Understand adjustment calculations

An adjustment adds to or reduces a cost. For example, you can add an estimate for benefits on top of an employee’s salary. This guide works through the full-time employee from the getting-started guide, then explains other adjustment choices.

Start with Avery’s example below. Use the later reference sections when you need to handle a different pay arrangement or investigate a rounding difference. Those examples are separate exercises.

Work out Avery’s budget and pay

Avery fills one full-time Patient Services Coordinator position from January 1, 2027. Both the position and Avery’s assignment are 1 FTE, meaning full time. There is no vacancy.

The position has a $70,000 annual salary budget. Avery earns a $60,000 annual salary. You add a 20% benefits estimate to each amount to compare the full budget with the full employee cost.

Start with the position’s budget

First calculate benefits using the budgeted salary, then add them to that salary.

The $84,000 total is budget capacity. Because Avery fills the entire position, assigned budget is also $84,000. The budget for the open part, called vacancy impact, is $84,000 − $84,000 = $0.

These are two views of the same budget. Do not add budget capacity and assigned budget together.

Add benefits to Avery’s salary

Use Avery’s actual salary for this calculation, rather than the position’s budgeted salary.

For the benefits rule, choose Annual cost only, Percentage of starting value (non-compounding), and enter 20 for 20%. This adds benefits to the yearly cost without changing the salary record. Apply the rule to the position separately in Labor budget and Actual compensation, starting January 1, 2027.

Avery’s salary record should still say $60,000. Entering $72,000 as the salary and then applying benefits would count benefits twice.

The 20% is an estimate chosen for this exercise. Actual compensation calculates costs from recorded pay and assignments; it does not confirm a payroll payment.

Compare the employee cost with the budget

Subtract Avery’s compensation from the assigned budget:

$84,000 budget − $72,000 compensation = $12,000 below budget

For the percentage difference, divide that difference by the budget:

$12,000 ÷ $84,000 × 100 = 14.29% below budget

This difference may be shown as a variance. In this example, all the position’s budget is assigned because Avery fills the whole position. The budget is accounted for as $72,000 employee cost + $12,000 remaining budget = $84,000.

If a required pay amount is missing, a complete comparison is unavailable. If the budget is zero, a percentage difference cannot be calculated. A missing value should not be treated as a zero.

Calculate a recorded 5% salary increase

On a separate full-time practice assignment with the same starting salary and benefits, record an agreed $63,000 annual salary from July 1, 2027, using the authorized employee-pay workflow. Review the calculation on July 1; earlier dates still use $60,000. Keep the full-time assignment and position budget the same.

The extra $3,600 consists of the $3,000 raiseplus**$600 more in estimated benefits**. You can check it as $3,000 + ($3,000 × 20%) = $3,600.

The new cost is $8,400 ÷ $84,000 × 100 = 10% below budget. The calculated cost uses the salary recorded for the selected date.

Use financial reports to check the dated result and period totals.

Reference: choose what an adjustment changes

The What should change? field tells FTE Tree which number to change. Start by deciding which part of the cost calculation the adjustment should change.

For example, a 10% Projected FTE adjustment changes 10 FTEs to 11 calculated FTEs. A 10% Annual cost only adjustment leaves FTE at 10 and increases only the cost. Similar-looking costs can therefore come from different calculation choices.

Choose when to add an amount or percentage

The How should it change? field controls how an adjustment combines with other adjustments. The form uses the following names.

FTE Tree calculates adjusted FTE first, then adjusted pay rate, then yearly cost. Within each of those three steps it follows the four methods in the table from top to bottom. Order within type orders rules with the same target and method; it does not move a rule to another calculation step.

Try the four methods with $100

Use each example separately.

1. Add $10 before a 10% increase: $100 + $10 = $110, then$110 × 1.10 = $121.
2. Apply two non-compounding 10% increases: each adds $100 × 10% = $10, for $100 + $10 + $10 = $120.
3. Apply two compounding 10% increases: $100 × 1.10 = $110, then $110 × 1.10 = $121.
4. Add $10 after a 10% increase: $100 × 1.10 = $110, then $110 + $10 = $120.

You can combine methods. Starting with $100, adding $10 before a 10% increase and $5 afterward gives ($100 + $10) × 1.10 + $5 = $126.

The same four methods work for all three targets, giving 12 choices in total. The units follow the target: a fixed FTE adjustment uses FTE, an hourly pay-rate adjustment uses dollars per hour, and an annual-cost adjustment uses dollars per year.

On a rule form, enter 5 for 5%. An import template instead uses 0.05 for 5%. Follow the import instructions when uploading a file.

Decide whether a fixed amount follows FTE

In Labor budget, Coverage controls how fixed monetary amounts follow FTE. In Actual compensation, use Fixed amount handling for that choice.

For a half-time assignment, 0.5 FTE, with a $1,000 yearly amount:

• Scaling with FTE gives $1,000 × 0.5 = $500.
• Applying once gives the full $1,000 for the applicable position or assignment.

Labor budget and compensation offer different apply-once choices. Follow budget adjustments or compensation adjustments to select the right one.

This choice affects fixed money amounts. A fixed FTE increase of 0.1 still means adding 0.1 FTE. It also does not split non-compounding percentage rules into different calculations: they use the same starting amount at that step.

Check how the type of pay changes the calculation

For example, a full-time salary of $60,000 at 0.8 FTE costs $60,000 × 0.8 = $48,000 a year. A 5% pay-rate increase changes the salary used in the calculation to $63,000, so the assignment costs $63,000 × 0.8 = $50,400.

When an FTE adjustment affects pay

For a full-time salary rate of $60,000, an assignment at 0.5 FTE costs $30,000. Adding a Projected FTE adjustment of 0.1 makes the calculation use 0.6 FTE: $60,000 × 0.6 = $36,000. The recorded assignment still says 0.5 FTE.

Contracted pay is different. If $60,000 is already the agreed yearly total for a 0.5 FTE assignment, increasing the FTE used in the calculation to 0.6 gives $60,000 × (0.6 ÷ 0.5) = $72,000. The calculation increases the agreed total in proportion to the change from 0.5 to 0.6.

At zero recorded FTE, that division cannot be made. Enter an appropriate pay rate or correct the setup before increasing the FTE used in the calculation. If an eligible employee’s contracted pay and FTE are unchanged, a recorded $60,000 contract at zero FTE still has a $60,000 yearly total. Missing pay is not the same as a zero-FTE contract. The employee must also be available and have a status that counts as active.

Why two $2,000 adjustments can give different answers

Suppose the full-time salary is $60,000, the recorded assignment is 0.5 FTE, and an FTE adjustment makes the calculation use 0.75 FTE. Salary cost is now $60,000 × 0.75 = $45,000.

• A scaled Annual cost only allowance uses the recorded 0.5 FTE: $2,000 × 0.5 = $1,000. Total: $46,000.
• A scaled Pay rate increase follows the 0.75 FTE used in the calculation: $2,000 × 0.75 = $1,500. Total: $46,500.

Check both the target and the FTE choice before comparing adjustments with the same entered amount.

Work out reductions

Enter a negative adjustment to reduce a value. One percentage rule cannot reduce it by more than 100%. Use an assignment’s end action when the work stops. For a rate or pay change, add the new value with the date it begins or choose the applicable default from that date. Do not enter a negative rate or FTE to end a record.

FTE Tree stops a calculated FTE, pay rate, or total cost at zero. For example:

For a detailed calculation, FTE Tree checks the zero minimum after combining fixed amounts before percentages, after combining non-compounding percentages, after each rounded compounding percentage, and after combining fixed amounts at the end. Any unused reduction is shown where the calculation explains it; it does not become a debt carried into another period.

Advanced: understand a rounding difference

Hourly rates keep four decimal places. Annual rates and annual costs use cents. FTE Tree rounds at the relevant calculation step before using the result in the next step. A halfway amount rounds away from zero.

For an hourly rate of $27.1234 with a 10% increase:

1. Calculate the increase: $27.1234 × 1.10 = $29.83574.
2. Round the resulting hourly rate to four places: $29.8357.
3. Multiply by 2,080 yearly hours at 1 FTE: $29.8357 × 2,080 = $62,058.256.
4. Round the annual cost to cents: $62,058.26.

The same order matters for tiny reductions. $0.0001 × 50% = $0.00005 rounds to a resulting rate of $0.0001. At 2,080 hours and 1 FTE, its annual cost is still $0.21. Rounding the requested reduction first would give a different answer.

A part-time allowance

A $100.01 yearly allowance at 0.3333 FTE contributes $100.01 × 0.3333 = $33.333333, rounded to $33.33. A $60,000 full-time salary at that FTE costs $19,998.00. Add them to get $20,031.33.

Entered FTE and the combined FTE used in the calculation have four decimal places. Your organization can choose how many places pages show; exported FTE retains four places. Changing the display does not change the calculation.

When fixed amounts use different FTE shares

If the starting pay rate and a fixed pay-rate increase both use the same FTE share, FTE Tree combines them before rounding. If one applies once and the other scales with FTE, it rounds their resulting rates separately before multiplying and adding their costs.

A deliberately small example makes the difference visible. Start with a $0.01 annual rate at 3 FTEs, add a $0.01 annual pay-rate increase before a 50% increase, and compare these two choices:

• Fixed increase applies once: each resulting rate rounds from $0.015 to $0.02. Total: $0.02 × 3 + $0.02 = $0.08.
• Both amounts scale with 3 FTEs: combine the rates first, ($0.01 + $0.01) × 1.5 = $0.03. Total: $0.03 × 3 = $0.09.

This is a rounding example, not a suggested pay arrangement.

Optional practice: an hourly night premium

Use a separate practice assignment with $32 hourly pay, 2,080 yearly hours, 0.75 FTE, and the Night work schedule. Apply a 10% Pay rate night premium and a $1,200 Annual cost only equipment allowance once per assignment.

The extra cost is $56,112 − $49,920 = $6,192. If the employee moves to a schedule that does not qualify for the night premium on October 1, the premium stops applying from October 1. The equipment allowance continues only if the assignment still meets that allowance’s own conditions.

Try the calculations in FTE Tree

Create the rules, then apply them in Labor budget or Actual compensation. A rule is the reusable calculation; applying it tells FTE Tree where and when to use it.

You need the relevant financial permissions for the departments you are working with. Managing reusable rules requires Manage labor budget setup. Your administrator can use Roles and permissions if an action is unavailable.