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The Perplexity of payroll
During a meeting last year I was
asked to explain how the payroll system works. I got about 15 words
in and was stopped cold. The person stated they wanted a simple
explanation, not a complex one. I thought for a moment and tried
again. I was about 12 words in this time when the person said,
“Never mind”. I responded “it simply can’t be done.”
Our payroll system is confusing to most. Part of the confusion is
the fault of the new payroll system and part is the manner in which
teachers get paid. While some teachers would like to get paid every
two weeks over the summer, most would say that since they have
earned the money already they should get the money when they stop
working in June. I personally agree with the second argument. If
someone needed the money in July and the employer was holding on to
the money (making interest for themselves), I would suggest that it
wasn’t right.
Teachers do not get paid for the summer or any scheduled holiday
such as Thanksgiving, Victoria Day, March Break, Christmas break,
etc. Teachers get paid for between 195 to 197 days a year (it is 196
this year). Islander Day for teachers just means you work an extra
day sometime else.
Now for some explanation:
Teachers get paid a daily rate for the days they work. Since you get
26 pays the money has to be spread out by placing some of your daily
pay into an account called your personal bank so you can pay
yourself on the days you don’t work.
They put just under 25% (depending on the year) in your personal
bank for each day you work. Any weeks where there is a day off they
take money out of your bank to pay yourself. You may notice on your
paystub, for a day that you don’t work, they take less then a full
day’s pay. This is because you don’t have to put money in your bank
for that day.
For example; if your salary was $41 471 that would be divided by 196
days this year which would give you a daily rate of $211.59. Since
teachers work 196 days but get paid over a period of 260 days ( how
many weekdays in a year), the percent that needs to be placed in
your personal bank is about 24.6%.
In our example the person who made $211.59 a day would have $52.05
placed in their personal bank. The rest ($159.54) would be paid out
to them. During a pay period where there is a holiday you pay
yourself out of the personal bank, but you pay yourself at the rate
of $159.54 because money does not have to be put into the bank for
that day, it only comes out.
You also may notice that if you were on any paid absence like sick
leave, it will show as a full day’s pay and the same amount will
still go in your bank. This is just how they keep track. It won’t
affect your pay.
The amounts will change year by year. This is just an example to
give a rough idea.
As you can see it gets confusing in a hurry! You will also notice
that your pay changes slightly from pay to pay. There are some
reasons for this including:
- Step increases.
- Negotiated salary increases.
- When you have paid the full amount required for CPP or EI in the
fall.
- When you have to start paying CPP and EI again in January. If it is the third pay
of the month their are no group insurance
deductions.
- Any changes to your group benefit rates.
- Any personal deductions ( insurance, Canada Savings Bonds, etc.).
- You only pay Employment Insurance on the days you work. When you
are paid out of
your personal bank, you shouldn't pay Employment
Insurance on that amount. This is
the main reason you will see
slight differences.
If you want to make sure you are getting paid the correct amount,
take your daily rate of your pay stub and multiply that number by
196. This will tell you what your yearly salary is and you can cross
reference that with the Memorandum online to see your step and
level. If it is not correct you should call payroll.
Of course this is a short explanation and there are many other
factors to your pay. I have developed a more in depth explanation on
our website at :
http://www.peitf.com/payroll.pdf
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