Setting Up Leave Codes and Accruing Leave

Following is an overview of how leave codes should be set up and how the setup facilitates leave accrual.

Setting Up Leave Banks

Leave banks provide a method of grouping, recording, and awarding specific types of leave, such as vacations, personal days, and sick leave. For example, when an employee reaches a certain length of service, such as 4-7 years or 710 years, you can use the system to award additional leave by structuring your leave codes into banks. You can divide a bank into levels based on other criteria, such as salaried and hourly employees and then set up a sequential series of codes within each of these to allow increases in the number of leave days awarded.

Setting Up an Anniversary Leave Bank

Following are three sets of codes within the same leave bank. Assume that each code's record has an Accrual Type of Anniversary. The first digit of the code identifies the bank, the second digit identifies the type of employee, and the third digit references the level, which is often based on the years of service.

300 Vacation - Administrative 0-5 years
301 Vacation - Administrative 5-10 years
302 Vacation - Administrative 10 + years
320 Vacation - Sec/Clerical 0-5 years
321 Vacation - Sec/Clerical 5-10 years
322 Vacation - Sec/Clerical 10 + years
330 Vacation - Custodial 0-5 years
331 Vacation - Custodial 5-10 years
332 Vacation - Custodial 10 + years

When an administrative employee is first hired, you would assign leave code 300. When the employee completes five years of service, as determined by the hiring or anniversary date, the system assigns code 301, and after 10 years, code 302.

Rollover

Leave banks must have a unique first digit to distinguish the type of leave. This digit serves as the rollover code referenced in the Leave table's Rollover Code field. It identifies the bank that applies when a leave bank's balance exceeds its leave code's Rollover Limit setting.

In addition, the order in which the banks are assigned to the employee record determines the next level to charge when a code's balance is zero and the Excess Leave Usage Method is Charge Next Level.

Following is an example how leave banks can be structured and organized in an employee's Leave Bank tab:

How Leave Accrues

Leave codes are stored on the employee's Leave Bank tab to identify the types of leave an employee receives. An employee may have a maximum of 10 leave banks since the system uses the leave code's first digit (0-9) to identify a leave bank. The Earned YTD, Taken YTD, and Balance fields in the banks are changed through payroll calculations and periodic processes, as well as through attendance entry.

Leave accrual can be based on the units worked in a pay period, on a fixed accrual per pay period, or as a function of monthly or fiscal year end processing. The accrued leave also can be awarded in a lump sum based on employee anniversary dates. The units used to award leave are usually defined as hours or days.

Accrual Rate and Leave Earned

If leave accrues based on the pay period units worked, the accrual rate represents the units awarded for the regular units worked (or the units of authorized leave). Based on this, if an employee receives 80 vacation units per year and a year includes 2080 work units, the accrual rate would be 0.0384 (80 ÷ 2080).

In this case, enter 0.0384 in the appropriate leave record's Accrual Rate field, and assign an Accrual Type of P - Pay Period Rate. The system multiplies the employee's timecard hours by this rate each pay period and adds the result to the employee's Earned YTD for the leave bank.

The Leave Processing field in the Human Resources Profile's Payroll tab can be used to determine how leave is awarded. Following are the selections available in this field. Keep in mind that these settings only apply to the following Accrual Types: A - Anniversary, B - Pay Period Amount, and P - Pay Period Rate. They do not apply to the M - Monthly and F - Fiscal (year) types.

1- Accrue leave first up to the maximum allowed; then process leave taken

During the calculation of leave earned (leave accrual), if the employee would accrue more than the maximum earned or has a leave balance greater than the maximum balance, then the system does not allow the employee to accrue the full amount.

2 - Process leave taken first; then accrue leave up to the maximum allowed

The system calculates leave taken before leave earned. The same checking occurs as with the first option, but since the leave taken has already been subtracted, employees with a near-maximum balance can earn more leave if they took leave in the prior pay period. However, this also means employees who do not have a sufficient balance could be docked, because the accrual occurs after the leave taken is calculated. This option reflects the policies of most organizations, since it does not allow employees to take leave before earning it.

3 - Accrue leave beyond maximum, then process leave taken; then reduce leave balance to maximum

The system calculates leave earned before leave taken, as in the first option. The difference is that employees can earn more than their maximum amounts. After calculating the leave taken, the system checks the maximum earned and maximum balance. If the employee has accrued more than the maximum balance, the leave earned is reduced accordingly. This enables employers to be the more generous with their leave policies, since employees can take leave before earning it and are not penalized for taking leave after earning it.

Linking Leave Codes with Pay Codes

You must link your leave codes to pay codes so that the time taken or earned for leave can be subtracted from or added to the appropriate banks. This linking occurs in the Pay Code table's Payroll tab, Leave Time Factors section.

For example, if leave codes in the 300 range are for vacation pay, associate any valid code from this bank with a pay code to entitle employees to leave pay. The first character in the leave code (3) identifies the vacation leave bank, while the specific type of vacation leave is identified by the full code in employees' Leave Bank tabs. For related information, refer to Pay Code Table.

Maximum Earned

Using the Maximum Earned field enables you to control the amount of leave time earned. To indicate that there is no limit on the amount of leave that can be earned in a year, enter 0 (zero) or 9999. If the units worked are days, the entry 2 would indicate that up to two days can be earned.

Excess Leave

The Human Resources System allows flexibility in formulating accrual rules for employees who exceed their accrued leave, in which case leave without pay (LWOP) applies. When LWOP units are reported in a pay period, the accrual is proportional, full, or none, depending on the Accrual Control field's setting.

Several options are provided for handling excess leave usage, and different rules can be set up for each leave code. For example, you can have the system maintain a negative balance for a leave category and credit this balance as future leave accrued. Another possibility is to dock excess leave from an employee's pay as leave without pay.