Change an employee's pay frequency

You may need to change an employee's pay frequency at some point during the tax year. For example, if your company pays managers monthly and other employees weekly, you might change the pay frequency for an employee who is promoted to management. You may also want to move all employees to monthly to reduce the frequency with which you run payroll. To ensure that an employee's year-to-date deductions for Pay As You Earn (PAYE) tax and National Insurance contributions (NICs) are accurate, you can change an employee's pay frequency only when the tax periods for both pay frequencies are synchronised.

The tax periods for two pay frequencies are synchronised at the beginning of the tax period for the larger of the two pay frequencies. For example, If you want to change an employee's pay frequency from weekly to monthly, you must make the change during the first week of the tax month. When you change a pay frequency, the employee cannot have been paid for any pay date that falls within the tax period for the larger of the two pay frequencies.

Tax years, tax months and tax weeks

HM Revenue & Customs divides each tax year into periods of tax months and tax weeks for the purpose of calculating PAYE tax and NICs. Tax months are used to track PAYE and NICs for employees who are paid monthly and tax weeks are used for employees who are paid weekly, fortnightly or four weekly.

The tax year starts on 6 April of one calendar year and ends on 5 April of the next calendar year. Each tax month begins on the sixth day of one month and ends on the fifth day of the following month. Likewise, each tax week is a period of seven days, the first of which begins on 6 April, regardless of which day of the week that is. For example, if 6 April is a Tuesday, the tax weeks for the year start every Tuesday and end the following Monday.

Tax periods are identified by time period and by number; for example, the monthly period beginning on 6 April and ending on 5 May is month 1. The weekly period beginning on 6 April and ending seven days later is week 1. Occasionally a tax year can contain more than 52 weeks. Because the days of the year are not exactly divisible by seven, in some years, days are left over after the last full tax week. These days are considered to be week 53.

The tax period for a given pay frequency and pay date appears above the pay date in the Process Payroll dialog box.

Changing the pay frequency

You can change an employee's pay frequency from one of the weekly pay frequencies to monthly or from one weekly pay frequency to another:

ShowChanging between monthly and weekly pay frequencies

The following table shows the tax months and tax weeks when you can change an employee's pay frequency from weekly, fortnightly or four weekly to monthly. The entries in the column represent tax months. The entries in the , and columns represent tax weeks.

Monthly Weekly Fortnightly Four weekly
1 1 2 4
2 5 6 8
3 9 10 12
4 14 14 16
5 18 18 20
6 22 22 24
7 27 28 28
8 31 32 32
9 36 36 36
10 40 40 40
11 44 44 44
12 48 48 48

Example: Changing an employee's pay frequency from weekly to monthly
Suppose during week 2 you want to change an employee's pay frequency from weekly to monthly. Because you have already paid the employee for week 1 (which falls during month 1), you cannot make the change. However, you can make the change in week 5, when the weekly and monthly tax periods are synchronised and the employee has not yet been paid.

ShowChanging between weekly pay frequencies

The pay frequencies weekly, fortnightly and four weekly are tracked in tax weeks. Changing from one weekly pay frequency to another is similar to changing from one of the weekly pay frequencies to monthly, except that the larger frequencies consist of a range of tax weeks. For example, suppose you want to change an employee's pay frequency from weekly to fortnightly, and it is currently week 3. Because the fortnightly tax period comprises weeks 3 and 4, you can change the employee's pay frequency any time during those tax weeks as long as the employee has not been paid for week 3. The following table shows examples of when the weekly, fortnightly and four weekly pay periods are synchronised. The numbers in the and columns represent ranges of tax weeks.

Weekly Fortnightly Four weekly
1 1-2 1-4
3 3-4 None
5 5-6 5-8
7 7-8 None
9 9-10 9-12
11 11-12 None
13 13-14 13-16
15 15-16 None

Example: Changing an employee's pay frequency from fortnightly to four weekly
You want to change an employee's pay frequency from fortnightly to four weekly. The current tax week is 38. As long as you have not paid the employee for the fortnightly tax period that covers tax weeks 37-38, you can change the employee's pay frequency to four weekly.

Weekly Fortnightly Four weekly
37 37-38 37-40

You change an employee's pay frequency on the Payroll Details tab of the Employee form.

  1. In the Navigation Pane, click Employees.
  2. Under Find, click Employees.
  3. Double-click the employee record that you want to edit, and then click the Payroll Details tab.
  4. Next to Pay frequency, select a new pay frequency for the employee.
  5. On the toolbar, click Save and Close.

Other issues that affect pay frequency changes

The following payroll issues can affect whether you can change an employee's pay frequency:

If the employee has Periods of Incapacity for Work (PIWs) for any days in the pay frequency you are moving the employee from, you cannot make the change. You must delete the PIWs in the employee record, and then change the employee's pay frequency.

If the employee has an active court order, you cannot change the frequency with which court order deductions are made without permission from the issuing court. When you get permission, you must close the court order, change the pay frequency and then reopen the court order.

If the employee has timesheet data used for the current pay period, Payroll for Microsoft Office Accounting 2008 will transfer the timesheet data to the new pay period in the new pay frequency. Be sure to review the timesheet data to ensure that it is correct.

If the employee is scheduled to receive advance pay, you cannot change the employee's pay frequency until after the employee has received all of the advance pay. You can then change the employee's pay frequency when the old and new frequencies are synchronised.

ShowRelated topics

 
 
Applies to:
Accounting 2008