Pay Categories are used to define the rates that employees are paid. Setting up your pay categories will help simplify the management of employee pay rates by:
- Automatically calculating linked rates through loading and penalty rate multipliers
- Configuring super rates
- Configuring leave accrual
Create a Pay Category
You can Create a Pay Category by following these steps;
- The setting for Pay Categories can be accessed and updated by clicking on the 'Payroll Settings', then select 'Pay Categories':
QBO users get to Payroll Settings by clicking on the ‘Payroll Settings’ button:
When you create a new business, a number of common pay categories have already been created however, you are able to delete these and create new ones that match your business needs. To create a new Pay Category click on the green ADD button as shown below.
- A New Pay Category box will open. Type the name of the New Pay Category in the Pay Category Name box. Then click on the blue ADD button on the bottom right. See Image below.
Fields in this category include:
- Units - Hourly, Annually, Fixed, or Daily
- Super Rate - as a percentage
- PAYG Tax Exempt
- Accrues Leave
- Rate Loading - this is loading that is applied on top of the base rate that the pay category is linked to. For example, if you have a base rate of $10 and set a rate loading of 50%, then the linked rate will be $15.
- Penalty Loading - this is penalty loading that applied on top of the base rate and the rate loading.
- Payment Summary Classification - this is used for pay categories that need to be reported separately on an employee's payment summary. You can find more information about this here
- Rate Precision - option to set rate at between 0 and 5 decimal places.
In regards to rate precision, please note the following:
* Additional earnings lines (configured at the bottom of the employees' pay rates screen) can be specified to up to 5dp, regardless of the pay category setting.
* In the pay run, rates may be specified to up to 5dp, regardless of the pay category setting.
- Once you have completed the Pay Category, press the save blue button on the bottom left of the screen.
Manage Pay Categories
In addition to the base value pay category, you are able to create linked categories.
For example a pay category could have the base value of Part-time weekdays but have linked categories of Part-time Saturday and another one for Part-time Sunday.
When a pay category is linked to a base pay category, you only need to specify the base rate for the employee and the rate for the linked pay categories will be automatically calculated.
You can create Linked Categories, by following the the steps below;
- Click on the "Add Link Category" button in the bottom right hand corner of the chosen Pay Category.
- You will see this screen (see image below) after clicking the Add Link Category button. Type in a name you want to call the linked category, for this example we are calling it Casual - Saturday. Then press the blue Add button. Please note, you have the opportunity to delete the Linked Pay Category before actually using it. If you move your cursor towards the end you will see a figure like this by clicking on this figure you are able to delete the new Linked Pay Category.
- Once the Linked Pay Category is added you will need to complete the relevant fields. The image below is explained;
- Units - Pre-populated according to main Pay Category i.e. Hourly
- Super Rate % - Entered with percentage required by SGS legislation
- Rate Loading % - As per award/employment agreement
- Penalty Loading % - As per award/employment agreement
"Tick" the remaining fields, by clicking on the box adjacent to the field, if you require this function, e.g. Accrues Leave, PAYG Exempt etc.
- Press the blue Save button in the bottom left hand corner.
If you have any feedback or questions please contact us via firstname.lastname@example.org