Taking leave is one of the core features of a payroll system. Unpaid leave aside, the usual expectation when applying 'leave taken' in a payroll system is that the employee is automatically paid for the leave taken. This system is no different although there are a couple of different cases to consider when understanding how 'leave taken' will work.
Employees that work a fixed pattern of hours
These would be your traditional permanent salaried staff that do not get paid by timesheets - rather they are paid the same earnings each pay run, regardless of hours worked. For this case, the employee's timesheet setting should be Do not use timesheets or Use timesheets for exceptions only.
Then, when they take leave, they're already being paid for it in the pay run so we just need to reduce the leave balance by the amount of leave that they take. This all happens automatically and you'll notice in later versions of the system (now the default) that leave earnings are separated from ordinary earnings in the pay run. We do this by adding two earnings lines when leave is taken - these lines simply remove the leave hours from the ordinary pay category and pay them against a leave pay category.
NB. the net effect of these two earnings lines is $0 so you must remember to include any leave hours with other hours worked in that pay period. If there are no other hours worked in the pay period, you'll have to use the Add Earnings option from the Actions button within each employee record in the pay run and add an earnings line for the leave hours being taken.
Employees that use timesheets
For this case, the employee should have a timesheet setting of Use timesheets to submit all time worked.
When timesheet employees take leave, we'll automatically create a corresponding earnings line to pay for the leave. This happens automatically and the 'transfer' settings on the leave category can/should be left at 'When leave is taken': 'Take no further action'. The main case that is handled slightly differently is 'Leave without pay'. When this happens, we have a leave transfer rule that deducts that number of hours from the primary pay category. In this scenario, we do not then add a corresponding earnings line.
Leave Transfer Rules
The main use of the leave transfer rules (apart from 'leave without pay') is for when you need to allocate the payments for leave taken to a separate account in your ledger. In that case, you'd create a separate pay category for that specific leave category, for eg a pay category called 'Annual Leave Taken' and configure the leave category as: 'when leave is taken': 'transfer hours from a specified pay category' 'deduct hours from': 'employee's primary pay category' 'transfer hours to': "Annual Leave Taken" pay category. The important thing to note if leave transfer rules are configured is that the employees' pay rates must be maintained on the pay category. If the employee is being paid their base rate for leave taken, simply select the "Use pay rate of Employee's primary pay category for transferred earnings line" checkbox and this will automatically apply the employee's primary pay rate in the pay run.
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