How wages are calculated
Every payslip in KAMI is built from a small number of rates that are derived, not typed in. Understanding how those rates are derived is how you tell the difference between a payslip that is wrong and one that is merely surprising.
Where: Payroll › the payroll run › Payslips You need: the payroll rights to view payslips
The one idea everything rests on
KAMI stores an employee's wage and a wage period — hourly, daily or monthly. Everything else on the payslip is derived from those two, through a chain of rates:
monthly wage → daily wage → hourly wageThe two divisors in that chain are the whole story, and both are configurable:
| Step | Divided by | Set in |
|---|---|---|
| Monthly wage → daily wage | Monthly wage days | Payment settings (wage basis) |
| Daily wage → hourly wage | The employee's expected working hours | The employee's schedule |
Get either divisor wrong and every derived figure on the payslip is wrong — overtime, night differential, absence deductions, holiday pay. They all price off these rates.
Monthly wage days: the number that decides the daily rate
The daily rate is the monthly wage divided by monthly wage days. That figure is not a fixed 22 or 26; it comes from the wage basis you configure:
| Wage basis | Monthly wage days | Consequence |
|---|---|---|
| EEMR | Calculated from your work week | 5-day week → 21.75, 6-day week → 26.08 |
| Fixed Monthly Days | Whatever number you set | Stable and predictable; entirely your policy |
| Calendar Days | The actual days in the month | Varies 28–31, so the daily rate changes month to month |
EEMR (Equivalent Estimated Monthly Rate) is calculated as:
(365 − (7 − days in your work week) × 52) ÷ 12So a five-day week gives (365 − 104) ÷ 12 = 21.75 days, and a six-day week gives (365 − 52) ÷ 12 = 26.08 days.
💡 If you have seen "22 days" or "26 days" quoted, those are roundings of 21.75 and 26.08. If your company genuinely wants a round number, set Fixed Monthly Days rather than assuming EEMR produces one — the difference between 21.75 and 22 is a real difference in every daily rate you pay.
⚠️ Calendar Days makes the daily rate move. February gives a higher daily rate than March for the same salary, because the same monthly wage is divided by fewer days. That is legitimate and some companies want it, but it produces different absence deductions and overtime pay from month to month, and it is a common source of "why is this payslip different" questions.
Hourly wage: not simply a division by eight
The hourly rate is the daily rate divided by the employee's expected working hours — the hours on their own schedule, not a fixed eight.
An employee on a 7.5-hour day has a higher hourly rate than one on 8 hours at the same salary, because the same daily rate is spread over fewer hours. That flows straight into overtime, which is priced per hour.
This is why a compressed or part-time schedule changes overtime pay even when the salary has not changed.
The three pay types
| Wage period | Base pay is | Typical use |
|---|---|---|
| Monthly | The monthly wage, adjusted for unpaid time | Salaried staff |
| Daily | The daily rate for days actually rendered | Field and shift workers |
| Hourly | The hourly rate for hours actually rendered | Part-time and casual staff |
For daily- and hourly-paid employees, KAMI still derives a notional monthly wage internally (rate × monthly wage days) so that contributions and taxes, which are monthly concepts, have something to work from. See Daily-paid, monthly-paid and hourly-paid employees.
Basic wage or gross wage
Some pay is priced off the basic wage and some off the gross wage, which is the basic wage plus recurring other payments such as fixed allowances. Which one applies to overtime is a setting, not a law of nature:
| Overtime wage basis | Overtime prices off |
|---|---|
| Basic | Basic wage only |
| Basic + Fixed Allowances | Basic plus fixed recurring allowances |
| Standard | The standard basis for your configuration |
⚠️ Moving an allowance in or out of the overtime basis changes overtime pay for everyone who receives it, in every future run. Treat it as a policy change, not a settings tweak.
What Happens Next
- Rates are derived at calculation time and stored on the payslip. Changing a wage basis afterwards does not retrospectively alter payslips that have already been calculated — you must recalculate them.
- Because rates are stored, two payslips in the same run can legitimately hold different rates if a setting changed between calculations.
- Every downstream figure — overtime, night differential, holiday pay, absence deductions, final pay — is derived from these rates rather than stored separately.
Tips
- Decide the wage basis once, before your first live run. It is the single most consequential payroll setting, and changing it later means every subsequent payslip is computed on a different basis from your history.
- Check one employee by hand before your first run. Take their monthly wage, divide by the monthly wage days you expect, and compare against the daily rate on the payslip. If those two do not match, stop — nothing downstream will be right.
- Watch part-time and compressed schedules. They are where the expected-working-hours divisor bites, and where a "wrong" overtime figure is usually correct.
- Do not reverse-engineer the rate from the payslip total. Read the rate itself; the total includes items that are not derived from it.
Troubleshooting / FAQ
Q: Overtime looks too high for one employee. Check their expected working hours. A shorter standard day produces a higher hourly rate, and overtime is priced per hour.
Q: The daily rate changed between months and nobody changed the salary. The wage basis is probably Calendar Days, which divides by the actual number of days in the month.
Q: Our daily rate is not salary ÷ 22. It is salary ÷ monthly wage days. On EEMR with a five-day week that figure is 21.75, not 22.
Q: We changed the wage basis but old payslips are unchanged. Expected. Rates are stored on the payslip at calculation. Recalculate the payslips you want to move.