Shift differential pay happens when an employer offers additional compensation for employees working shifts that are less desirable, such as evenings or midnight shifts. Employers determine the shift differential rate. There is no law mandating employers offer a shifter differential, but doing so can contribute to employee retention.
Creating a shift differential policy doesn't have to be complex. By following these steps, you can easily configure a simple shift differential for situations where employees work beyond their scheduled time.
To learn more about setting up a premium policy in Fingercheck, check out How to Set a Premium Policy.
Add a shift differential earning code
Add an earning code for the shift differential pay.
Log in to Fingercheck as an Administrator.
Go to Setup > Payroll > Earnings.
Click Add.
Click Add to select an earning code. The code you will most likely want to select will be a “regular pay” earning code.
Click OK in the confirmation window that appears to proceed with adding the Regular Pay type earning code.
Click OK on the confirmation window that appears.
Click the X in the top-right corner to close the Add Earnings panel.
The earning code appears in your list of codes.
Edit the shift differential earning code
After you add the earning code to be used for the shift differential pay, you need to edit the earning code.
Go to Setup > Payroll > Earnings.
Select the pencil icon to edit the newly added earning code for shift differential.
Edit the following fields:
Code: short descriptive code to easily recognize the shift differential pay code.
Short description: short description to quickly identify the shift differential pay code you just added.
Description: longer description to describe the shift differential pay code you just added.
Rate: enter the shift differential rate to use for premium pay.
Rate rule: select Special from the drop down menu.
If no rate rule is selected, the employee’s base rate will be used.
Click Save.
Create a shift differential policy
Create a shift differential policy.
Log in to Fingercheck as an Administrator.
Go to Setup > Policies > Premium Policies.
Click Add.
Enter the following:
Code: short descriptive code to easily recognize the shift differential premium policy.
Description: description to describe the shift differential premium policy you are adding.
Click Add to set up premium rules for the shift differential.
Edit the premium policy:
Premium type: select ShiftDifferential from the drop-down menu.
Sequence: the sequence number indicates the priority if you have more then 1 rule–this entry will most likely be a ‘1’.
Select the days of the week the shift differential will be in effect.
Applicable time edits:
Start time: time of day the shift differential begins.
End time: time of day the shift differential would end.
Include partial punch: select this option if employees start their shift before the start time of the policy.
If you don’t have this option selected the employee will only get the shift differential if they start their shift after the start time.
Effective days edits:
Start date is when the policy starts.
End date is when the policy ends.
Details edits:
Division earning: select the earning code that was created.
Earning type: this indicates how this earning should be classified as.
Select “Premium” if this earnings should not count towards the employee’s worked hours, and should count towards something separate.
Click Apply.
Click Save.
Apply the shift differential premium policy
After the shift differential earning code and premium policy have been created, you can add the policy to the employee’s set up.
Apply the policy to multiple employees
Applying the premium policy to a master profile set up will add this policy to any employee that has this profile attached to their employee set up.
Log in to Fingercheck as an Administrator.
Go to Setup > System > Master profiles.
Click the pencil icon to edit an existing profile, or Add to add a new profile.
For the Premium hour policy drop-down menu select the premium policy you just created.
Click Save.
Apply the policy to an individual employee
Log in to Fingercheck as an Administrator.
Go to Employees.
Select an employee to open their profile.
Select Personal > Profile.
Click the pencil icon to edit an existing profile.
Scroll down to Premium policy field and select the premium policy you just created for shift differential.
Click Save.
View the shift differential
The shift differential will show on a separate line when viewing the employee’s time card, earnings, and pay stub.
View the time card
The time card displays the hours worked for regular and the shift differential separately.
View the earnings
When viewing the employee’s earnings, the shift differential will show as extra hours. This is because the shift differential is listed separately, showing the additional premium pay.
View the employee’s pay stub
The employee’s pay stub also displays the shift differential separately from the regular hours.
FAQ
What is shift differential?
Shift differential is an additional amount of pay granted to employees who work during specific shifts, typically outside the regular working hours.
When is shift differential applicable?
Shift differential is applicable when employees work during non-standard hours, such as evenings, nights, weekends, or holidays. The idea is to compensate employees for working during less desirable time slots.
How is shift differential calculated?
Calculating shift differential varies but is often a premium hourly rate in addition to the employee’s regular hourly rate of pay. It's essential to check your company's policy or guidelines for the specific calculation method.
Are all employees eligible for shift differential?
Not necessarily. Eligibility for shift differential depends on your company's policies. Some roles or positions may qualify, while others may not.
How is shift differential reflected in payroll?
Shift differential is typically reflected as a separate line item on the employee’s paycheck, showing the additional amount earned for working during specified shifts.
These FAQs provide general information, and it's crucial to refer to your company's policies for accurate and specific details about Shift Differential.
Thank you for using Fingercheck. If you have any questions, please use the chat option or reach out to our team at 1-800-610-9501.