FRS 102 query re: average number of employee's

Do you include part time staff and people who start and leave in the same month

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In respect of disclosing the average number of employee's, do you include part time workers and workers who may start and finish in the same month?

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By grahambonds
24th May 2017 13:01

Have a read of s411 CA '06

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JCACE
By jcace
24th May 2017 13:36

The average number is determined by dividing the relevant annual number by the number of months in the financial year.

The relevant annual number is determined by ascertaining for each month in the financial year, the number of persons employed under contracts of service by the company in that month (whether throughout the month or not) and adding together all the monthly numbers.

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By jon_griffey
24th May 2017 16:21

A few thoughts....

1. Presumably having divided by the number of months, if you don't end up with a round number, you always round down? You can't have half an employee.

2. If you only count persons with contracts of service, then it would appear that you do not count owner-directors if they do not have a contract.

3. Watch out for persons on long term leave etc who might not appear on the payroll summary.

4. How is number of months calculated with reference to part months? For example if you have the accounting period 15 March 2016 to 5 April 2017, is this 12, 13 or 14 months?

Not looking to be fastidious, but there will be many companies right on the cusp of 50 employees who it could make a big difference to.

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Replying to jon_griffey:
By Duggimon
25th May 2017 10:36

As regards point one there is no reason you could not round up or not round at all, average number of employees is not the same thing as number of employees and I don't see why your average couldn't be 17.35. it's perfectly clear what that means when expressed as an average, you don't have to then present 17.35 employees.

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Mike Cooper HJS
By mike_uk_1983
25th May 2017 12:52

I think there are some comments more relevant to working out if the company is large or small.

To work out employee numbers for disclosure purposes you need to work out the total number of people paid in each month.

So to answer your question you will include part time staff even if they only worked an hour in the month.

If someone leaves in the month and is replaced in the same month this will count as two people in that month.

Once you know the total for each month add them up and divide by the number of months.

I do agree with many of the points to watch out for like Jon says. Rounding up or down doesn't really matter. Is it material to the accounts? I would say no, so happily round down.

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