There are two accrual methods for annual, sick and long service leave:
Based on Contract Hours - for standard hours.
Based on the Hours Worked - for unpredictable hours.
In addition, sick leave can be setup to grant leave, where the hours are received at the end of the entitlement period, rather than accrued each period. You can grant leave up front by ticking Grant Immediately when you attach the leave class to the employee. The setup and calculation for granted sick leave is the same as for contract hours, the only difference is when they receive the hours.
Leave classes with different conditions can be linked together using Next Leave, so that at the end of the first entitlement period, the employee is moved to the next. You don't manually transfer them, they are automatically moved during the End of Pay process. This is used for different long service leave classes, and can also be used for sick and annual leave, e.g. if you grant sick leave for new hires and accrue in subsequent years.
When making changes to an existing leave class, reconcile the employees' leave to ensure the leave accrues correctly and has the correct balance. You need to consider:
the Entitlement Period in the Leave class and what that means for the employees, given their Entitlement Date.
the number of hours in Prorata for the employees and what the maximum accrual is for the Leave Class.
Contract Hours Leave
Leave hours are accrued between dates using the Entitlement in the leave class (i.e. 4 Weeks per year) and the Contract Hours attached to the employee. For an employee attached to a '4 Weeks Per Year' class, the employee's Contract Hours will determine how many hours to accrue for the year.
Annual Leave of 4 Weeks Per Year + Contract Hours of 7.6Hrs x 5 days per week = 152 hours accrued per year (38h x 4w)
Annual Leave of 4 Weeks Per Year + Contract Hours of 5Hrs x 2 days per week = 40 hours accrued per year (10h x 4w).
In the above examples, both employees are entitled to 4 weeks Annual Leave and it is the Contract Hours that defines ‘a week’ for the employee.
If the Entitlement in the leave class is defined in days, e.g. 3 days instead of 0.6 weeks, then the days in the Contract Hours will be ignored. All employees will accrue 3 days multiplied by the hours per day in their assigned Contract Hours. Likewise, if the Entitlement in the leave class is defined in hours, e.g. 37.5 hours instead of 1 week, all employees will accrue 37.5 hours regardless of the Contract Hours.
Contract Hours are found in Payroll, Maintenance, General, Contract Hours. Once created, you can attach Contract Hours to Pay Details on the Employee record (Payroll, Maintenance, Employees, Employees). Leave Classes are attached under Leave.
With this method, you may see a small difference in the accruals. This is because the leave accrues per day based on 365 days per year (this is not adjusted for a leap year). This method calculates a daily accrual, providing greater accuracy, forecasting of leave, and accurately calculating leave on Termination to the end of the termination date.
To calculate Daily Accrual:
Annual Leave Hours Per Year - 4 weeks x 38 hours = 152 hours
Annual Leave Accrual per Day - 152/365 = 0.41644 hours
0.41644 x 365 = 152.00 hours
To set up Contract Hours Leave:
Go to Payroll, Maintenance, Leave and select the Leave Type to create, e.g. Annual Leave.
Enter a Code and Description.
Don't tick Calculate on Hours Worked.
In Entitlement: Maximum Each Period, enter how many weeks are accrued over the entitlement period. For Example 4 (Entitlement) Weeks (Units) per 1 (Number) Years (Per Period).
Click OK to save.
Tip: Express the entitlement in weeks to accommodate all contract hours variations.
Hours Worked Leave
Hours Worked Leave multiplies the selected hours included in a timesheet by the Accrual Rate to calculate the leave accrual. Contract Hours are not required to be attached to the employee.
This method enables unpaid leave hours to be omitted from the accrual of leave; however, you can't forecast leave to a specific date as the hours worked are unknown.
The Accrual Rate is a percentage and is calculated by dividing the maximum leave accrual by the entitlement period. For example:
Accrual Rate for 4 weeks per 1 Year = 4 weeks / 52 weeks x 100% = 7.6923%
The Entitlement Maximum each Period is included in the leave class and is the maximum leave an employee can accrue in a year.
To set up Hours Worked Leave:
Go to Payroll, Maintenance, Leave and select the Leave Type to create, e.g. Annual Leave.
Enter a Code and Description.
Tick Calculate on Hours Worked.
Select the Hours Type, Other Leave Reasons, User Defined Leave and Additions to accrue leave on. Anything ticked will be multiplied by the Accrual Rate when leave is updated.
Other Leave Reasons are used in conjunction with the Other Leave Hour Type. E.g. if you enter Other Leave and a nominated Leave Reason in a transaction, leave will accrue. All other selected leave types will accrue regardless of the Leave Reason.
User Defined Leave will only be available when User Defined Leave is selected in Hour Types.
Enter the Accrual Rate.
In Entitlement: Maximum Each Period, enter the maximum accrual for the entitlement period. For Example 152 (Entitlement) Hours (Units) per 1 (Number) Years (Per Period).
Click OK to save.