The Unpaid Leave amount for 6 days was deducted from my Gross Monthly Amount.

The figure I'm being deducted for 6 Days is €832.65.

I am totally confused that it is this high. I have worked out that I get paid only (approx) €91.40 daily. (If I take 2833.33 and divide by 31 days in the month).

However, according to our accountant calculations she makes out that I am paid: €138.77 daily.

So I have asked her how she came to this figure and this is what she has advised me:

Takes Annual salary * (multiplies this by) number of days unpaid leave / (divides this by) number of working days in the year - (and subtracts) the number of public holidays in the year.

So she has taken:

€34,000 (annual salary)
*
6 (unpaid Leave days)
= €204,000
/
253 - 8 [245] (working days in the year - 8 Public Holidays)

= €832.65 --> Amount to be deducted...

Can anyone tell me if this makes sense to them at all - this sounds completely bizarre way of calcuatling this and I think I'm being deducated too much.

Many thanks

I don't think either of the calculations are correct. In your calculations you are using your monthly gross which is an average, different months can have different numbers of days.

Your employer should not have deducted public holidays, if you are full time five days per week, you get paid for public holidays.

A better way of calculating the gross is 365/52/5 to give you your gross daily rate but this does not take into account your levies/PRSI/tax credits etc.

Wheety · 31-08-2016 01:42PM

Well you're including weekends. Going by your HR's explanation you are paid on a 5 day week and not 7.

Bandana boy · 31-08-2016 02:13PM

I think reducing the public holidays is a problem as they are paid days

I would have your daily rate at 34,000/260= 130.76 a day
Times 6
€784.61 reduction before tax

Strictly speaking there is 261 working days in 2016 so you could argue
34,000/261 =130.27
Times 6
€781.60

All of this assumes your standard week is Mon-Fri

daheff · 31-08-2016 03:44PM

public/bank holidays dont come into it.

I would work it as: number of parental days taken/number of business days in the month*monthly salary.

There may be some give or take on the proportion of salary (eg it could be number of parental days taken/number of business days in year*1/12*annual salary)...but by and large thats how it works

on a 22 day month i make your gross deduction to be 6/22*2833.33 =772.73

It sounds like your employer/HR person doesnt really understand what they are doing and not that they are trying to screw you over. They are trying to work out the daily rate, but mistakenly are deducting the bank holidays (your salary still includes these days as they are paid days) in the calculation.

fuzzycycle · 31-08-2016 06:53PM

Thanks all for taking the time to reply. So it turns out you're all right. The public holidays shouldn't have been deducted but I was also including wknds so my estimate was wrong also.

So I've been told there are 22 working days this month, so net salary will be calculated as follows:

2833.33 / 22 = 128.78 (daily rate)
128.78 * 6 = €772.72 (amount to be deducted before tax applied)

Still not great, still a big deduction for 6 days leave, but that's what I wanted & they have given me so won't complain. Just glad I understand how it's calculated.

I don't think they were trying to be underhanded, like you say just think accountant (who is relatively new & Young so perhaps a little inexperienced (not insulting her at all) ) wasn't 100% sure how it should be calculated.

She went off, invested it & came back to me within 24 hours of query, you can't ask for more than that really.

Thanks again for your help!!

Glass fused light · 31-08-2016 10:40PM

Bandana boy wrote: »

I think reducing the public holidays is a problem as they are paid days

I would have your daily rate at 34,000/260= 130.76 a day
Times 6
€784.61 reduction before tax

Strictly speaking there is 261 working days in 2016 so you could argue
34,000/261 =130.27
Times 6
€781.60

All of this assumes your standard week is Mon-Fri

I agree with Bandana boy on the day rate, and IMO your accountant is 'inexperienced'/crap at payroll and so is who ever advised her.

Using the monthly amount by days worked in the month is not correct as this can change month on month and year to year. Eg if there were 20 days a rate of eur141.67 would apply so for 6 days a gross deduction of eur850.
Plus it's just agreed that your annual payment in 12 equal amounts, you could have agreed to be paid 13 amounts with the last 2 in December.

On an annual salary you are employed for the full year, 5 work days a week, 52 weeks a year, so 260 work days in total, you are entitled to the bank holidays and 20 days holidays but this is costed into the salary.

Ignore extra days holidays over statutory as these are 'paid for' in your salary, they are still work days, just ones you don't have to turn up for like a bank holiday.

In a year where you do not take leave you earn 1/260 each work day (eur34,000/260 = 130.77 per day) and your P60 will show a gross amount of eur34,000.

You then decide to forgo 1/260 of your salary for each day of unpaid leave you take.

This was the agreed logic method way back when I was doing payroll

daheff · 01-09-2016 01:47PM

Glass fused light wrote: »

.

On an annual salary you are employed for the full year, 5 work days a week, 52 weeks a year, so 260 work days in total,

You then decide to forgo 1/260 of your salary for each day of unpaid leave you take.

This is all well and good, but there are more than 260 working days in a year as a year isn't a round 52 weeks, and depending on how weekends fall it can be more or less days worked per annum.

But I do agree that there should be a set rate per day foregone...otherwise some cost more than others.

Glass fused light · 02-09-2016 08:55AM

Yes the year is not a round 52 weeks 52 * 7 = 364 + 1 'excluded' day = 365 days for the year & an additional 'excluded' day on each leap year.
So the employee has a fraction of additional salary allocation to the day rate using the 52 week method and the employer/HR has a quick, easy to explain method (and not having an argument when the 'excluded' days fall on week/weekends).
So 260 + 1 'excluded' day + 1 leap year - Saturday Dec 31st = 261 work days.
Or 260 + 1 'excluded' day + 1 leap year (Friday Jan 1st) = 262 work days.
Solution to this would be for the employment contract to have a formula linking to the leave section.

However (ignoring the excluding days) the work days should not change, just the day of the week that day 1 of week 1 runs from ie 2016 runs from Friday to Thursday, 2017 runs from Sunday to Saturday.

Thoie · 02-09-2016 09:41AM

Based on a working week of Mon-Fri, on average there are 261 "paid" days a year. This varies a bit based on the start day of the year, and whether it's a leap year.

Because I'm procrastinating from doing something else, here are the days for the next 10 years:

2016 - 261 (leap)
2017 - 260
2018 - 261
2019 - 261
2020 - 262 (leap)
2021 - 261
2022 - 260
2023 - 260
2024 - 262 (leap)
2025 - 261

Query on formula used to calculate unpaid leave

Comments