This is a guide on merging old and new salaries in order to accurately capture an employees salary after a review is done within the month.
Have you just reviewed an employee’s salary mid month or at a period away from the start of the Payroll cycle?
You often wonder how to capture the old salary and the new salary so that the employee is accurately paid and statutory deductions are correctly captured..
Here’s how to make sure both salaries are correctly prorated following the scenario below:
An employee earns NGN 150,000 monthly and gets a raise to NGN 250,000 effective from the 7th day of the month.
The new Gross of NGN 250,000 will take full effect from next Payroll cycle. However, for the cycle in which the salary was reviewed, the difference in the old and new salaries have to be calculated and implemented as the salary for that month.
See below calculation:
No of days worked divided by the number of days in the month, multiplied by the old salary.
6/31*150000 = 29,032.26 (Old Gross)
No of days worked divided by the number of days in the month, multiplied by the new salary.
24/31*250000 = 193,548.39 (New Gross)
Gross for that month = Addition of prorated old gross and prorated new gross.
29,032.26+193,548.39 = 222,580.65 (Gross for current cycle)
Once your calculation is done, navigate to >>Payroll>>Salary rates>>Review the salary.
Alternatively, you can set then new gross under the salary rates page and select the effective date as the date the salary was reviewed (the system automatically prorates the salary based on the effective date)then you add the prorated old gross as an allowance.
NB: If you used the first method, remember to change the gross and effective date in the next Payroll cycle via the salary rates page.