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Cashing out annual leave

by Intuit6 Updated 1 year ago

Do you have an employee looking to cash out annual leave? In these scenarios, When “cashing out” annual leave, you are required to pay the full amount that they would otherwise have been paid, including super contributions. To cash out annual leave for an employee follow these simple steps:

Creating a Pay Category for Leave Cash Out

  1. Select Payroll from the left-hand menu.
  2. Select the Payroll Settings tab, then select Pay Categories (Located under Pay Run settings).
  3. Select Add.
  4. Enter the Pay Category Name as Leave Cash Out, then select Save.
  5. Under Units, select Fixed.
  6. Update any other appropriate fields, then select Save.

Note: By setting up the category as Fixed you can include it in a pay run without adjusting the normal hours they worked.  Additionally "cashing out" annual leave generally does not accrue leave so by setting the Units to Fixed it will not accrue leave.

Cashing out Annual Leave in a pay run

Once the pay category is set up you can add it to their next pay run.

  1. Select Payroll from the left-hand menu, then select Pay Run.
  2. Select the Pay Schedule and Pay Period then select Create.
  3. Select the employee who is cashing out their annual leave.
  4. Select Actions and choose Adjust Leave.
  5. Select Annual Leave and enter the appropriate Hours.

Note: The hours entered in the leave adjustment should be a negative number, rather than a positive one. Apply Earnings Rules should definitely be unticked, as the earnings adjustments are covered in following steps.

  1. Select Actions and choose Add Lump Sum.
  2. Under Other Earnings select the pay category Leave Cash Out.
  3. Enter the number of Hours and the number of Pay Periods.
  4. Make any other required adjustments to the pay run, then select Finalise Pay Run.

For more information on cashing out annual leave, you can visit the Fair Work website here.

Content sourced from Employment Hero

QuickBooks Online Payroll AdvancedQuickBooks Online Payroll Standard

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