Overview
Employees are entitled a number of hours of vacation leave per year. Depending on your company's policies, your employees can avail of their full leave entitlement each year, carry some of it to the next year, or get paid for the leave that wasn't taken or carried forward. For more information on leave entitlements, click here.
Permissions
You need to ensure that you have the Manage Payroll permission if you want to add a leave payoff to an employee's payslip. If you want to view the leave balances of other employees (through their profile), you will need the View/Manage All Employee Data permissions.
Leave Payoff upon Termination
If you would like to pay off any pending leave balance for employees, you will need to add this balance to payroll. Please note that if an employee is terminated and still has a remaining balance of vacation leave, the leave payoff will be automatically added to the payslip.
Manual Leave Payoff
If you would like to pay off an employee at any point in time during, you will need to add the leave payoff manually. To do so, please follow the below steps:
- Go to the Payroll section;
- After creating the payroll, add the relevant employee(s);
- Open the payslip of this employee;
- Click the +Add Leave Payoff button found at the bottom right hand corner of the payslip;
- Click Calculate and then hit save.
The leave payoff amount here is the current leave balance that the employee has left. You can untick the auto tick box to manually lower the amount, but you cannot pay off an employee for more leave than they have in their balance:
Re-calculating a Leave Payoff Balance
Some employees accumulate leave entitlement on the basis of their payslip hours. Accumulated leave is added to the employee's balance upon locking of the payslip. So what happens if you need to pay off an employee for the leave they have accumulated within that same payroll?
In such a case, after clicking on the +Add Leave Payoff button, you will need to click on the 3 slanting lines to refresh the balance. After doing so, click on calculate and save.
Another reason to recalculate the balance would be where leave was booked after adding the leave payoff to the payslip, and so the final leave balance needs to be updated.
Leave Payoff for different Leave Types
By clicking +Add Leave Payoff, the employee's remaining Vacation leave will be added. Should you wish to change the leave type, you will need to click on the drop down arrow and switch leave types.
You may add leave payoffs for as many leave types as you have available. Simply click on the +Add Leave Payoff multiple times and change the leave type for each one.
It is important to note that you cannot add the same leave type more than once within the same payroll. So if, for example, you wish to add the same leave type but pay off the hours at different rates, this can only be achieved by adding leave payoffs to separate payrolls.
Leave Payoff Calculation
When selecting the leave type, you will be adding any pending leave balance that is stored in the person's account, to be paid off in the relevant payroll. The balance in hours will be multiplied by the hourly rate, and the value due will be shown in the Adjustments section in the middle calculation section.
The remaining leave balance (unless you have manually amended the payoff to be less than the remaining balance) will show as zero:
Once an amount of leave is paid off (i.e., once the payslip is locked), the remaining balance in the employee's leave balance pod will update. If all remaining leave was paid off, then this balance will show as 0.
How to pay off leave in January
Depending on your company policy, you might pay off employees for leave not taken during the year. If you choose to do this in the last payslip of the year, all you need to do is click on +Add Leave Payoff in the last payslip (as per the above instructions). If, however, you choose to pay this off in the first payslip of the following year, you will need to follow the below steps:
- Go to the Leave section and carry forward the remaining leave (or the desired amount) to the following year.
- Then, from within the same Leave section, download a Totals by Employee leave report. From this report, you will need to refer to the carried forward balance.
- Next, open the January payroll and click on +Add Leave payoff. Here, you will need to untick the auto tick box and input the carried forward amount. Then press calculate and save.
This needs to be done, because the leave payoff takes the current year's balance. So to pay the previous year's balance, you must carry this balance forward and set this as the pay off. As, otherwise, if you leave the full amount to be paid off, you will be paying off the current year's balance too.