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Level 1

vacation pay accrual and salaried employees

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?




2 Comments 2
QuickBooks Team

vacation pay accrual and salaried employees

Hey there Gruntsculp1,


Thanks for reaching out to us here. Making sure you understand how to pay out vacation pay correctly is important. I would be happy to point you in the right direction for the best assistance possible.


In order to make sure you chose the right course of action, I recommend reaching out to an accounting professional. They'll be able to help you make the right decision moving forward. If you do not have an accountant, you can find one by clicking on this link.


If you have any other questions, feel free to reach out here. 

Level 1

vacation pay accrual and salaried employees

I understand where you are coming from the Vacation Pay earned is based on the rate they were earning. so the total in the vacation pay accrued is correct but you pay them at their current salary once they run out of vacation pay that is on them not you. the amount they accrued was based on the old rate so it is correct to think it should be paid at the old rate but I would just pay it at the current rate they should know how much vacation pay they have to use.

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