How is the Surcharge Additional Payment Calculated?

Modified on Wed, 14 Feb 2024 at 09:54 AM

In Kenjo's payroll solution, surcharges represent extra pay given to employees for working in particular situations, like Sundays, night shifts, or on public holidays.

To understand how the surcharge additional payment is calculated, Kenjo needs to know two things:

  • The surcharge rate - Added when creating the surcharge rules
  • The Hourly base salary for all employees - Added in the Employee's salary configuration

The surcharge rate

To configure the surcharge rate, you first need to create a surcharge rule. For this, go to Attendance settings > Salary surcharges.

? You can learn how to create payroll surcharges by visiting this article.

Once you have defined the name, description and the conditions for applying a surcharge rule, the next step involves selecting the surcharge rate. This rate indicates the percentage by which employees' regular pay rates will be increased. 100% is the basic salary. For example, if you want your employee to earn 1.5 times their normal salary, you would set a surcharge percentage of 150%.

In Germany, the most common surcharges are:

  • Night shift - 125% surcharge rate
  • Sunday - 150% surcharge rate
  • Public holidays 125% surcharge rate

A person earning 10 euros as their basic rate will get the following extra payment in the aforementioned examples:

  • Night shift: extra 2.5 euros for very hour worked on a night shift
  • Sunday: extra 5 extra euros for every hour worked on a Sunday
  • Public holidays: extra 2.5 extra euros for every hour worked on a public holiday

Surcharges are calculated based on base salary

The base salary or basic wage is the current wage to which an employee is entitled for the regular working hours that apply to him for the respective payroll period. 

Calculating for Hourly Employees

Calculating the surcharge rate for hourly employees within Kenjo's system is a straightforward process. The tool simply takes the hourly rate specified on their salary page (Employee > Compensation > Salary > Add Salary) as the base for the calculation.

For instance, if Employee A is an hourly worker with an hourly rate of 10 euros and a 200% surcharge rate, they would earn an extra 10 euros for each hour worked or 20 euros an hour.

Surcharge payment: (10 euros x 2) - 10 = an additional payment of 10 euros per hour (which equals to 20 euros the hour)

Calculating for Salaried Employees

When it comes to salaried employees (those with salaries set as Monthly or Annual on their salary page) Kenjo recommends the use of an equivalent hourly rate. To access or edit this suggested value, navigate to Employee > Compensation > Salary > Add Salary for salaried employees.

The suggested rate per hour for salaried employees is calculated based on the average hours worked per month, using the following formula:

Average hours worked per month = (Hours in the work schedule * 52.2) / 12

Subsequently, to determine the Rate per hour:

For Annual Salary:

Hourly rate = Yearly salary / 12 / Average hours worked per month

For Monthly Salary:

Hourly rate = Monthly salary / Average hours worked per month

Here's an example:

For an employee earning 24,000 euros annually and working 40 hours a week:

  • Average hours worked per month = (40 * 52.2) / 12 = 174
  • Hourly rate = (24,000 / 12) / 174 = 11.494 euros

For an employee earning 24,000 euros annually and working 20 hours a week:

  • Average hours worked per month = (20 * 52.2) / 12 = 87
  • Hourly rate = (24,000 / 12) / 87 = 22.89 euros

This method ensures that surcharge rates for salaried employees are accurately determined based on their salary and expected monthly working hours.

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