Pay Information and Options

Pay Information and Options

All the conditions and options for processing pays and calculating wages are contained in the Pay Details section which includes:

  1. Contact Information,
  2. Start Date,
  3. Job Classification,
  4. Branch Number*,
  5. Pay Structure,
  6. Pay Options
  7. End Date (Will only appear if the employee has been terminated.)
  8. Pay Information
  9. Pay Options

*Branch Number is the reference for businesses with multiple locations or offices that need to be specified as per ATO requirements. Most reports can also be filtered by Branch numbers. 

 

Pay Information 

Normal Hours (per Week): Record the normal hours that an employee works per week. This establishes the basis for calculation of entitlements. This field requires the Normal Hours Per Week regardless of the pay frequency (i.e. Fortnightly, Monthly etc...)

Pay Structure Options: Hourly (for hourly paid employees), Salary (for annual salaried employees), Nominated Gross (for situations where 'Hourly' or 'Salary' is not appropriate and you nominate the gross pay) or Piece Work (the employee is paid in number of units or pieces processed). See more information on ‘Piece Work’ below.

Hourly Rate/Base Annual Salary: the Hourly Rate or Base Annual Salary is the gross rate for the employee. If you record a Salary Sacrifice using the Salary Sacrifice tab, the amount of salary sacrifice will reduce this amount. (The amount of salary sacrifice will also be shown on pay slips. If you do not want the amount of salary sacrifice to be shown on pay slips, only include the net rate in this field and do not use the Salary Sacrifice tab.)

Pay Period Options: Weekly, Fortnightly, Bi-monthly and Monthly.

Pay Method Options: Cash (where you pay by cash – rounded to nearest 5 cents), Cheque (where you can write cheques manually or use the Cheque Writer system) and Electronic Pay (where amounts are included in a combined file for transfer to your bank). See more information on Electronic Pay and Paying Employees by Internet Banking below.

Piece Work: When the employee’s Pay Structure is Piece Work, you need to use Custom Rates (see section on Custom Rates) to define the units and the rate that will apply to each unit to calculate pays. Selecting Piece Work will modify other areas of the program. The following areas will be disabled: 

  • Shift Allowances
  • RDOs
  • Overtime
  • Annual Leave and Personal/Carers Leave
  • Leave Loading 
  • Long Service Leave 

The Normal Hours (per week) and Hourly Rate boxes will be cleared and disabled in the Pay Details Tab, and in the Summary Page the Hours column will be renamed Units. In the Pay Advice Report, the title Hours will be replaced with Units and the title Rate will be replaced with Rate per Unit. The title Hours will also be replaced with Units in the Payroll Categories (Detail) report.  

Please note: Employees with Piece Work selected will not appear in the list of employees when using the Multiple Pays option unless Daily Hours have been recorded.


Electronic Pay: Electronic Pays are wages paid via a funds transfer from the company’s bank account to the employee’s bank account. It is done through an electronic transfer of a file containing employee wage details and bank account details. Wages Manager will create this file as an .ABA file (an Australian Bank Standard format). This is NOT the same as Internet Banking – see below. When you select Electronic Pay as the Pay Method you need to record their Bank Details. You will be prompted to do this when you select an employee to be paid electronically and save the changes.

For information on setting up employee bank accounts, see information on Bank Details.
For paying employees into more than one bank account, see information on Multiple Bank Accounts under Bank Details.
For more information on processing electronic pays, see Paying Employees Electronically in Processing Pays.

Paying Employees by Internet Banking:
Paying by Internet Banking is not the same as paying ‘electronically’.
Electronic Pays allow you to create one file that combines all pays so that this one file is sent to your bank. This generally requires that you have the bank’s proprietary software, but some banks may allow you to attach it while you are in internet banking.
However, if you pay your employees using internet banking, do not select Electronic Pay as the option because this will not transfer the information you need to Cashflow Manager to reconcile your records.
Choose Cheque as the Pay Method. This will enable you to record a transaction number (instead of a cheque number) and transfer each payment to your Cashflow Manager file to match with your bank statement.
You can still record your employee’s bank details so that you have them available when paying wages. 
 

Pay Options 

Increasing or Decreasing Tax Withheld: Wages Manager can increase or decrease the amount of tax for occasions when the automatically calculated tax withheld needs to be manually modified on a regular basis. An example of this scenario is an employee who has a Tax Office approved variation to reduce their tax withheld because of rental property negative gearing deductions. You can specify whether a dollar amount or percentage is adjusted per pay.
To adjust the amount of tax withheld from the employee's pay, click on the [Modify Employee] button and select the Pay Details Tab.
In the Pay Options section, next to Manual Tax Adjustment, select whether to ‘Increase’ or ‘Decrease’ the amount of tax withheld. In the next box, type in the amount of the adjustment and then choose either Dollars or Percent.
If Percent is selected, then the tax calculated will be increased or decreased by the selected percentage amount.

Please note: You should only decrease the amount of tax withheld when the Tax Office has given authorisation in writing. You can also adjust the amount of tax calculated when you are processing a pay for a single employee. However, this will only affect that particular pay.

 

Allowances:

Overview - Allowances

When an employee receives allowances or reimbursements this needs to be specified in the Employee’s Details when adding a new employee or modifying an Employee’s Details.

Employees may be paid allowances for a variety of reasons such as industrial award entitlements, use of private motor vehicle etc. In fact, there are 18 different types of allowances (or reimbursements) that are included under the Tax Office guidelines.  

Some require tax to be withheld. Some are reported in gross income while others are reported separately on the PAYG Payment Summary. Some are ordinary times earnings (OTE) for superannuation guarantee purposes while others are not OTE but are still defined as salary and wages.

It is very confusing. However, Wages Manager has made it very simple by automating all of the requirements when you select which of the 18 types of allowances that applies. There are also several additional allowance types that you can select for other allowances or in the event that professional advice you receive indicates that they apply.

The 22 types of allowances and their treatments are:


                                                                                                            

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