Calculation Pay Period and Effective Period
The calculation of gross pay operates with two periods: the calculation pay period (P) specified for the calculation, and an effective period for each agreement.
The effective period (E) consists of all dates within the calculation pay period that fall within the employment period and the period specified on the agreement. Agreements with an empty effective period do not contribute to the calculation of gross pay.
When the effective period E is the same as the calculation pay period P, the gross pay for the given agreement is the amount M * A / N as described in the above section. Otherwise the amount is adjusted using one of the following eight methods:
| Method | Description | Calculation |
|---|---|---|
| One | None | M * A / N |
| Two | Period, Fixed time | M * A / N * F(E) / F(P) |
| Three | Period, Calendar days | M * A / N * C(E) / C(P) |
| Four | Period, Week days | M * A / N * W(E) / W(P) |
| Five | Period, Working days | M * A / N * W2(E) / W2(P) |
| Six | Day, Calendar days | A / N * 12 / 365 * C(E) |
| Seven | Day, Week days | A / N * 12 / 260 * W(E) |
| Eight | Day, Working days | A / N * 12 / D * W2(E) |
where
- A = amount on the compensation agreement
- B = annual amount = A / N * 12.
- P = pay period
- E = effective period
- M = number of months in pay period
- N = number of months in period of the compensation agreement
- F = fixed working time in a given period
- C = calendar days in a given period
- W = week days in a given period
- W2 = days with working hours in a given period
- G = Days with fixed work hours in a year = W2 (week)
- D = Days with fixed hours in a year = G * 52.
For example, you are employed starting Monday, September 5 (2016) and the payment period is August 26–September 25. So, E = September 5–25. The agreement is $5,000 per month and your fixed working time is 7.5 hours Monday: Friday. Then F (E) = 7.5 * 15 days = 112.5 hours, F(P) = 7.5 * 21 days = 157.5 hours, and the result for each of the methods is:
| Method | Result |
|---|---|
| One | $5,000 |
| Two | $5,000 * 112.5 / 157.5 = $3,571.43 |
| Three | $5,000 * 21 / 31 = $3,387.10 |
| Four | $5,000 * 15 / 21 = $3,571.43 |
| Five | $5,000 * 15 / 21 = $3,571.43 |
| Six | $5,000 * 12 / 365 * 21 = $3,452.05 |
| Seven | $5,000 * 12 / 260 * 15 = $3,461.54 |
| Eight | $5,000 * 12 /(5*52) * 15 = $3,461.54 |