Worked Example: Overpayment due to a Change in Hours (Full-Time to Part-Time)

An example of When Earned (WE) calculation method.

A change in hours from full-time to part-time from May 23, at 0.5 FTE, is entered after the May payroll was run. A retroactive process picks this change up in June. The reduction in hours has been treated as an amendment to the member’s existing contract and no new role Id is issued.

The late processing has caused an overpayment which will need to be manually calculated, balances updated, and “When Earned” elements created to update MCR.

When there is a mid-month change from full-time to part-time and it doesn’t constitute a new contract of employment, the service period is to be split on the day the change occurs.

Manual Calculation

A full-time employee receives a total monthly payment of £3,1800.00 and originally May pay is calculated as:

Balance	Amount (PTD)
Eligible Compensation	3180.00
Pensionable Earnings	3180.00
Permanent Pensionable Pay	3180.00
Assumed Pensionable Pay	3180.00
Final Pensionable Pay	3180.00
Employees Contribution	305.28 (9.6%)
Employers Contribution	753.02 (23.68%)

Note: This is not an exhaustive list of balances, other balances may also be impacted.

When manually recalculating May pay, to reduce it due to the change in hours , the payroll figures should have been:

Balance	Amount (PTD)
Eligible Compensation	2718.39
Pensionable Earnings	2718.39
Permanent Pensionable Pay	2718.39
Assumed Pensionable Pay	2718.39
Final Pensionable Pay	2718.39
Employees Contribution	233.78 (8.6%)
Employers Contribution	643.71 (23.68%)

Refund of Pension

Whichever method is used to refund the employee and employer contributions, of £71.50 employee, and£109.31 employer, care is to be taken that it doesn’t affect what is reported in the MCR.

For example, if a user created pre-statutory deduction element is used to refund the employee and employer contributions check to ensure that the calculation balances to be reported in the MCR are correct for a particular period.

Balance Adjustment

As a refund of pension contributions is due for May, which should not impact the June calculation, checks should be made to see what balance adjustments are needed. How you’ve setup the feeds to the following balances will determine which balances may need to be adjusted so that the payroll calculation is correct:

Balance	April PTD Calculated Amount	May PTD Corrected Amount	June PTD Calculated Amount	Total YTD Should be
Eligible Compensation	3180.00	2718.39	1590.00	7488.39
Pensionable Earnings	3180.00	2718.39	1590.00	7488.39
Permanent Pensionable Pay	3180.00	2718.39	1590.00	7488.39
Assumed Pensionable Pay	3180.00	2718.39	1590.00	7488.39
Final Pensionable Pay	3180.00	2718.39	1590.00	7488.39
Employee Contribution	305.28	233.78	117.66	656.72
Employer Contribution	753.02	643.71	376.51	1773.24

Note: Enter the negative balance adjustments to ensure YTD balance amounts are correct. Employee and Employer contributions may already have been adjusted, for example if using a refund element.