Some employers wish to include the employer's contribution (CEC) in the salary package or hourly rate.
SmoothPay always calculates KiwiSaver on top of the employee's earnings, requiring the base value exclusive of the CEC component. The reason it does so is because this type of packaging used to be unlawful (and may well be regulated again) - and the rules in Smoothpay were created with that in mind.
So, if you have an "inclusive" salary or payrate, then you need to work out the "exclusive" salary of payrate, using the following formula:
Inclusive Value / (100 + employer contribution) * 100 = Exclusive Value
Salary package example
For example, lets assume that the employer will be contributing the minimum 3% and the salary is $50000:
50000 / 103 * 100 = 48543.69
In this case, the salary before kiwiSaver CEC, is $48543.69.
If you add 3% you get the package value of $50000.
Pay rate example
In this example, the packaged pay rate is $25
25 / 103 * 100 = 24.271845
In this case, the employee's base pay rate is $24.271845
What if the employee opts out?
In this case, you would untick the employee's KiwiSaver enrolment, and increase the base salary or pay rate to the full value.