In this section, we explain how Annual Leave Accruals are calculated and displayed in a Payslip.
How does Easy Payslip calculate Annual Leave Accruals?
Leave accruals are calculated based on the following criteria
- The employee has been set up as having Annual Leave entitlements
- Refer Help Guide 'How to Edit Employee Entitlement Details' on how to do this
- The employee works 'Applicable' hours
Applicable hours that are included in the calculation for leave accruals are:
- Base Hourly Rate
- Additional Base Rate 1
- Additional Base Rate 2
- Additional Base Rate 3
- Additional Base Rate 4
- Annual Leave Pay
- Sick Leave Pay
- Personal Leave Pay
- Long Service Leave Pay
Hours and/or payments that are not included in the calculation for leave accruals are:
- Overtime (any option)
- Taxable Allowances (any option)
- Untaxed Allowances (any option)
- Annual Leave Loading
The Payslip example below shows this in more detail
As can be seen in the above example, 36.50 hours will be used in determining the hours accrued for this pay period.
Let's look at the Accrual calculation in more detail.
Step 1 - Confirm Opening Balance of Accrued Hours
To demonstrate how Accruals are calculated and displayed in a payslip, we will assume the following details were entered when setting up the Employee.
Step 2 - Determine Applicable Hours
As shown in the example above, this is 36.50 hours this period.
Step 3 - Calculate Accrued Annual Leave Hours this period
Annual Leave (also referred to as Holiday Pay) is accrued at the rate of 7.6923% of each applicable hour your employee works. (This provides 20 days leave each year based on a 38 hour week).
For this particular period, the calculation for Annual Leave Accrual will be as follows:
= Applicable Hours x Accrual Rate = Accrued Hours this period
= 36.50 x 7.6923% = 2.81 Hours.
Therefore 2.81 hours of Annual Leave will have been accrued by the Employee this pay period.
Step 4 - Deduct Annual Leave Hours taken this period
As shown in the example above, the employee took 3.50 hours of Annual Leave during this period.
Step 5 - Determine the Closing Annual Leave Hours Balance
The closing Annual Leave hours balance at the end of payslip 1 would be calculated as follows:
Therefore at the end of Payslip 1, the employee would have 19.31 hours of Annual Leave remaining.
This would be shown in the Payslip as:
Step 6 - Repeat from Step 1 next Payslip
Easy Payslip will continually calculate and display the updated accrued hours in each payslip.
For example, if we assume your employee works a 38 hour week for their second payslip (with no Leave taken), they will accrue 2.92 hours of Annual Leave (38 hours x 7.6923% = 2.92).
Their Closing Balance at the end of the Payslip 2 would therefore be 22.23 hours, as shown below:
Other points to Note
- Your employee can have a negative Leave Entitlements Balance.
- The system will not stop you from inputting more hours in a payslip than the employee's closing annual leave hours balance.
- There are no limits on the hours accrued.
- Your employees can accrue and/or take as much leave as you need