Long Service Leave classes can be set up to accommodate the different State and Federal Legislation and the employee's length of service. Before setting up Long Service Leave, you should refer to State Government websites and any Awards or EBAs for the conditions that you need to comply with.
There are two ways to calculate leave:
Based on the employee's Contract Hours - for standard hours.
Based on Hours Worked by the employee - for unpredictable hours.
Leave is accrued as part of the Update Leave Entitlements or End of Pay processes. Though you must tick Update Leave in End of Pay.
If you are making changes to an existing leave class or changing the leave class an employee is attached to, reconcile the employee's leave to ensure that the leave is accruing correctly and has the correct balance. With Long Service Leave, you need to consider:
the Entitlement Period in the Leave class and what that means for the employee, given their Entitlement Date.
the number of hours in Prorata for the employee and what the maximum accrual is for the Leave Class.
Changing to a smaller entitlement period or maximum accrual may result in the leave balance being reduced when you next accrue leave.
Contract Hours:
Leave is accrued each pay using the Entitlement in the leave class (e.g. 8.6667 weeks for 10 years) and the Contract Hours attached to the employee. Meaning the employee's Contract Hours specify how many hours the employee works per week and therefore how much to accrue.
For example:
LSL 8.6667 Weeks for 10 years + Contract Hours 7.5 Hrs per day x 5 days per week
Contract Hours per week = 7.5 x 5 = 35
Total hours accrued over 10 years = 35 (hours per week) x 8.6667 = 325 hours
LSL 8.6667 Weeks for 10 years + Contract Hours 5 Hrs per day x 2 days per week
Contract Hours per week = 5 x 2 = 10
Total hours accrued over 10 years = 10 (hours per week) x 8.6667 = 86.667
Contract Hours can be accessed and set up by going to Payroll, Maintenance, General, Contract Hours and are attached to the employee's record by going to Payroll, Maintenance, Employees, Employees and selecting Pay Details.
Set up Contract Hours Long Service Leave Class:
Go to Payroll, Maintenance, Leave, Long Service Leave.
Click Add.
Enter a Code and Description.
Tick Apply Costing Split if you have the General Ledger module and want to split the cost of the accrual over the Cost Accounts worked. When you tick this, you will need to select Hour Types, Other Leave Reason, User Defined Leave and Additions to calculate the split.
Set up the Entitlement / Entitlement Period. This is used in conjunction with Contract Hours to calculate how much leave to accrue per period.
In Entitlement, enter the number of Hours, Days or Weeks to accrue over the Entitlement Period. (e.g. 8.6667 to accrued 8.6667 weeks)
Select Units as a type of time that defines the leave entitlement. The options are Hours, Days, or Weeks.
Enter the Number of periods that the leave is accrued over. (e.g. 10 to accrue over 10 years).
Select Per Period to set the period over which the leave accrues. The options are Weeks, Months or Years.
Enter the Pro-Rata Entitlement. This is used to determine when Long Service Leave will appear on the Leave Summary and Liability Report. This can also determine when Long Service Leave is included in a Termination.
Enter the Number of periods after which the leave will be included in the Liability Report or Termination.
Select Per Period to set the periods. The options are Weeks, Months or Years.
Select the Next Leave class if there is one.
If you selected a next leave class, select No for Repeat Pro-Rata. Otherwise, select Yes so that the leave accrual starts again when the employee reaches the end of the Entitlement Period.
Select the Termination Payout. This, in conjunction with the Pro-Rata Entitlement, determines when the accrued hours appear on a Termination.
Click OK.
For more information on Portable Long Service Leave, refer to the article Portable Long Service Leave.
Hours Worked:
The Hours Worked method calculates leave by multiplying the nominated hours from a transaction by the accrual rate entered on the leave class. The accrual rate is a percentage.
To calculate the Accrual Rate, divide the total accrual by the period over which it is accrued.
For example:
LSL 8.6667 Weeks for 10 years
Accrual Rate = (8.6667 weeks / 520 weeks (52 weeks per year x 10 years)) x 100% = 1.6667%
The Entitlement Maximum each Period reflects the maximum hours an employee can accrue for the Entitlement Period.
This method excludes unpaid leave hours from the accrual; however, you cannot forecast leave balances because the accrual is based on hours worked.
Set up Hours Worked Long Service Leave Class:
Go to Payroll, Maintenance, Leave, Long Service Leave.
Click Add.
Enter a Code and Description.
Tick Calculate on Hours Worked.
Tick Apply Costing Split if you have the General Ledger module and want to split the cost of the accrual over the Cost Accounts worked.
Select Hour Types, Other Leave Reason, User Defined Leave and Additions that will be used to calculate the accrual and costing splits.
Set up the Entitlement / Entitlement Period. This is used to specify the maximum accrual.
In Entitlement, enter the number of Hours, Days or Weeks to accrue over the Entitlement Period. (e.g. 325 to accrue over 10 years)
Select Units as a type of time that defines the leave entitlement. The options are Hours, Days, or Weeks.
Enter the Number of periods that the leave is accrued over. (e.g. 10 to accrue over 10 years).
Select Per Period to set the period over which the leave accrues. The options are Weeks, Months or Years.
Enter the Pro-Rata Entitlement. This is used to determine when the Long Service Leave will appear on the Leave Summary and Liability Report. This can also determine when Long Service Leave hours are included in a Termination.
Enter the Number of periods after which the leave will be included in the Liability Report or Termination.
Select Per Period to set the periods. The options are Weeks, Months or Years.
Select the Next Leave class if there is one.
If you selected a next leave class, select No for Repeat Pro-Rata. Otherwise, select Yes so that the leave accrual starts again when the employee reaches the end of the Entitlement Period.
Select the Termination Payout. This, in conjunction with the Pro-Rata Entitlement, determines when the accrued hours appear on a Termination.
Click OK.
For more information on Portable Long Service Leave, refer to the article Portable Long Service Leave.