Calculate employee earnings

Section 11Objective 6

Calculate employees’ earnings• Section 11

– Objective 6• Calculate gross pay• Calculate overtime from employee records• Calculate statutory and non-statutory deductions• Calculate net pay

Calculate employees’ earnings• It is the function of the Accounts Department

to prepare the payroll.• A payroll is a list of employees and the

payments due to them for wages or salaries for a pay period.

• Each times salaries or wages are paid payroll is prepared for the period– It show details of an individual gross pay,

statutory deductions and non-statutory deductions

Calculate employees’ earningsCalculate gross pay• Gross pay (Total pay)

– Is the total compensation earned by an employee.

– It consists of the regular wages or salaries, plus overtime pay, bonuses and commissions.

– The regular wages for an employee is determined using the following formula• Total regular hours worked x

hourly rate

Calculate employees’ earnings• Calculate gross pay

– The calculation of gross pay is taken from approved time cards or time books

– The formula for the overtime employee is• Overtime work in excess of eight hours worked

x overtime rate

Calculate employees’ earnings• Calculate overtime from employee records

– Overtime is time an employee worked in addition to his or hers normal working hours.

– These hours are paid at higher rates than normal hours

– The hours are outlined in a country’s law

Calculate employees’ earningsCalculate overtime from employee recordsThe overtime worked beyond eight hours on a working day in some countries may be paid– time and half– double time– triple timeThe formula to calculate overtime work in excess of eight hours isOvertime work in excess of eight hours x overtime rate.

Calculate employees’ earnings• Calculate net pay

– Net salary (take home pay) is calculated as• gross salary less statutory and non-

statutory deductions

Calculate employees’ earnings

• The video on the next slide will give an overview of calculating employee’s wages and the use of relevant records( as per objectives 2, 5 and 6 from the syllabus).

Calculate employees’ earnings

• Go to: Calculating employee earnings– Audrey Shellhammer– https://www.youtube.com/watch?v=iI8vAmD6

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