Salary calculation and leave

Benefits of a simple system

Most IT companies have complex systems to keep track of utilized leave, full-day leave, half-day leave and so on. We follow a fairly straightforward and transparent system. This has the following benefits:

  1. It is easy for all parties – both payee, administrative staff and management – to control and verify the correctness of payouts
  2. It is easy to accommodate flexible working hours, partial leave and work from home with fragmented hours.
  3. Simple calculation and fast payout of overtime hours.

Average working days per year

First, we calculate the total number of working days per year and the average per month:
Total – 365 days
– 104 weekend days (52 weeks * 2 weekend days)
– 12 public holidays falling on weekdays
– 12 paid leaves
= 237 actual working days (19.75 per month)

19.75 working days per month * 8 hours = 158 hours per month.

This means that when an employee has taken the monthly paid leave and has been away for public holidays (2018), they would have worked 158 hours on average.

Monthly payout calculation

Based on the employee’s monthly salary we calculate an hourly wage. Hourly wage = monthly salary/158 hours. The exact payout is made before the 5th of every month and is based on the exact hours worked during the previous month.

We simply multiply the number of hours worked with this hourly wage (and add extra pay for any work done outside of normal working hours that sometimes technical staff do when called in on urgent project work).

The monthly paid leave is accounted for and included in the hourly salary so there is no need for monthly adjustments.

This means that the payout for a month like July with 22 working days would probably be 11% higher (if the employee works full-time) and a month like August with more holidays would be lower.

But on average throughout the year the total annual salary would match your monthly salary X 12 months.

Registration of paid hours

Employee clocks in and out using a digital time clock in our staff panel which is a part of our ERP/internal business software. At the end of each day, they register how they’ve spent their time through detailed time entries that senior staff can review.

Billed hours are immediately accessible by clients through our client panel. More about this in our time entry guidelines.