Annual Leave Conversion Balances

We have tried to make FlexiTime as simple as possible to switch to from other payroll systems. One of the ways we've made it easy is by adding the Employee Wizard to add new employees.

When adding an employee from an old payroll system FlexiTime asks what the Annual Leave Available in Hours is for the employee. The annual leave available includes the remaining annual leave due to the employee from their last anniversary, plus the annual leave they've accrued since the last anniversary.

By only asking for the annual leave available we've made it simple to move your employees over from your old payroll system to FlexiTime. However, because annual leave is a complicated area it is important to explain the consequences of only recording the annual leave available.

At any time an employee is owed two separate amounts; their holiday pay is 8% of the gross earnings since their last anniversary and annual leave is the total number of hours due to them at the last anniversary. If they finish employment FlexiTime calculates both of these amounts in their final pay. The annual leave due at the last anniversary should be paid out at the higher of:

the employee's ordinary weekly pay
the employee's average weekly pay during the last 12 months

Rather than entering two separate amounts for annual leave due as at the last anniversary and gross earnings since the last anniversary, FlexiTime asks for one amount only - the annual leave available. This means that the amount owing for holiday pay at 8% of gross earnings has been converted into leave due to the employee in hours. The value of this leave due will increase if the employee's average or ordinary pay rate increases.

We think by only asking for annual leave available we've made life a lot simpler, but if you don't want an employee's holiday pay to be converted to annual leave you can edit the employee after adding them and enter separate amounts for:

Gross Earnings to Date
Annual Leave Due as at last anniversary
Annual Leave Taken since last anniversary
Annual Leave Accrued in advance

In some cases other payroll systems do not accrue annual leave in advance or even correctly keep a balance of annual leave due as at the last anniversary. If you only have a balance of holiday pay owing in dollars, then you should take particular care when converting this balance to an annual leave available in hours amount. The best approach would be to agree with your employee how many hours the holiday pay represents based on their pay and leave history and their current pay rate.

This article provides some guidelines for calculating annual leave accrued in advance.

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