In QuickBooks Desktop:
A salaried employee has recently received a salary increase (effective November 1).
At that time, he had vacation pay accrued (i.e. earned) at the previous salary rate. Vacation is accrued/paid at 8% of salary. He takes vacation in the year AFTER it is earned.
He is now taking some vacation. My instinct tells me these days should be paid out at the salary they were earned.
If I use the vacation salary payroll item to pay him, it pays using the new salary rate. And deducts that amount from the accrued vacation pay.
Here are some simplified numbers, for illustration purposes only:
Salary rate Nov 2021 to Oct 2022: $50,000
Salary rate Nov 2022: $60,000
Accrued vacation at Oct 31: $4,000 (20 days)
Accrued vacation for Nov: $400 (8% of new salary)
Vacation taken Nov: 10 days. This should be $2000. However, because of the new salary, the system calculates $2500.
Ending accrued amount at Nov 30: $1900
If that employee were to quit on December 1, he would be owed the $2000 from his previously earned vacation, plus $400 earned in November, a total of $2400. But the accrued amount is only $1900.
Does anyone have any thoughts on this situation?
Am I right to think the employee should be paid the vacation at the salary rate it was earned?
