How does the System Behave when Taking Leave

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.

Default setting for leave

The default setting for leave is 'Basic':

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This means that if an employee does NOT use timesheets (i.e. their timesheet setting is Do not use timesheets or Use timesheets for exceptions only), when the leave is applied to a pay run the leave balance will be reduced, but you will not see a separate earnings line for the leave taken. You just need to remember to enter the total hours worked, which includes both the actual worked hours, and the leave hours. If you have set the employee to be paid their standard hours by default on their Employee file > Pay run defaults page the system will pay their standard hours automatically. It will look like this in the pay run:

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If an employee DOES use timesheets (and their standard hours are not paid automatically within the pay run), the system will create an additional earnings line when leave is taken. This is because those hours would not be paid otherwise (i.e. 'automatically' like employees whose hours are paid by default are). If an employee submits a timesheet using any of the paid 'leave taken' work types the same will apply, in that the system will create an additional earnings line to pay for the leave:

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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.

Report the earnings for the leave taken against another pay category

If you choose to change the default leave settings to "Report the earnings for the leave taken against another pay category", the system will behave a little differently when applying leave to the pay run. 
The setting is located on the Payroll settings > Leave categories page:
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The main use of this setting is for when you need to allocate the payments for leave taken to a separate pay category. In that case, you'd create a separate pay category (there are system default categories already set up) for that specific leave category, for e.g. a pay category called 'Annual Leave Taken'. You can then configure the leave category as 'Report the earnings for the leave taken against another pay category', and then select the 'Annual leave taken' (for example) pay category. You can also select to use the pay rate of the employee's primary pay category so their rate will remain the same and that you don't need to separately set the rate for the leave pay category being used. It will automatically apply the employee's primary pay rate in the pay run.

Within the pay run for this setting, if an employee does NOT use timesheets, you'll notice a couple of extra earnings lines. First, there will be a negative earnings line for the leave hours. This will be shaded to indicate that it is directly linked to the 'leave taken' line and it can't be altered unless you alter the actual 'leave take' line. If you do that (and click save), it will automatically adjust the details in this line. The system creates this negative line in order to remove the hours from the employees default pay category in preparation to then transfer those hours to the chosen 'leave taken' pay category. 

The 2nd additional line that you will notice is an earnings line adding the leave hours, but this time it is adding the hours to the chosen 'leave taken' pay category. Remember, you need to enter the total hours worked, which includes both the actual worked hours, and the leave hours if the employee is not set up to be paid their standard hours by default. 

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If the employee DOES use timesheets, the system will behave the same as the 'basic' setting, which is to say that it will create an additional earnings line (no negative line needed because the leave hours would not have been added already), however this time it will apply the leave hours straight to the chosen 'leave taken' pay category, not the employees default pay category:

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If you have any feedback or questions please contact us via support@yourpayroll.io

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