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Cashing out annual leave

by Intuit•22• Updated 4 days ago

Do you have an employee looking to cash out their annual leave? In these scenarios, when cashing out an 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. Go to All apps A bunch of numbers and letters on a tile wall., select Payroll, then select Employees (Take me there).
  2. Select the Payroll Settings tab, then select Pay Categories.
  3. Select Add.
  4. Enter the Pay category name as Leave Cash Out.
  5. Tick the Is Fixed box, then select Save.
  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. Go to All apps A bunch of numbers and letters on a tile wall., select Payroll, then select Employees (Take me there).
  2. Select New Pay Run.
  3. Select the Pay schedule and Pay period ending, then select Create.
  4. Select the employee who is cashing out their annual leave.
  5. Select Actions, then select Adjust leave.
  6. From the Leave Adjustments section, select the Annual Leave from the Select a leave category ▼ dropdown, then enter the appropriate Hours.
  7. Select Save.

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, then select Add lump sum payment.
  2. From the Other Earnings â–Ľ dropdown, select Leave Cash Out.
  3. Enter the Units and Rate.
  4. From the Select a calculation method â–Ľ dropdown, select Method A and enter weekly pay periods.
  5. Select Save.
  6. Make any other required adjustments to the pay run, then select Finalise Pay Run.
  7. Select the appropriate paid date, create super payment, and publish pay slips, then select Finalise.

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

Content sourced from Employment Hero