If you are using timesheets, this is as easy as selecting Employee Leave as the Work, then selecting the appropriate type of leave as the Category.
Even if you have salaried employees who are not entering timesheets, it is good to enter their leave using the timesheets as this keeps track of which day the leave was taken (ensure the employee has Derive Pay By Timesheet ticked in their Employment Details).
If not using timesheets you need to add a line to the employee's pay with the appropriate leave pay code.
If your employees have variable times / rates / bonuses then their rate for the leave may differ from their standard pay rate. In the pay you can edit the employee pay line, edit the leave line and change the rate appropriately. For Annual Leave, the ordinary and average pay rates are calculated for you.