Understanding the permanent part time method (New Zealand)
The Permanent Part Time Method (PPT Method) in Exo Payroll is used for many purposes, and not always for Permanent Part Time employees. It’s also often used incorrectly as users don’t always understand the calculation.
What does the permanent part time method do?
Ticking the Permanent Part Time method tick box on the employees Holiday Pay tab means that the system will Pro-Rata the Holiday Pay Accrual based on the days paid in each pay period, instead of a set amount of days’ entitlement per year.
This setting is primarily used for Permanent Part Time employees who are working flexible working days/hours. Other reasons may be:
- An employee is returning from a long-term absence (i.e. 3 months’ trip) and they want to pro-rata how many days leave they accrue for that year.
- An employee makes a graduated return to work after maternity leave.
- A full-time employee does a lot of overtime and the company wants to accrue more days/hours entitlement than the standard full time amount.
How does the permanent part time method work?
When setting this method in the system, ensure that the employee is set to Permanent Part Time, then tick the tick box in the Holiday Pay tab.
What is important to note is that the method will pro-rata the accrual against a whatever is in the Annual Entitlement Days field, and it is designed to compare against a full-time employee.
So as in the pic below the Annual Entitlement should always be set to 20 days/160 hours otherwise the calculation will not work.
The actual calculation is Days Paid / 260 days (full time employee year) × 20 days Annual Entitlement.
So in the example above: 30 days paid / 260 × 20 = 2.30769 (rounded to 2.31 days)
When this method is set, ensure that the Days/Hours Paid for Holiday Pay in each pay period is changed to reflect the Actual days that the employee is paid for.
Do all permanent part time employees need to have this set?
If you have an employee who works a set number of hours per week e.g. 3 days a week, if this won’t change you can simply set the Annual Entitlement to 12 (4 × 3 day weeks) and DO NOT tick the Permanent Part Time Method.
This will accrue a set amount of 12 days’ annual entitlement. If the employee works overtime, i.e. now and then does an extra couple of hours, leave the Days Paid for Holiday Pay at 3 in the pay and the employees Holiday Pay 12 month average will increase slightly to compensate.
Need more help? You can open the online help by pressing F1 on your keyboard while in your software.
You can also find more help resources on the MYOB Exo Employer Services Education Centre for Australia or New Zealand.