We strongly recommend that you load the last 12 months of pay history to ensure ongoing compliance with the Holidays Act calculations that are based on 12 months of employee earnings. The pay history needs to contain simply the total gross earnings and days worked for each employee per pay period.
In some cases, you may need to load hours worked as well, particularly if the employee has set total hours per week but no set days that they work.
There is more information on how to import pay history in our support article: Pay History Import.
Although we strongly encourage the loading of pay history, in some special circumstances, such as salaried employees with no additional earnings, it may not be needed. If you do decide not to load pay history you need to know the implications.
There are a couple of calculations in the Holidays Act that rely on a 12-month rolling window. You can find how these are applied by PayHero in the following articles:
Average Weekly Rate is used when employees take Annual Leave. It is simply the gross earnings of the last 52 weeks divided by 52. The two groups of employees for whom this calculation is not going to have an effect are salaried staff (provided they don’t earn any extra payments such as bonuses or commissions) and employees who are paid 8% holiday-pay-as-you-go.
Furthermore, the 12-month average is compared against an ‘ordinary’ weekly rate. With the variably paid workers, this will be a four-week average. The highest of the two is used to pay for annual leave. In some situations, such as where an employee has received a pay rise or has increased their hours, you can be sure that their four-week average will be the highest, so the remaining 48 weeks will be unused.
The second calculation using 12 months of history is the Average Daily Rate, used when employees take the other types of leave. This is the earnings from the last year divided by days worked. This calculation is only used when you can’t determine the employee’s Relevant Daily Pay i.e. what they would have earned had they worked the day in question. This means it is only required for those with flexible working patterns, and not fixed rosters. Note that while you may not need pay history for the annual leave calculations for holiday-pay-as-you-go employees, you may still need it to calculate the average daily rate for their sick leave or public holidays.
In addition to the rates themselves, more recent pay history may be used to determine what a 'week' of annual leave looks like for an employee without a fixed work pattern. By default PayHero uses a review period of eight weeks to determine the average days/hours the employee works.
You can find out more on how the review period is used by PayHero when processing annual leave in our support article: Annual Leave & Holiday Pay in PayHero.
That means that if you have employees with variable work patterns taking leave or if a public holiday falls within eight weeks of your conversion date, you will need pay history and imported timesheets so that PayHero can interpret the recent work patterns. Of course, you still have the option to manually set leave directly in the pay during the transition period while employees are building up pay records over the review period.