Setting up Daily Rate Compensation in Employees Profile

Audience & Scope

Audience: HR Admin 

Module: Payroll

Country: Global

Pre-requisites:  Admin User group settings

 

Introduction

Managing different types of employee compensation just got more flexible. With the latest enhancement to the Compensation tab in the Employee Profile, you can now set an employee’s salary based on a daily rate—perfect for businesses with shift workers, part-timers, or employees paid by the day.

 

Step by Step instructions Setup Daily Compensation

To access the new option:

Click into the Employee Profile > Compensation > Salary

1. Click on + Add Salary
2. Select Daily Rate from the dropdown
3. Fill in the required details
4. Click Save

Once saved, the system will automatically recognize this setting during payroll processing.

Important Note on Effective Date

When setting up a Daily Rate compensation, keep in mind:

• The effective date must be set to the first day of the month
• Any other date will not be accepted for this compensation type

This ensures consistency and accuracy when payroll is processed.

 

How Payroll Handles Daily Rate

When running the payroll cycle:

• The employee’s basic pay will default to 0
• Payroll processors will need to manually “Add Days” to calculate the total salary

This allows flexibility in capturing actual working days for the payroll period.

 

How Calculations Are Derived

Here’s how the system uses the Daily Rate for different payroll components:

a) Overtime Calculation

1. Within HR Lounge, click into the Payroll module

2. Then click into the Settings and into the General tab

3. Scroll down to find the Calculation section

4. The setting is located here at the Hours per day

 

b) Custom Hourly Item (Employee’s Hourly Rate)

You may refer to the steps within this article to create a custom payitem.

 

c) Unpaid Leave Deduction

Each day of Unpaid leave follows the daily rate setup in the Compensation tab of the employee profile.

 

d) Custom Daily Rate Items

You may refer to the steps within this article to create a custom payitem.

 

Meanwhile for Singapore, here is how the calculations are calculated:

 

1) Unpaid Leave 

You may refer to the formula shared below.

 

2) Overtime 

You may refer to the formula shared below.

3) Overtime for Daily employee 

You may refer to the formula shared below.

You may also refer to this article from the Ministry of Manpower Singapore for further clarification.

 

Common Issues/FAQ

Q: Where can I set a Daily Rate for an employee?

A: You can set a Daily Rate by going to Employee Profile > Compensation > Salary, then clicking on + Add Salary and selecting Daily Rate from the dropdown.

Q: Can I choose any date as the effective date for Daily Rate compensation?

A: No, the effective date must always be the first day of the month. The system will not accept other dates for this compensation type.

Q: How is the employee’s salary calculated during payroll?

A: When payroll is run, the basic pay will default to 0. Payroll processors must manually add the number of working days using the “Add Days” function for the system to calculate the total salary.

Q: How is overtime calculated for employees on a Daily Rate?

A: Overtime is calculated using the formula:
Daily Rate ÷ Hours per day
This gives the employee’s hourly overtime rate.

Q: How is unpaid leave deducted for employees on a Daily Rate?

A: Each day of unpaid leave is deducted based on the full Daily Rate set in the employee’s compensation.

Q: Can the Daily Rate be used for other custom pay items?

A: Yes, any custom daily rate items will directly use the Daily Rate set in the Compensation tab for calculations.