This article explains how Personio Payroll automatically calculates continued pay for employees with hourly salaries during absences such as vacation, sick leave, or holidays.

Note
The beta stage for this feature will begin in early June. Please sign up using the form below. We will notify you when the feature becomes available to you.

What is continued pay? 

Employers are legally required to continue paying employees during certain absences, even if no actual work is performed. This applies to: 

• Paid Vacation Under Section 11 of the BUrlG
• Continued Pay for Incapacity to Work Due to Illness Under Section 4 of the EFZG
• legal holidays pursuant to § 2 EFZG

For employees who are paid on an hourly basis, the calculation varies greatly compared to those on a monthly salary, since their earnings depend on the number of hours worked, premiums, and other components of their compensation. Therefore, special calculation rules apply here. 

Calculation Methods

General

Personio Payroll offers two calculation methods. Each organization can decide for itself which of these to apply. During the implementation of Personio Payroll, the implementation specialists set up the calculation method in the background company-wide. 

Note
In the case of insufficient history—for example, because data for an employee from three fully completed payroll periods is not yet available (e.g., a new hire)—Personio Payroll automatically switches to the default calculation method.

Failure-to-operate principle

Formula: Continued Pay = eligible hours missed × actual hourly salary at the time of the absence

The loss-of-earnings principle is based on what the employee would have earned at the time of the absence had he or she actually worked. To calculate this, the actual hourly salary at the time of the absence is multiplied by the number of hours missed.

Principle of Averages

Formula: Continued Pay = eligible hours missed × (earnings from the last 3 pay periods / eligible working hours from the last 3 pay periods)

The averaging principle takes into account the actual earnings for the last three months, including any applicable premiums, premiums, and other compensation components.

All compensation components you have specified are included in the calculation of the average. You must specify these accordingly during your implementation. These may include, for example, the following types of compensation: 

• Base salary, such as hourly salary 
• Custom Premiums or Bonuses
• Premiums for Sunday, Holiday, or Night Work

Note
If you wish to configure a new wage type at a later date, you must also specify whether it is included in the average calculation. To learn how to set up a new pay type in Personio, see our article on the theme.

Continued Pay in Personio Payroll

Before you begin

To use and view continued pay for employees with hourly salaries, first make sure you have the following permissions: 

• Your organization uses Personio Payroll for payslip processing
• You must be the payroll owner for the relevant legal entity in Personio and have access to payroll.

Setting Up the Continued Pay Method

To set up the continued pay method, please contact the Personio Payroll Support team, as this is configured in the background. Configuration is performed separately for the following types of absences: 

• Paid Vacation Under Section 11 of the BUrlG
• Continued Pay for Incapacity to Work Due to Illness Under Section 4 of the EFZG
• legal holidays pursuant to § 2 EFZG

The following configurations are made for each absence type: 

Check Continued Pay in the payroll run 

As soon as a new payroll period is opened for an hourly employee and an absence has been entered for the current period, Personio Payroll automatically calculates and displays the continued pay. 

You can check the calculated values in the following areas: 

• Under "Payroll" in the "People" tab 
• On the pay stub for the relevant employee

The People tab 

To view continued pay in the "People" tab, follow these steps:

1. Go to the Payroll > People section.
2. Click on the row for the person in question.
3. In the right-hand sidebar, under "Gross Salary" > "Continued Pay," you can view the calculated values. 

Pay Statement

To view the continued pay information on your pay stub, follow these steps:

1. Go to the Payroll > People section.
2. Click on the row for the person in question.
3. In the right sidebar, under Gross Salary > payslip, click Preview. 

Depending on the type of absence, you will find the following three wage types listed under "Gross Pay" on your pay stub. 

Manually Customize Amounts 

If the automatically calculated value is incorrect, you can correct it manually. This involves the following steps:

1. Go to the Payroll > People section.
2. Click on the row for the person in question.
3. In the right sidebar, under "Gross Salary" > "Continued Pay," click "Change Amount." 
4. Customize the number of hours and the hourly rate as needed.
5. Click "Check" 
6. Review the updated values and select a reason for the change.
7. Finally, click "Save Changes."

Note
If the values were overwritten manually, automatic recalculation for the open billing period is disabled. Subsequent changes to data—such as changes to the duration of an absence—are not automatically applied.

FAQ

When does the shortfall principle apply, and when does the average principle apply?

You will define the configuration together with the implementation team as part of your Personio Payroll implementation. The applicable regulations are determined by statutory requirements or collective bargaining agreements.

What calculation method applies in the case of illness in combination with the AAG procedure?

For employees who are simultaneously covered by the Expense Reimbursement Procedure (AAG) due to an inability to work caused by illness, Personio Payroll applies the lost wages principle. This ensures that the calculation of continued pay and reimbursement through the AAG procedure are correctly coordinated.

What reference period is used to calculate the average?

To calculate the average, earnings and eligible working hours from the last three pay periods are used. This period is required by law.

What happens if a new employee has not been on the payroll for three payroll runs yet?

If there is not enough data covering a three-month period to calculate continued pay using the average method, Personio Payroll automatically uses the replacement method until sufficient existing data is available. 

Which forms of compensation are included in the calculation of the average?

You specify the compensation components during implementation, and our implementation specialists configure them.

How is the duration of the absence to be compensated determined?

The duration of the absence to be compensated is determined by the working hours policy assigned to the employee at the time of the absence. Additional information on working hours policies in Personio:

• Create Working Hours Policies
• Create a Flexible Schedule

I don't see any absence pay for this employee. What now?

First, check the following points: 

• Has a calculation already been configured for this absence type?
• Is the employee paid on an hourly salary basis through Personio Payroll?
• Were there actually any eligible absences during the pay period?

If errors do occur, please contact our Payroll Support as the person responsible for payroll. 

Can the calculation vary for each employee?

No, the calculation settings currently apply to all hourly employees at an organization who are processed through Personio Payroll. Group-specific configuration is not currently possible. 

Does this feature also apply to preliminary payroll or DATEV?

No. The automatic calculation of continued pay for employees with hourly salaries is currently available exclusively in Personio Payroll. Preliminary payroll and integrations with external payroll accounting systems (e.g., DATEV) are not supported in this version. Employees with zero-hour contracts are also not eligible for support.