Average Daily Pay is the most practical method to calculate the payment of sick leave, public and alternative holidays and bereavement leave, unless there is an employment agreement specifying a special rate.
Average Daily Pay is based on the last 52 weeks and is used to pay the employee what they would have earned had they been at work. The use of Average Daily Pay is optional. For more information on which components to include in the calculation, refer to Calculating holiday and leave pay | Employment New Zealand.
Average Daily Pay
There are five stages to setting up Average Daily Pay:
Set up Transaction Totals
Set up Variables based on Transaction Totals and Normal Rate
Set up Formula
Attach the Formula to Leave Rate
Attach the Leave Rate to Leave Reason
Stage One - Transaction Totals
Select the components to be used in the calculation based on Employment New Zealand. You need to create two, one for Hours and the other for Amount. The components, additions and deductions, leave reasons and user defined leave classes may differ between them.
Hours Transaction Total
Go to Common, Maintenance, Calculations, Transaction Totals
Click Add.
Enter a Code and Description.
Tick Active.
Select Hours for Value Type.
Enter 52 weeks for the Period Range.
Click on the Pay Components tab.
Tick All Pay Components.
To exclude components (e.g. Tax, Net Pay Superannuation, etc), click Select. Highlight the component(s), click OK, then untick Include.
Click on the Additions/Deductions tab. Either:
Tick the All checkbox (e.g. All Additions Before Tax) and then exclude exceptions by clicking Select, highlighting the addition/deduction, clicking OK, then unticking Include.
Leave the All checkboxes unticked and list the inclusions by clicking Select, highlighting the addition/deduction, clicking OK, then ticking Include.
Repeat step 10 for the Leave Reasons and User Defined Leave tabs.
Click OK to save the record.
Amount Transaction Total
Right-click on the new Hours record and select Copy.
Enter a Code and Description.
Select Amount in Value Type.
Review the Pay Components, Additions / Deductions, Leave Reasons and User Defined Leave tabs and make any required changes.
Click OK to save the record.
Stage Two - Variables
Used to specify the source of the data used in the calculation. You will need to create three, two for the variables created above and one for the Normal Rate.
Transaction Total Variable
Go to Common, Maintenance, Calculations, Variables.
Click Add.
Enter a Code and Description. You can match the description to the Transaction Total.
Select Transaction Totals as Source.
In Field, select the Hours Transaction Total.
Click OK to save the record.
Repeat steps 1 to 6 for the Amount Transaction Total.
Normal Rate Variable
Set up if you don't already have a Variable for Normal Rate.
Click Add.
Enter a Code and Description.
Select Employee Details as Source.
In Field, select Normal Rate.
Click OK to save the record.
Stage Three – Formula
The Formula calculates the 52-week average and compares it to the Employee’s Normal Rate.
Go to Common, Maintenance, Calculations, Formula.
Click Add.
Enter a Code and Description.
Tick Active.
Under the first box, click Select. This displays the Variables.
Highlight the Variable for Hours and click OK.
Repeat this for the Amount and Normal Rate Variables.
Click into the blank field under Condition Name. This will create a line.
Enter a Condition Name. This could be a character such as A or 1.
In Condition, enter [Hours Variable Code] > 0 - For Example - [V07] > 0
Then in Formula, enter [Amount Variable Code] / [Hours Variable Code] - For Example - [V08] / [V07]
Arrow down to the next line.
Enter a Condition Name.
In Condition enter [Normal Rate] > [First Condition] - For Example - [V09] > [A].
Then in Formula enter [Normal Rate] - For Example - [V09].
Tick Exit. If the Condition is met (e.g. Normal Rate is greater than the calculated rate), the formula will return a result. If not, it will move to the next line.
Arrow down to the next line.
Enter a Condition Name.
In Condition enter [First Condition] > [Normal Rate] - For Example - [A] > [V09].
Then in Formula enter [First Condition] - For Example - [A].
Tick Exit.
Arrow down to the next line.
Enter a Condition Name.
In Condition enter [First Condition] = [Normal Rate] - For Example - [A] = [V09].
Then in Formula enter [Normal Rate] - For Example - [V09].
Tick Exit.
Click Save to save the Formula.
Tip: Free text can be entered into the Comments area on each line. Values can be tested against the Formula by entering data into Test Values and clicking the Run Test button.
Stage Four – Leave Rates
Go to Payroll, Maintenance, Rates, Leave Rates.
Click Add.
Enter a Code and Description.
Click the Formula radio button.
Select the Formula created above.
Stage Five – Attach the Leave Rate to the Leave Reasons
Go to Payroll, Maintenance, Leave, Leave Reasons.
Edit the Leave Reason.
In Rate Type, select the Leave Rate created above.
Click OK to save the record.
Repeat these steps for each relevant Leave Reason.