How to calculate vacation pay out for employee's final pay cheque in QuickBooks Online Payroll

QuickBooks Payroll does not yet have an automatic vacation pay out feature for your employee’s final paycheque. However, you can follow these steps to ensure that your employee is paid correctly.

If your employee's vacation is accrued and they are paid for time off

You will need to determine the remaining balance of vacation after this pay period. Here's how to find this balance:

1. Go to Payroll and select Employees (Take me there).
2. Select Run Payroll.
3. Select the desired employee by checking the box beside their name and select Preview payroll.
4. Select the edit pencil next to the Net Pay amount.
5. Scroll down to find vacation Hours available and determine the remaining balance.
6. Select Cancel to go back to the main payroll screen.

Note: If your employee is paid hourly, you can run payroll as normal, including the remaining vacation hours. If your employee is paid by salary, you need to change them to hourly to make sure the vacation hours add to the gross.

Salaried employee that works 8 hours/day, 5 days/week paid with an hourly rate

Here’s how to pay a salaried employee that works 8 hours/day, 5 days/week with an hourly rate.

Divide the employee’s salary amount by the number of work hours in the salary period:

• Per Year: 2080 hours
• Per Month: 173.333 hours
• Per Week: 40 hours

For example, an employee paid $10,000 per month earns 10,000/173.33 = $57.69 per hour.

Set the employee’s hourly rate to the amount in Step 1:

1. Go to Payroll and select Employees (Take me there).
2. Select the Employee, then select Edit.
3. Change the Employee's rate from salary to hourly, then enter the hourly rate you calculated.
4. Select Done.

Then run the payroll, paying the employee for the number of hours worked in their pay period (minus any hours not worked):

1. Go to Payroll and select Employees (Take me there).
2. Select Run Payroll.
3. Enter all other types of pay and the vacation hours.
4. Select Preview payroll and make sure to review payroll details.
5. Select Submit payroll.

Now enter all other types of pay and the vacation hours, and submit payroll.

Note: Depending on how your vacation policy accrues, you may notice the final vacation balance on the pay stub is not zero. To correct this, you can add or subtract hours before running the final cheque such that the final balance is 0 on the stub.