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When is a deduction not a deduction?

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  • # 114962

(Case 1) I agree to pay my employee 800 pcm but that if he misses a day it will be 700, if he misses 2 days it will be 600, etc. If he misses a day, should his payslip show "gross Pay 800, Pre-tax Deductions 100"?

(Case 2) I agree to pay 5m pcm or 2% of revenue whichever the lesser. Actual revenue is usually about 50k. Should his "Gross Pay" be 5m every month, with a 4,999,000 "deduction"?

I have heard "yes" said for both cases. To me, both are just unusual formulae for calculating gross pay. The first case happpens to involve a mathematical subtraction operation, so is obviously a "deduction" in one sense, but not, I submit, in the sense relevant for payroll purposes. The same reality could have been defined without subtraction, using a schedule of alternative monthy amounts instead.

(Sorry if this is posted twice. There seemed to be an error.)

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