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Alternate / Annual Leave Mistake

A few weeks ago I accidently put alternate leave instead of annual leave in an employee's pay, can I change this easily or does it make no real difference?

Robert Owen Answered

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This question raises a number of important considerations relating to employee leave. 

The Holidays Act requires that you keep a full record of leave for your employees. It is important that if any changes are made that these are well documented either on the employee payslip notes or on the notes for the employee.

You can do an adjustment in the next pay, putting in an alternative leave accrued line and an annual leave taken line (these lines should net out to a zero $ value) and noting on the payslip note that this is an adjustment for the previous pay.

Alternatively, leave balances can be corrected for the employee directly on the Leave tab for the employee. Increase the Alternate Leave Due Days by the number of days taken in the pay, and increase the number of hours Annual Leave Taken by the number of hours of Annual Leave that should have been taken. You may also want to note down the change in the Notes section on the Personal tab. However if taking this approach you need to consider the following.

Alternate Leave is paid differently from Annual Leave so there may be a difference in the rate that was used to pay the employee. Alternate Leave is paid for a full day and is, in the first instance, paid at the relevant daily rate, that is, the normal hourly rate for the number of hours the employee would have worked had they worked that day. If you don't know how many hours the employee would have worked you can use the average daily rate. FlexiTime calculates this using the average hours worked per day from the last 12 months and the employee's average hourly rate over that period.

Annual Leave by contrast is paid at the higher of the ordinary rate (average hourly rate over the last 4 weeks), or average rate over the last 12 months or if the employee normal rate is higher then that is used.

If you are changing the balances on the Leave tab then in order to make this a zero net value transaction the number of hours of annual leave taken should be increased based on the value of alternate leave paid out divided by the higher of the employees ordinary or average pay rate.

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