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keating.jan
May 31, 2022
Question

How does Quickbooks calculate the first pay in a monthly cycle when the new employee started part way through the month?

  • May 31, 2022
  • 1 reply
  • 0 views
We run monthly payroll.  Our work week is 38 hours (7.6 hours / week).  A new employee started on 7th March, so part way through the month.  She has asked me how her wages were calculated.  She understands the arbitrary 164.67 hours / month that Quickbooks has allocated.  She doesn't understand how that first month was calculated, and whilst I understand it's an algorithm that ensures the annual figure is met, I don't know the methodology behind it so I can't explain it to her satisfactorily. 

Essentially, she worked 19 days (144.4 hours) in that first month.  When the payroll calculated her wages it did so by paying 132.8 hours.

I should mention that in April she actually worked 21 days (159.6 hours) and was paid 164.67 hours ... and she is fine with that.  She just wants the first month explained.

Any help in explaining this to her would be greatly appreciated.

Thanks
Jan

1 reply

I
IntuitAika
May 31, 2022

Hi keating.jan,

 

Thank you for posting in the Community! 

 

Based on the information you've provided, it seems that the Calculate monthly hours based on an annual average has been enabled for your monthly pay schedule.

 

Here's how to check:

 

  1. Go to Employees tab and then select Payroll Settings.
  2. Select Pay Schedules.
  3. Select Monthly. 
  4. See if Calculate monthly hours based on an annual average is ticked.

 

The purpose of this setting is to calculate an average number of hours per month for employees with advanced standard working hours set up in their profile, rather than paying the specific hours per month based on the number of days in the month (calculating/paying different hours each month). This setting will follow the same principle as basic standard hours, for eg if an employee is set to work 19 hours per week, the monthly calculation of hours will be 19 x 4.33333 and this amount will not vary each month.

 

If this setting is not selected, the calculation used to determine the employee's monthly hours will be dependant on the days the employee works and how many of those days are contained in the specific month.

 

Feel free to leave a comment below if you have any other questions. Have a great day! 

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