You could use the "Working" or "Consecutive" Day Method.
#HRwithEM
Gross Salary / (divided by) 22 Working days x (multiplied by) Number of days worked = (equals to) Prorated pay
#HRwithEM
Gross Salary / (divided by) 28 or 29 or 30 or 31 (depending on the month in question) x (multiplied by) Number of days worked = (equals to) Prorated pay
#HRwithEM
Let's assume that your gross salary per month is N100,000 and you worked for only 20 days in the month of January 2019. How much should you be paid using either of the two methods that I described in my previous tweets?
#HRwithEM
Our assumption is that the employee in question reported to work on the 21st and stated their intention in no longer working with the company immediately, hence the need to prorate the salary for the month. #HRwithEM
(N100,000 / 23 working days) x 14 working days worked = N60,870 (prorated pay)
Consecutive Day Method:
(N100,000 / 31 conservative days) x 20 days worked = N64,516 (prorated pay)
#HRwithEM
The current tax law allows for certain reliefs, however in this case we would apply the major ones that are relevant.
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Pension (8% of N1.2m) = N96,000
NHF (2% of N1.2m) = N30,000
Consolidated (N200,000 + 2% of N1.2m) = N440,000.
Taxable Pay is therefore:
N1,200,000 - N556,000 = N634,000
#HRwithEM
First N300,000 = 7% = N21,000
Next N300,000 = 11% = N33,000
Next N500,000 = 15% = N5,100
Next N500,000 = 19% = N0.00
Next N1,600,000 = 21% = N0.00
Above N3.2m = 24% = N0.00
#HRwithEM
The Effective Tax Rate (ETR) is determined by this formula:
Total Annual Tax Due / (divided by) Annual Gross Salary x 100
Therefore N59,100 / N1,200,000 x 100 = 5%
#HRwithEM
5% of N60,870 = N3,043.5
5% of N64,515 = N3,225.75
#HRwithEM
I look forward to having you again next weekend same day, same time!
Send in your burning #HR questions to enmichael@enmichael.ng, and join me next weekend on Twitter to learn how I would handle such a situation.
Have a beautiful weekend!
#HRwithEM
The major reliefs for this employee are:
Pension (8% of N1.2m) = N96,000
NHF (2.5% of N1.2m) = N30,000
Consolidated (N200,000 + 20% of N1.2m) = N440,000.
Taxable Pay is therefore:
N1,200,000 - N556,000 = N634,000
#HRwithEM