When you setup an employee and specify the employees pay rate under the ‘Employee’ > ‘Employee Maintenance’ ‘Pay Rates’ tab, you can set whether the employee is paid on a ‘Gross to Net’ or ‘Net to Gross’ method.
You can change the calculation type from ‘Gross to Net‘ to ‘Net to Gross‘ (or vice versa) when you are in ‘Open and Pay’ for an employee. The image below highlights (in the top left) where you can change the calculation type:
What is Gross to Net?
This is when an employee is paid ‘Gross’ and then any deductions are taken (for tax and NI etc) leaving the employee with a ‘Net’ figure. The net pay figure is the amount the employee would be paid. So you enter a ‘Gross Pay’ figure, Tax/NI and any other deductions are taken and then you are left with a ‘Net Pay’ figure.
What is Net to Gross?
This is the opposite of Gross to Net. This is when you can enter a ‘Net Pay’ figure and when calculating, any Tax and NI is added on, giving you a ‘Gross’ amount’. Whatever you type in as a ‘Net Pay’ figure will be the figure the employee would be paid. You make use this net to gross method when working out pay for employees who are paid case in hand for example.
So you enter a ‘Net Pay’ figures, Tax and NI is added to this, working out a ‘Gross Pay’ figure but leaving you with the ‘Net Pay’ figure you want to pay the employee.