Paying Leave "in advance" using lump-sum payments

Paying Leave "in advance" using lump-sum payments

If you want to pay your employees leave in advance but do NOT want to "slug" them with extra tax at the same time, follow the steps provided below:

Example: Say, for example, you want to pay your employees last week's wages but they have taken this week and next week off on annual leave, and want to be paid upfront. In simple language, you will be paying them for 3 weeks. Last week (when they worked), this week, and next week's leave. 

1. You will pay the "ordinary" earnings as usual.
2. After that, use the 'Add Lump Sum Payment' options using the 'Actions' button in the employee record in the pay run. 

       3. Select the 'Leave Taken' pay category and add the total leave hours to be paid.

      4. For this scenario, you should select Method A. (Check Method A detailed process in the next step). After that, enter the appropriate number of pay periods. (Using the above example, enter '2')

       5. If you pay the leave this way, it will NOT reduce the employee's leave balance. In order to reduce the leave balance, you need to use the 'Adjust leave' option from the Actions button within the employee record. Select the appropriate leave category and enter a negative adjustment to reduce the leave balance by the number of hours being taken. (Please be careful NOT to apply any earnings rules)

 

     6. If you pay the leave this way, it will NOT accrue leave on the leave hours taken. In order to accrue the leave, make sure to adjust the leave accrual rate in the pay run. To do this, click on the pencil icon next to the accrual figure and override the existing leave accrual amount showing with the correct amount that should accrue.

     7. Click Save

NOTE: Tax calculation will use the other earnings in the pay run to average out the tax so if:

• there are NO "ordinary earnings" in the pay run; or
• you don't think the tax calculation is correct,

You need to perform your own calculations and adjust the tax yourself. You can do that by using the 'Adjust PAYG' option from the 'Actions' button - enter a negative adjustment to decrease the amount of tax calculated, or a positive amount to increase it.