SimplePay performs basic salary calculations automatically in line with the standard EA rules when you enter the relevant hours for your employees. More information on capturing employee hours can be found in the following sections:
SimplePay does not, however, calculate overtime, rest day or public holiday pay automatically. In order to record these types of pay, you have to create custom items. For more information about how to create custom items, please refer to:
Overtime work is all work in excess of the normal hours of work (excluding breaks). For overtime work, you must pay employees at least 1.5 times their hourly basic rate of pay. Payment must be made within 14 days after the last day of the salary period.
Employees can only claim overtime if:
- they are a non-workman earning $2 600 or less per month
- they are a workman earning $4 500 or less per month
You are not required to pay an employee overtime if they exceed the above thresholds. SimplePay does not differentiate between the two; you will therefore need to ensure that the employee is eligible for overtime before adding it to a payslip.
An employee can only work up to 72 overtime hours in a month. Employers can apply for an exemption if they require employees to work more than 72 hours of overtime in a month.
Work on rest days or public holidays is not counted in the 72-hour overtime limit, except for work done beyond the usual daily working hours on those days. Such extra hours are included in the 72-hour limit.
For more information on overtime, please visit the MOM website.
Hourly Paid Employees
You can capture the number of overtime hours that an hourly paid employee has worked during a particular payslip period by clicking on Basic Salary under Payslip Inputs.
The system will then calculate the overtime for the employee as follows:
Hourly rate (as entered under Basic Salary in the Regular Inputs section) x 1.5 x Overtime Hours Worked (as entered under Basic Salary in the Payslip Inputs section).
Fixed Salaried Employees
There is no built-in system item for overtime for fixed salaried employees. You will, therefore, need to set up a custom income item for overtime with the following fields configured:
- The Input Type should be “Hourly rate * Factor * Hours”.
- The Rate factor should be “1.5”, unless overtime is paid at double the hourly rate, in which case “2” should be entered. Any alternative can also be entered if a custom rate is required e.g. “1.75”.
- The Hours worked factor should be left blank or set as “1”, unless each hour of overtime is deemed to be shorter or longer than the actual time worked.
Once the custom item has been created, you can then add it to an employee’s payslip as follows:
- Navigate to an employee’s profile
- Click on Add next to Regular Inputs and select the newly created custom item
- Click Save
To capture overtime for a particular pay period, click on the overtime custom item under Payslip Inputs and enter the number of overtime hours worked by the employee for the relevant period.
The system will automatically calculate the overtime pay for the employee as follows:
Employee’s hourly rate (calculated by the system) * Rate factor (as configured when setting up the custom item) * Hours (as entered under Payslip Inputs)
The system automatically calculates the employee’s hourly rate (used in the above formula) as follows:
Basic salary * Number of pay periods in a year for the employee’s pay frequency / (52 * number of hours worked per week, as configured under an employee’s Regular Hours screen)
Please note: SimplePay uses the contractual hours as per the Regular Hours screen to determine an employee’s hourly rate; this differs slightly from the calculation that MOM uses, as MOM uses the actual hours worked for the period and not the contractual hours
An employee earns $2,000 per month. Their Regular Hours screen is configured to work Monday to Friday, with 8 hours worked per day, except for Fridays, which are only 6 hours.
The employee’s hourly rate is calculated as:
($2 000 x 12) / (52 x 38) = $12.15 per hour
- $2 000 is the employee’s Basic Salary
- 12 is the number of pay periods in a year for employees on a monthly pay frequency
- 52 is a fixed constant, representing the number of weeks in a year
- 38 is the number of hours that the employee works per week, calculated as 8 + 8 + 8 + 8 + 6, as per their Regular Hours screen
A rest day comprises 1 whole day (midnight to midnight) and is not a paid day. You, as the employer, determine the rest day, which can be on a Sunday or any other day. If the rest day is not a Sunday, you should prepare a monthly roster and inform your employees of the rest days before the start of each month.
You cannot compel an employee to work on a rest day, unless under exceptional circumstances. Employees might sometimes request to work on a rest day. When calculating the payment for work on a rest day, different rules apply when work is done at the employer’s request and when it’s done at the employee’s request.
Also, as with overtime pay, there are different maximums applicable to workmen and non-workmen. For more information about these rest day pay aspects, please visit the MOM website.
Employees are entitled to their gross rate of pay on a public holiday if:
- They were not absent on the working day immediately before or after a holiday without consent or a reasonable excuse; or
- They were on authorised leave (e.g. sick leave, annual leave, unpaid leave) on the day immediately before or after a holiday.
Employees are not entitled to holiday pay if the holiday falls on a day when they are on approved unpaid leave.
Public Holidays on Off Days
If the holiday falls on a non-working day or off day, you need to do one of the following:
- Compensate employees with an extra day’s pay in lieu of that holiday; or
- Give them another day off as a holiday.
Working on a Public Holiday
If employees work on a public holiday, different leave pay rules will be applied depending on whether the public holiday falls on a working day, a rest day or a non-working day. If an employee is required to work on a public holiday, the employer should pay the employee an extra day’s salary or grant them off in lieu.
For more information about this and other public holiday pay aspects, please visit the MOM website.