In this article, we'll cover how to make a pay rate change for an employee or contractor. Our effective dating tool means we handle all those pro-rated payroll calculations for you, even if the pay change takes place mid-cycle.
First, you'll make the salary or pay rate change in the individual's people profile. Then, when you run payroll for the pay period in which the change takes place, you'll see entries for both the original rate and the new rate, pro-rated based on the effective date of the pay change.
What is a mid-cycle pay change?
A mid-cycle pay change takes place when an employee's rate of pay changes in the middle of a pay cycle. This means that for part of the cycle they will have one rate, and for the other pay of the cycle they will have another rate.
This can occur when someone is hired in the middle of a pay period, when someone is terminated in the middle of a pay period, or when there is a change of wage in the middle of a pay period.
As a result, their compensation for the first pay period may be prorated based on the number of days worked, rather than a full pay period amount.
Change a salary or pay rate in a people profile
1. In the navigation bar, select People. In the People list, locate the relevant individual and click View.
2. In the individual's people profile, click Job details.
3. Click Edit to make changes.
4. Click on the Annual salary or Hourly rate amount.
6. This will open the Update compensation slide-out window. Here, enter the new compensation amount under Annual salary or Hourly rate,.
7. You can also make any other necessary changes to the Employment type (Full-time or Part-time) and Expected hours in a pay period.
8. Under Effective date, enter the date that your changes take effect. This is the first day that the employee or contractor should be paid at their new rate.
9. If the selected effective date is mid-cycle, the Mid-cycle pay change section will appear. Enter the appropriate hours for each of the following:
- At the old rate:
- For the effective pay period, how many days did they work under the old rate?
- For the effective pay period, how many hours did they work per day at the old rate?
- At the new rate:
- For the effective pay period, how many days did they work under the new rate?
- For the effective pay period, how many hours did they work per day at the new rate?
10. Under Prorated hours for current payroll, Wagepoint will calculate hours at the old and new rate based on the numbers you've entered. Review the numbers, then click Save.
11. On the Job details tab, a message will appear letting you know when the change will go into effect.
12. Click Done.
How does a mid-cycle rate change impact the Run payroll workflow?
Running payroll that includes a mid-cycle pay change is not much different from running a regular payroll, The only difference is that the relevant individual will have two entries: one at the original rate, and one at the new rate.
For example, you may notice an additional line on Step 2: Hours and incomes, Step 3: Taxes, and on the individual's paystub.
On Step 2: Hours and incomes, any individual who received a mid-cycle pay change will have two entries: one at the original rate, and one for the new rate.
The Regular hours will automatically populate based on the information you entered when setting up the mid-cycle pay change. You can make changes here to the hours as well add any applicable incomes, deductions, and benefits as usual.
On Step 3: Taxes, you'll see two lines for the individual with the mid-cycle pay rate as well.
On the individual's paystub preview, there will be two Regular pay lines: one at the older rate, and one at the new rate.
Please note that this only applies to the paystub preview. The employee's version of the paystub will have both lines combined together.
