So an employee has had a leave request approved - what’s going to happen when you run the pay?
For employees with regular days and hours that’s easy. FlexiTime will pick out the hours for the relevant days and pay them accordingly - for example 8 hours for each weekday in the Leave Request if they’re a regular 40 hours a week employee.
But for the majority of companies it’s not that simple. When your employees work variable hours from day to day and variable days from week to week things get more complex.
When processing a leave request there are 3 questions:
- What days within the leave request are paid?
- What hours should be paid for each of those days?
- What rate should the leave be paid out at?
FlexiTime will try to determine which days in the leave request are Otherwise Working Days (OWDs). This article explains how OWDs are worked out - you'll need to ensure your employees and company are setup accordingly for the Leave Requests function to work properly.
Now that we know whether a day is an OWD, we next need to decide how many hours should be paid for that day.
FlexiTime will first look at the employee's Employment tab to see if the Hours Per Day have been explicitly set - either the Hours per Day is entered or Show Days is ticked and hours have been entered on individual week days.
If the flexible nature of the employees work means that neither of these are set, FlexiTime will use the average hours per day over the last 12 months.
In rare cases where an employee is accruing annual leave based on Normal Hours Per Week and they have the Days Per Week entered (but not Hours per Day), FlexiTime will use Normal Hours Per Week / Days Per Week, but only for Annual Leave calculations.
Annual Leave will be paid at the highest of the employee's Annual Leave Rates. Some FlexiTime companies may be set up to default to the employee’s Normal Rate. In that case, if the Ordinary or Average rates are higher a pay warning will be raised. You can change to default to the highest rate under Setup > Company Settings > Pays.
Bereavement, Alternative, Public Holiday, and Sick Leave will be paid using the normal pay rate if Hours per Day are set on the employee. The Hours Per Day multiplied by the Normal Rate is considered to be the employee's Relevant Daily Pay. If the Relevant Daily Pay can't be calculated, the Average Daily Rate is used instead.
Should the rate on the payline for the leave be zero it will be because there is insufficient data in FlexiTime to do an Average Daily Rate calculation. Most commonly this will be because the work days have not been recorded on each pay - this article outlines how to resolve this.
It should be noted that the concept of using the average hours for the last 12 months when paying Annual Leave is not something that is described in the Holidays Act. The legislation only refers to annual leave in terms of weeks. With today's dynamic and flexible workforce, handling annual leave solely in terms of weeks is impractical, and incompatible with accruing leave based on hours worked. Using the average hours paid out at the higher pay rate provides the closest approximation to a weekly rate where there is no fixed agreement as to what constitutes a week.
We recommend reviewing the Pay Leave Report (from the Options dropdown on the pay) before you finalise the pay. This report summarises the leave in the pay and the rates used.