What's covered in this guide?
What is an earnings rate?
Earnings rates are used to calculate an employee’s net pay based on the conditions of the shift they’ve worked. Base hourly wages, overtime, allowances, and deductions are common examples of earnings rates.
These earnings rates populate an employee’s payslip and are calculated as either:
Amount per hours/minutes in a shift (e.g. base hourly)
Multiplier of an employee’s base hourly rate (e.g. casual loading)
Single fixed amount for the entirety of a shift (e.g. meal allowance)
Access earnings rates
View and configure Earnings rates through Payroll > Payroll Settings > Earnings Rates.
Import earnings rates from Workforce
If a custom award template is enabled in your Workforce account, Earnings Rates can be automatically created from the related award rules and allowances.
To do so:
Navigate to Payroll > Settings > Earnings Rates > Actions > Import Earnings Rates
Select the Custom Earnings Template in your Workforce account to import earnings rates from
Click the Import button
Depending on how many earnings rates are being imported, this will take a few minutes.
Create a new earnings rate
We recommend creating earnings rules in Workforce, and then importing them into Payroll as earnings rates. However, new earnings rates can be created in Payroll through Payroll Settings > Earnings rates and click the + New button.
When creating a new earnings rate, enter the following fields:
Name
Earnings type - Either Ordinary hours, Overtime hours, Allowance, Director's Fees, Leave loading.
One of either:
Hourly rate
Multiplier
Fixed amount
Journal account - Choose from any accounts set up in your journal
Use the tick box to confirm if the earnings rate accrues leave
Under Liability Configuration, select the applicable statutory liability settings for the earnings rate:
Contributes to gross for minimum wage – determines whether the earnings rate is included in National Minimum Wage (NMW) calculations.
Employee National Insurance can be deducted – student loan repayments are calculated on the same earnings basis as employee NIC, so if an earning is excluded from employee NIC here, it's excluded from student loan repayments too. Hover over the info icon beside this setting for more detail.
Click the Create button once finished to save the new earnings rate.
Contributes to gross for minimum wage
By default, earnings rates contribute to an employee's gross pay for National Minimum Wage (NMW) calculations.
If this earnings rate should not contribute to National Minimum Wage (NMW) calculations, untick the Contributes to gross for minimum wage checkbox under Liability Configuration.
Examples of payments that may not contribute towards NMW calculations include:
Tips and tronc payments
Premium overtime payments
Certain allowances or reimbursements
When this setting is unticked, both the pay and the associated hours for that earnings rate are excluded from NMW calculations.
Only untick this setting where appropriate for your payroll configuration and applicable HMRC guidance.
How will earnings rates appear in Payroll?
Earnings Rates in Payroll are created with either a fixed amount, multiplier, or hourly rate.
When importing from Workforce, earnings rules are grouped into a single earnings rate if they share the same:
Multiplier (e.g. x2.0)
Ordinary vs. overtime hours
Related award
In the example below, the two rules apply in different circumstances (missing a break, or too small a gap between shifts), however both rules:
Have a x2.0 multiplier
Consider ordinary hours
Belong to the same award
Therefore, both would be exported to the same earnings rate.
How will allowances appear in Payroll?
Allowances are also created in Payroll as Earning Rates, and generally as either a fixed amount or multiplier.
As allowances have more extensive reporting requirements, they will be imported to Payroll as individual earning rates.
