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Payroll set up: Sick leave policies

Paid sick leave is an optional benefit that employers may grant to employees. Several employers address the issue of periodic absence from work due to ill health by providing employees with a limited number of paid days off per year often referred to as “sick days”. This type of plan is usually found in workplace policies or collective agreements. However, some provinces and territories require employers to provide unpaid sick leave.

Before you run payroll (and even before you add your first employee) it is helpful to set policies for paid sick leave:

1. Select the Gear icon, then Payroll Settings.

2. Select Pay Schedules.

3. From the Vacation and Sick Leave Policies section, select Create.

4. Select Sick from the Category drop-down menu.

5. Enter a Description that will help you select the correct policy when you set up employees (for example, 10 hours/year).

6. Enter the Frequency that the sick time will accrue and the maximum hours of sick leave the employee can bank. For example, if the employee is granted 10 hours of sick time at the beginning of the year and the time expires at the end of the year, you will input the following in each field:

  • Accrual Frequency: At the beginning of the year.
  • Hours earned per year: 10 hours
  • Maximum Available: 10 hours. When the employee’s sick time reaches this amount, no more sick hours will be added until the banked amount is less than the number you entered.

7. Click OK to save the policy.

Note: 

You can set up pay schedules before you add employees, or you can set them up when you add employees.

If employees earn time off at different rates, you should set up multiple sick policies:

1. Enter the first policy.

2. Select OK.

3. Create the next one. You can create as many as you need.

You can review this article for more information on sick pay laws and regulation by individual province and territory.

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