Paying a salary change that starts in the middle of a cut-off
When an employee's salary changes partway through a payroll cut-off, KAMI can pay the old rate up to the change and the new rate from the effective date onwards. This is called mid-cycle wage change.
Without it, the new salary applies to the whole cut-off.
Example
An employee's daily rate goes up on 5 October. The cut-off runs 26 September to 10 October.
| Days | Rate paid |
|---|---|
| 26 Sep – 4 Oct | Old rate |
| 5 Oct – 10 Oct | New rate |
The payslip shows a separate line for each rate, so you can see the hours, rate and amount on each side of the change.
Before you start
- You need access to Settings → Payroll and to edit employees' payroll details.
- Turn the setting on before you create the payroll batch for the cut-off. A batch that already exists won't pick it up. If you turned it on after creating the batch, recreate the batch.
Step 1: Turn on mid-cycle wage change
- Go to Settings → Payroll → Payment Configuration.
- Find the Mid Cycle Wage Change card.
- Tick Enable mid-cycle wage change calculation.
- Save.
This is a company-wide setting. You only need to do it once.
Step 2: Record the salary change with its effective date
- Open the employee's profile and go to the Payroll tab.
- Edit Salary details and enter the new Basic Wage.
- Under Career Progression, set the Effective Date to the first day of the new salary, and add a remark (for example, "Merit increase").
- Save.
If the effective date is in the future, KAMI saves the change and applies it automatically on that date.
Step 3: Run the payroll
Create and calculate the payroll batch for the cut-off as usual. For each employee whose salary changed within the cut-off, KAMI splits the cut-off at the effective date:
- Basic pay for the cut-off is split by calendar days before and after the change. For example, in a 15-day cut-off with the change on day 10, 9 days are paid at the old rate and 6 days at the new rate.
- Overtime, night shift, holiday and leave pay are each paid at the rate in effect on the day they happened.
- Late, undertime and absence deductions are worked out separately for each part, at that part's rate.
Payslips where the split was applied are marked Mid Cycle Wage Change.
Good to know
- One change per cut-off. If an employee has two salary changes within the same cut-off, only the first one is split. Record the second in the next cut-off, or adjust it manually.
- Basic wage only. The split applies to the basic wage. Allowances are not split; KAMI assumes they didn't change during the cut-off.
- Some attendance-policy items use the new rate for the whole cut-off. Overtime bonuses, tardiness penalties and holiday payments set up in an attendance policy are calculated once, at the new rate.
- No automatic back pay for closed payrolls. If the effective date falls in a payroll that has already been closed, KAMI doesn't recalculate it. Add the difference to the next payroll as a one-time adjustment, such as a Wage Adjustment.
- Turning it off. If the setting is off, the new salary applies to the whole cut-off in which it takes effect.
Frequently asked questions
The payslip shows the new rate for the whole cut-off. Why? Check that Enable mid-cycle wage change calculation was on before the batch was created, and that the employee's salary change has an Effective Date inside the cut-off. If the batch was created before you turned the setting on, recreate the batch.
Why is the split by calendar days and not working days? Mid-cycle wage change currently splits basic pay by calendar days, including rest days, so the result can differ slightly from a working-days calculation.
Does this work for monthly, semi-monthly and weekly payrolls? Yes. The split follows whatever cut-off the payroll batch covers.