Are you transitioning an employee from a daily rate to a fixed semi-monthly or monthly salary structure, but unsure how to reflect this change in the system?
Moving a team member between different payroll frequencies requires updating both their salary details and their payroll assignment group to ensure their upcoming payslips calculate accurately.
Please note that the difference will be the source of the salary computation.
Daily Paid employees' salary is being computed based on their logs, while, Monthly/Semi-Monthly Paid employees' salary is being computed based on their Basic Salary and Days Present/Absent.
Below are the steps for transitioning daily paid to semi-monthly paid employees:
- In Sprout HR, the Payroll Run Type under Work Information should be updated to Semi-Monthly.
- For the Salary, under Current Payroll Information, the Basic Salary and De Minimis (if applicable) should be updated to a monthly rate instead of a daily rate.
Please refer to the sample image below:
As for the Overtime, Night Differential, and Holidays, the employee will still be entitled to these items.
- For Sprout Payroll, you will be using the Normal Payroll run type instead of Part Time.
What is the difference between Monthly/Semi-Monthly Paid vs. Daily Paid employees?
The key difference lies in how salaries are computed:
- Daily Paid or Part-Time Employees: Their salary is completely driven by timekeeping. The payout is based on actual hours worked, which is pulled directly from the “Total Hours Worked” column in the Attendance Report.
See What Is the Difference Between Total Hours Worked and Total Hours in the Attendance Report? - Monthly/Semi-Monthly Paid Employees: Their base payout is fixed. The system automatically reflects the exact half-month salary for each period, while any absences, late logs, and undertime are calculated and deducted separately based on the uploaded attendance.
Read: The Difference Between Daily Paid and Monthly Paid Employees
Will there be any implications for Payroll?
If you are utilizing the Import Retro feature, please note that it cannot be used during the first payroll run when transitioning from Daily Paid to Semi-Monthly. This is because the Import Retro function only works when the payroll run type remains the same.
In this case, the payroll run type for Daily Paid employees is "Part-Time", while for Monthly or Semi-Monthly Paid employees, it is "Normal". Since the run types differ, the system will not recognize retro entries from the previous payroll type.
FAQs: Updating Employee Salary and Payroll Run Types
Q: If I need to update an employee's payroll run type (for example, switching them from daily rate to monthly rate) or adjust their basic salary, when is the best time to make these changes in the system?
Answer: The absolute best time to make these updates is immediately after your current month's payroll is fully finalized and closed, but before the first cutoff of the next month begins. For example, once your entire June payroll is settled and released, you should apply the system changes right before you start the July 1 to 15 cutoff period.
Why? This gives the system a clean break between the old and new setups. It ensures that your historical data remains intact, your monthly reports stay accurate, and the system can apply the new computation rules smoothly from day one of the new cycle without needing manual adjustments.
Q: Can I change an employee's salary type or payroll run type during an active payroll cutoff?
A: Yes, you can update an employee's salary type (e.g., switching from daily paid to monthly/semi-monthly paid) or payroll run type even while a payroll cutoff is active.
Q: What should I check before changing an employee's salary or payroll configuration?
A: To ensure payroll accuracy, keep the following considerations in mind before finalized the update:
- Review past records: Ensure that any attendance and payroll records already processed under the previous configuration are accurate.
- Verify upcoming computations: The new salary type and payroll run configuration will automatically apply to all subsequent payrolls. Double-check that the new compensation details are correct.
- Handle mid-period changes carefully: If the change takes effect in the middle of a pay period, review the final payroll results closely to ensure compliance with your company policy.
💡 Pro-Tip: If a mid-period change results in an underpayment or overpayment, you can use a One-Time Adjustment to either add the missing amount or deduct the excess.
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