Annual Leave Accrual Daily Rate Calculation

Hi Earl, thanks for the reply.  This is the bit I'm having a problem with:

• 2.923 hours ÷ 5 days = 0.7308 hours per working day

If I divide 2.923 by 5, I don't get 0.7308; I get 0.5846.  If I divide 2.923 by 4, then yes, I get 0.7308, but not if I divide by 5 - unless I'm missing something?

Cheers

Hi @GC2023,

Thank you for your post. Please allow us to extend you a warm welcome to the Community forum. We hope you find it a valuable resource.

We apologize for the incorrect information and miscalculation provided in the MYOB article. We've checked this further, and it seems that this link is written by an external contributor. We've escalated this with the relevant team so they can change the calculation and update the information provided in that article.

We really appreciate you bringing this to our attention. This article should be updated with the correct information as soon as possible. Once again, we're sorry for the inconvenience, and we thank you for your understanding.

Please feel free to create a new post if you need help in the future. We're more than happy to assist.

Cheers,

Princess

Hi sg9,

Thanks for your post and welcome to the Community Forum! I'm sorry to hear about the issue you've been facing. I really appreciate your patience and understanding about this issue, and I do apologize for the delayed response. Yes that is correct. In addition, calculating annual leave entitlements is typically done by following a pro-rata method based on an employee's ordinary working hours. Here's how you can calculate annual leave entitlements using the provided formula:
 

Step 1: Determine the Total Annual Leave Entitlement

   Start with the total annual leave hours an employee is entitled to. In your example, this is 152 hours.

Step 2: Calculate the Weekly Entitlement

   Divide the total annual leave hours by the number of weeks in a year, typically 52, to find the weekly entitlement:

   152 hours of annual leave ÷ 52 weeks = 2.923 hours per week

Step 3: Calculate the Daily Entitlement

   Divide the weekly entitlement by the number of working days in a week, typically 5, to find the daily entitlement:

   2.923 hours ÷ 5 days = 0.7308 hours per working day

A full-time employee working a 38-hour week throughout the year accrues annual leave at the rate of 2.923 hours per completed week of service, which equals 0.7308 hours of annual leave per working day. This calculation ensures that leave entitlement is proportional to an employee's hours and length of service, as per your provided formula.

Heres your problem > 2.923 hours ÷ 5 days = 0.7308 hours per working day

Its Not !

2.923 / 5 = 0.5846 ! ! ! !

I would think this is a MAJOR FAIL for an Accountancy Application/Organization...

As seen on:
https://www.myob.com/au/resources/guides/workforce-management/annual-leave

FYI - They manage to calculate the Part Time example correctly.

How do you calculate annual leave entitlements?

You calculate annual leave entitlements pro-rata based on an employee’s ordinary working hours.

For example, a full-time employee working a 38-hour week throughout the year accrues annual leave at the rate of 2.923 hours per completed week of service (152/52 = 2.923), which equals 0.7308 hours of annual leave per working day. 

Use the formula:

• 152 hours of annual leave ÷ 52 weeks = 2.923 hours

• 2.923 hours ÷ 5 days = 0.7308 hours per working day

However, a part-time employee who works a 20-hour week (four hours a day, five days per week) for a whole year accrues annual leave at the rate of 1.538 hours per completed week of service (80/52 = 1.538), which equals 0.3076 hours of annual leave per working day. 

Use the formula:

• 80 hours of annual leave ÷ 52 weeks = 1.538 hours

• 1.538 hours ÷ 5 days = 0.3076 hours per working day