Background

In the past, fixed allowances and expected overtime payments were required to be paid separately when an employee was on leave. Consequently, the employee would receive their Relevant Daily Pay (RDP) in distinct components.

However, if you want to compare RDP and Average Daily Pay (ADP) you need to have a single identifiable value for RDP. To achieve this, Datapay has introduced a new method for calculating RDP, called RDP V2, which incorporates fixed allowances and overtime on the date of the leave, into the RDP rate.

For customer who like to pay at the higher of the two (RDP/ADP), we have introduced a new Leave Rate Option for this; 'Higher of: RDP, ADP’. Please note that there is no legal requirement to pay the higher of RDP and ADP.

Implementation of RDP V2

Relevant Daily Pay (RDP) Calculation Version

FBAPS Leave components will have a new option called ‘RDP Calculation Version’ to assist in implementing this functionality.

· ‘RDP Calculation Version will be set to ‘V1' for all existing customers who are currently using the RDP Leave Rate Option. This would be updated to ‘V2’ when ready to use RDP V2.

· ‘RDP Calculation Version’ will be set to ‘V2', for new customers, and for customers who are not currently using the RDP Leave Rate Option.

The RDP V2 rate will always be displayed in the ‘Relevant Daily Pay Rate’ output but will only be used in the calculation of the payment if the ‘RDP Calculation Version’ is set to 'V2'. This will allow you to check how leave would be paid if the ‘RDP Calculation Version’ is set to 'V2' before switching to pay using the V2 rate.

‘RDP Calculation Version’ should be updated for the Company on the “Components Setup” screen under 'Leave Details’.

This value is shared between different leave types, therefore please do not make it component specific, and do not set it on the “Pay Components” screen.

Under Company / Components Setup

Search for Leave Details

Change the RDP Calculation Version to V2

Prerequisites

For the RDP Rate to be calculated correctly:

Leave dates must be specified, and leave must be added to the pay packet on the date it is for.
- If paying leave for a past pay period, this should be paid in a rev/adj.
If a part-day of leave is taken immediately before or after another full day of leave, it should be processed separately to allow Datapay to accurately identify the specific half-day.

How is RDP V2 calculated?

Including Fixed Allowances

By default, fixed allowances will not be included in the RDP rate. To include a fixed allowance in the RDP rate, the component setting ‘Leave Interaction' needs to be updated from 'No’ to 'RDP V2' or 'RDP V2, no reduction'.

All fixed allowances that are set up for inclusion in the RDP rate will have a daily amount calculated based on the employee’s work pattern. If leave is on the same date as the allowance, the daily amount of the allowance will be included in the RDP rate.

For employees that do not have a work pattern, a fixed allowance will only be included in the RDP rate if the fixed allowance is for a single date.

Allowances are only included in Liability/Termination for allowances that span the period.

Impact of this functionality on Fixed Allowances

If 'Leave Interaction' is set to 'RDP V2, no reduction', the fixed allowance will be paid as normal. Please note that this will mean that the allowance is paid In RDP V2 as well.

If ‘Leave Interaction’ is set to ‘RDP V2’, the fixed allowance will be reduced if leave is paid on a date in that range using the RDP V2 rate.

The RDP V2 rate will only be paid if:

The ‘RDP Calculation Version’ is ‘V2’; and
The leave uses the ‘RDP’ leave rate option, or the ‘Higher of: RDP, ADP' leave rate option and it’s the RDP rate that’s higher.

Examples:

Fixed Allowance Example 1: Fixed Allowance on a single date

If there is a $10 fixed allowance on a single date, and leave is added to the same date, the RDP rate will include the $10. If leave is added to a different date, the RDP will not include the $10. In this example, the fixed allowance is on the same date as the first day of sick leave. ‘Leave Interaction’ is set to ‘RDP V2’, so the fixed allowance will reduce to $0.

Fixed Allowance Example 1b: Fixed Allowance on a half day of leave

If there is only half a day of leave taken, the fixed allowance will reduce by $5 to $5.

Fixed Allowance Example 2: Fixed Allowance for one week

If there is a $100 fixed allowance in a weekly pay packet, and the employee’s work pattern is for 5 days per week, the daily amount of the allowance will be $100/5 = $20. If leave is on one of these dates, the RDP rate will include the $20. ‘Leave Interaction’ is set to ‘RDP V2’, so the fixed allowance will reduce by $20 for each day of leave.

Fixed Allowance Example 2b: Fixed Allowance for one week and a half day of leave

If there is only half a day of leave taken, the fixed allowance will reduce by $10 to $90.

Including Overtime

Overtime/Extra Hours are included in the RDP rate if they are on the same date as leave taken. Overtime will not be included in Liability or Termination calculations.

If you want to include scheduled but unworked overtime/extra hours in the RDP rate, ‘Time Worked’ should be set to ‘No’ (the default is ‘Yes’). This will adjust the ‘Value of Hours Worked’ of the overtime/extra hours to 0. You may want to set up a new overtime/extra hours component for this.

Overtime T1.5 of 2 hours was scheduled to be worked, but was not worked because the employee was sick. This was entered in the pay packet as ‘Time Worked’ - ‘No’, so what would’ve been paid for the overtime is included in the sick leave payment instead. In this example there was overtime scheduled on the first day of the sick leave.

RDP Adjustment

There is also the option of adjusting the final payment when the RDP rate is used so that the total payment for the day is equal to the RDP rate. Without the adjustment, they may differ when leave is taken for part of a day or overtime is worked on a day of sick leave.

By default, the overall payment will be adjusted in these scenarios.

Example 1a: Full day of sick leave taken, but 2 hours of overtime were worked on that day

2 hours of overtime were worked on the same day of the first day of sick leave. The rate has increased, but the total payment for the day is the same as day 2.

The outputs from the first day of sick leave. The total payment has been adjusted by -89.10 so the total payment for the day is equal to the Relevant Daily Pay Rate.

Example 1b: Same as 1a, but RDP Adjustment Option is Off

The overtime is paid, and it is also included in the payment for the first day of sick leave taken.

Example 2a: Half day of sick leave taken, but 2 hours of overtime were worked on that day

2 hours of overtime were worked on the same day of the first day of sick leave. The RDP rate has increased, but the total payment for the day has been reduced.

RDP Adjustment is -44.55

Example 2b: Same as 2a, but RDP Adjustment Option is Off

The overtime is paid, and it also contributes to the sick leave payment.

Example 3a: Half day of sick leave taken, but 2 hours of overtime were not worked on that day

2 hours of overtime were scheduled but not worked on the same day of the first day of sick leave. The RDP rate has increased, but the total payment for the day has been increased further.

RDP Adjustment is 44.55

Example 3b: Same as 3a, but RDP Adjustment Option is Off

The overtime is scheduled but not paid, part of it is included in the sick leave payment.

Payroll Administrator - NZ

Relevant Daily Pay V2

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