Retroactive Salary Increase

Frappe HR
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1

Hello, Please is there a way salary slips can be calculated based on a salary increase to a particular Employee that should be effective from an earlier date?

For Instance, Employee A receives a 10% increase in base salary by March 25 2019, but the increase is meant to be effective from January 01 2019, how can the salary slip for April be created such that the difference of the effect of the increase on the previous January, February and March salaries is added to the April Salary?

2

Conceptually speaking, is the aim here to correct an error in how past salary slips were calculated? If so, I’d suggest figuring out the corrections manually and then booking them as a journal entry. Trying to roll everything into a new salary slip seems an odd approach.

Alternately, if you really need everything documented as a salary slip, can you just cancel and amend?

3

@peterg sometimes appointments, promotions etc can be made and applied retroactively. In such cases, the difference in salary needs to be paid in the current period.

@crossexcell99 perhaps this functionality will need to be implemented such that if there characteristics that determine an employee’s salary changes, the following is done:

  1. the date of change has to be noted
  2. If the date of change occurred before the current payroll run, the employees net pay is recalculated starting from the date of change to the period before the current payroll entry.
  3. The total amount from step 2 is calculated and compared with the actual payroll that was paid during the same period.
  4. The difference is made available to be used in a component that represents the differential from promotion

What do you think?

1 Like
4

@Chude_Osiegbu I believe that may work.

Case 1: Salary Increase in February effective from January:

Additional Salary is created with payroll date set as January

When february payroll runs, due to the Additional Salary it checks if the Additional Salary was paid in january, if not it creates a temporary new salary slip for january and includes the Additional Salary
It gets january salary slip and:

a) for each of the components, subtracts the values for the january slip from the temporary slip and adds that to the corresponding component in the slip for february such that both the earnings and deductions are affected

b)gets the net amount from the january slip and subtracts from the temporary slip and adds the value to the february slip under a specific component for arrears

Case 2: Promotion to different grade or designation in February, effective from January

A new salary structure is created if no suitable existing salary structure
The new salary structure will have components to account for increase from previous slips
The previous salary structure is cancelled and a new one assigned from January

When payroll for february is carried out, the process similar to case 1 is done, in this case for salary slips which have the old salary structure and have not been paid