This screen allows you to set up your leave categories and control which of them accrue automatically, how they will behave in the pay run, whether or not to include them in termination payments, and decide which should appear in your employee's pay slips.
The settings for Leave Categories can be accessed and updated by clicking on the Payroll Settings tab on the payroll dashboard, then go to Leave Categories under the Pay Run Settings heading...
QBO users get to Payroll Settings by clicking on the ‘Payroll Settings’ button:
Please note: Any changes that are made to your business's leave category settings will not be applied to existing employees, the new settings will only apply "automatically" to any new employees who are subsequently added to your payroll. If you want to change the leave settings for your existing employees you will also need to make the same adjustments on each employee's, leave allowances page. You can do this "in bulk" by using a leave allowance template, then apply that template to each employee's record - this is all explained here...Leave Allowance Templates
The default setup for a new business includes 5 Leave Categories:
- Annual Leave
- Leave Without Pay
- Personal/Carer's Leave
- Time in Lieu
- Long Service Leave
You can choose to add more categories by clicking on the green "Add" button to the right of the screen. When doing so, you'll be presented with the following screen:
When adding a new leave category you need to enter:
- Name (required)
- Leave Loading percentage - used to automatically apply leave loading.
- Leave Category Type - drop down box to choose from 'Standard' or 'Long Service Leave'
- Employee Leave Balance - drop down box to choose from 'Tracked' or 'Not tracked'. Note: For some types of leave that aren't accrued in the usual way (e.g. leave without pay) it might not make sense for an employee to have a 'balance'. In these cases you should set this value to 'Not tracked' to tell the system it doesn't need to keep track of how much of this type of leave an employee is entitled to.
- Automatically accrues
- Exclude from termination payout
- Hide accruals from pay slips - Select this option if you do not wish to allow employees to see the amount of leave accrued for this leave category within a pay run on their pay slips.
- Hide balances from pay slips and in employee portal - Select this option if you do not wish to allow employees to see the balance of this leave category on their pay slips or in the employee portal.
- Standard allowance (nb. this only shows if the leave is automatically accrued) - set how many weeks per year
NOTE: In our latest KeyPay update, we’ve removed the “weeks per year” and “days per year” leave accrual methods. So for all new businesses and businesses that aren’t using these accrual methods they will no longer be displayed as an option in the leave category or employee leave allowances pages.
If your business is already using either of these leave accrual methods, nothing will change and you will continue to accrue leave as you always have, however we would strongly encourage you to consider switching to the “hours per hour worked” leave accrual method.
- Payment Setup: This determines whether the employee is paid for the leave taken and the pay category that is assigned when leave is taken. (The default setting for Payment Setup on the Annual Leave - leave category used to be Basic but this has been updated in later releases of KeyPay so that leave hours are reported against a separate pay category called Annual Leave Taken - you are free to change this if necessary)
- Basic: When an employee does not use timesheets (see screenshot below), the employee's leave balance will be reduced, earnings are not impacted. When an employee is using timesheets to submit all time worked, an earnings line will be created and the leave balance will be reduced.
- Don't pay for the leave taken: When an employee does not use timesheets (see screenshot below), an earnings line with negative will be added to reduce the earnings for the employee. When an employee is using timesheets to submit all time worked, no earnings line will be created.
- Report the earnings for the leave taken against another pay category: When wanting to report payments for leave taken in a separate pay category (for reporting/journaling purposes), select this option. The earnings related to the leave taken will be assigned against the specified pay category instead of the employee's primary pay category. When this alternative is selected, the option will be given to use the rate of pay from the employee's primary pay category. Otherwise (if the leave needs to be paid), the rate should be set on the employee's record, Pay Rates page against the pay category that it's being transferred to.
- Custom: For advanced users only, this option allows the user to deduct hours from an arbitrary pay category and transfer them to another arbitrary pay category when leave is taken.
To check or assign the employee's timesheet setting, go into the 'Pay Run Defaults' page of the employee record. The timesheets option is near the top of the page.
If you have any feedback or questions please contact us via firstname.lastname@example.org