In a world of uncertainty being able to back-date and forward-date transactions and configuration is a very powerful capability to have. In simple payroll terms it means you can make the ‘effective’ date of a change to fall in the past, present or future - and still have an accurate pay outcome. However, New Zealand payroll is far from ‘simple’. In managing the detailed complexity we are currently dealing with, having a date-effective payroll is more important than ever.
How AMS Pulse Makes Date Effective Payroll, More Effective
29 Jul, 2021
Before getting into that detail, we should pause for a moment and consider the alternative; only being able to effect changes from the current date period range (usually the current date and pay period). If it falls outside that period,manual processes outside of the system are required - either to manage the historic adjustment or to maintain a list of future changes. (Imagine what would happen should your Business Continuity Plan be activated as you may not have access to those future changes to enter into the system). It may be manageable if you have a handful of employees – but it just isn’t viable for several hundred or more.
Date-effective in AMS Pulse
AMS Pulse is fully date effective; daily date effective and not period based. It not only delivers this powerful capability for small and individual changes, but for bulk changes across departments, employee agreements and entire organisations. So, what does this actually look like?
- Employee changes (future or past) can be made at any time and they are applied on the day the change becomes effective. This can be in the middle of a pay period, days or months previously or at any point in time after the change is entered into the system.
- AMS Pulse integrated standard HR process workflows are effective dated so employee changes when approved becomes effective from the stated date.
- AMS Pulse accurately calculates the pay from that effective date to the impacted pay period end. No more difficult manual calculations if the date is in the past. No calculations of the percentage of pay impacted needed. And no reminders necessary.
- Similarly, configuration and rule changes are effective dated to the day from which they need to be applied. The same is true for transactions including changes to leave which makes implementing Holidays Act changes as easy as they can be.
- AMS Pulse intuitively knows and enforces real-time validation, business rules and computation based on when rules are effective.
- AMS Pulse organisation structures are fully date effective as restructures continually happen in the public sector. They can be set in the system ahead of time and the new organization structure seamless becomes effective on the day.
As AMS Pulse is securely delivered via an NZISM aligned cloud you are able to implement and manage these changes from anywhere – you, your rosters, timesheets and payroll can weather lockdowns, floods, earthquakes and more. You have the greatest possible flexibility with real time date effectiveness.
Backpay and other pay adjustments
A very practical application of date-effective change is backpay, including the back dating of a collective settlement which is common across the public sector. AMS Pulse automatically recalculates payments that have already been made with the corresponding taxation element and Holidays Act recalculations. This includes considerations such as gross earnings, overpayment recovery and adjusting leave rate payments. It is not unheard of where backdated settlements can be paying out $M’s in backpay, so you want to get it right.
AMS Pulse also has a pay adjustment process where additional payments are fully automated. This requires a pay adjustment recalculation to pay the difference including the 'normal' pay and the corresponding taxation element including any IR pay day filing adjustments for prior periods.
An example of pay adjustment is typically from events like a late timesheet. Employees can update their timesheet (even from a previous pay period) and it flows through to manager approval to the Award Interpreter The pay adjustment is visible for the employees through the Self-Service portal with an adjustment payslip.
AMS Pulse caters for these automatically and works with the Award Interpretation rules engine to constantly enforce period-based award interpretation rules when pay adjustments are processed. An example of this would include only paying overtime if more than stated hours of ‘normal’ time were worked in the pay period. A time consuming calculation to make manually that is automatically calculated in AMS Pulse.
So how does this actually work?
Our customers tell us the date-effective functionality in AMS Pulse has been a game changer, especially with settled agreements which are generally backdated, sometimes over many months. The payroll engine calculates these types of changes as part of standard processing on a daily basis so it can be calculated on the exact date the change came into effect
Here is a working example:
- In September the Payroll enters a 2% pay increase with the effective date being the first day of June.
- When the September payrun is activated AMS Pulse automatically recalculates all payments from the effective date of change including:
- Average Week Earnings (AWE) would be recalculated for any Annual Leave from 1 June to the end of last pay period. Noting AWE would be individually recalculated for each Annual Leave absence.
- AWE would increase due to any recalculated attendance at the new rate.
- Ordinary Weekly Pay would also be re-evaluated based on the new salary for any Annual Leave already paid.
- 4wkAverage (if used) would also recalculate as with AWE.
- All weekly rates included in the configured rate calculation method would be compared and the higher chosen.
This all occurs in one pay run with each attendance record being calculated individually. It allows the system to roll forward with knowledge of new payments and give everyone involved the greatest possible clarity on when the change occurred, its current and future impact.
A visible, auditable trail
The system then pays the employee the difference between what was paid and what would have been paid for every individual payment item that requires recalculation. This gives very clear visibility of:
- History -a historical record is kept for both the original and later payment.
- Payrates - the employee’s payslip will show old rate and new rate.
- Makeup of current pay - for the current pay period, the new salary will be used, as will the recalculated gross earnings - plus if any leave is taken that requires the new rate.
A full, auditable trail is created, so you are able to prove compliance and evidence of how the calculations were made and applied. And it is straightforward to enter the change into the system, to simulate or quantify large organization-wide updates – not days of calculations and manual changes.
So long as the initial system entry is correct you can be absolutely confident you have paid the right amount at the right time. You are 100% compliant with 100% certainty – and for no other reason than that, having a date effective payroll is absolutely worth it.