Payroll from approved hours: keeping fixed and hourly pay consistent

The two pay models in a services firm

Most consultancies and agencies run both models at once. Permanent staff are on a fixed monthly salary. Contractors, part-timers and some specialists are paid by the hour. Both groups log timesheets, both groups get invoiced to clients, and both need a salary slip at month-end.

The mistake is treating them as two systems. Fixed pay still needs timesheets for invoicing and for pro-rating. Hourly pay still needs approvals so that a rejected entry is not paid.

Fixed monthly pay: the pro-rating rules

Fixed pay is simple until somebody joins on the 12th or leaves on the 20th. The rules that keep it fair and explainable:

• Pro-rate by calendar days in the month (joined on the 12th of a 30-day month: 19 of 30 days), so weekends inside the period count the same way they do for a full month.
• Read the joining and leaving dates from the staff record, not from a note on the payroll sheet.
• Unpaid leave reduces the amount by the same daily rate; paid leave does not.
• Salary changes take effect from a date, and the month is split at that date if the change falls inside it.

Hourly pay: cost rate times approved hours

Hourly pay has three inputs: the approved hours, the cost rate for that person on that client, and the date range. The cost rate is separate from the bill rate the client is charged, and both can have effective dates, so a rate change in the middle of a month applies only to the days after it.

Only approved entries count. A submitted but unapproved entry is not paid and is not invoiced, which gives the approver a reason to clear the queue before payroll day.

Adjustments without side spreadsheets

Bonuses, overtime at a different rate, loan deductions and expense reimbursements usually live in a spreadsheet next to the payroll. They should be lines on the payroll run instead, each with a label, a type (earning or deduction) and an amount, so the slip shows them and the total reconciles.

Finalise, then lock

A payroll run goes through three states: draft (numbers can change as approvals come in), finalised (slips are generated and sent) and paid. Once finalised, the timesheet month should be locked so that nobody edits an entry that has already been paid. If a correction is really needed, reopen the month, change the entry, and the next run picks up the difference as an adjustment.

How CrewClock does it

CrewClock stores a salary configuration per person with an effective-from date: fixed monthly in the organisation's payroll currency, or hourly linked to the cost rate on a client. The payroll run pulls approved hours, pro-rates fixed pay by joining and leaving dates, adds adjustments, and produces a PDF salary slip per person that can be emailed in one click. Finalising a run locks the month for timesheet edits. Invoices read the same approved hours at the bill rate, in the client's currency.