Paying a salary change that starts in the middle of a cut-off

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.

DaysRate paid
26 Sep – 4 OctOld rate
5 Oct – 10 OctNew 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

  1. Go to Settings → Payroll → Payment Configuration.
  2. Find the Mid Cycle Wage Change card.
  3. Tick Enable mid-cycle wage change calculation.
  4. Save.

This is a company-wide setting. You only need to do it once.

Step 2: Record the salary change with its effective date

  1. Open the employee's profile and go to the Payroll tab.
  2. Edit Salary details and enter the new Basic Wage.
  3. Under Career Progression, set the Effective Date to the first day of the new salary, and add a remark (for example, "Merit increase").
  4. 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.