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I normally get paid on the 25th of every month. However from January onwards I will get paid on the 20th of every month.For this example to work let's assume I get £1 000.00 per month, totalling £12 000.00 per year. Note, I'm on a monthly salary.

This earlier payment would be fine however when my payslip arrived I noticed that I was paid only £750.00 for January. I was told that this was because the pay was moved early and as such I had not worked that extra 1 week. (I had only worked 3 weeks out of the 4 weeks) This makes sense to me, but at the same time, it looks like I will be short £250.00 for this year then.

The reason I'll be short, according to my arithmetic, is because I'll be paid: £750.00 for January and then 11 000 for the rest of the 11 months of the year. Added together this means I'll only get a total of £11 750.00 for 2014 and not the usual amount of £12 000.00.

I'm sure I'm missing something here, but I can't seem to work it out.

John Crawford
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    Tricky company ! – Claude Leibovici Jan 22 '14 at 11:28
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    It doesn't matter when you get your money in a month as long as you are working that entire month. So even if you are paid on $20$th Jan, you will be working for the entire month of Jan and hence you should be paid $1000$ and not $750$. – lsp Jan 22 '14 at 11:29
  • I think, you have to talk with your boss seriously :) – Danny Jan 22 '14 at 11:41
  • I really do plan on talking to my boss, but before I do I want to show him my calculations (which I've already done as shown in the question). However what I can't do is disproof his "but you haven't worked these days yet" counter arguement. – John Crawford Jan 22 '14 at 11:45
  • Your boss has a point and you may get paid £250 less this year but your pay is calculated per hour irrespective of the frequency of payments so it should vary from month to month as the number of days varies but lets pretend that all months are equal length to keep the maths simple. Then the last week of the years work will become part of your January pay packet next year. That is if you chose to resign on December 31 this year you would get a final pay packet with the £250 you earned after you got paid in December but before you finished work. – Warren Hill Jan 22 '14 at 12:36
  • That said I wouldn't be happy as £250 is a large amount to be out of pocket if you have few savings and have bills to pay. – Warren Hill Jan 22 '14 at 12:39
  • I think the problem is, your salary is from 26 December to 20 January, but your company only paid you $750$ instead of $1000\times\frac{25}{31}=806.45$ – peterwhy Jan 22 '14 at 12:41
  • Presumably they are paying you for work done. You work for one month they pay you for that month's work. Forget the calendar year's calculation because you are mixing things up with that. What you should be worried about is if for the next twelve pay periods you are worse off taking into account interest rates. You are definitely better off with them having payed the first 26 days early than having to wait to be paid for those 26 days on the 25th. I would ask my boss to pay me every week or even every day for the day's work. getting money early is a good thing. – Rabee Tourky Jan 22 '14 at 13:30

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Consider the same period, 26 Dec 2013 to 25 Dec 2014. Without this change, you will receive $£1000$ per month on 25 Jan, Feb, ..., Nov and Dec 2014.

Now, your company moves your pay date a quarter month earlier. You receive only $£750$ in January, and $£1000$ in each of the subsequent months. Apparently you have received $£250$ less in 2014.

But that is a cash flow point of view. After you receive your final payment in December 2014, and before the end of 25 Dec 2014, you will be working for a quarter month, with these salary to be paid in January 2015. This quarter-month salary, equivalent to $£250$, is considered your salary receivable and your company's salary payable. The company will be bearing a liability from you, and you are still earning your income day by day.

If you instead choose to resign after your pay in December 2014, then actually you can resign a quarter month earlier than with the previous arrangement.

(I keep saying a quarter month earlier instead of 5 days earlier because, as I mentioned in the comments above, I believe 5 days out of 31 days is not a quarter. Your company is still cheating by counting $3/4$ of the month you have worked. And actually you have already worked for 26 days out of 31 days between 26 Dec and 20 Jan, both days inclusive.)

peterwhy
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  • Thanks for pointing this out, I completely get it now. Oh and with regards to the 3/4 month thing, I actually just rounded it to 3/4 to make things simple. My company did pay me a little extra for that. Thanks once again. – John Crawford Jan 22 '14 at 14:53