LSL - Setup for payroll

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LSL - Setup for payroll

I'm new to setting up Payroll Categories.  I need to set up provision for LSL for two types of employees.  We are in SA so they get 13 weeks LSL after 10 years' service.  I want the $ amount that is accrued each pay to affect a liabilities account accordingly. 

I guess I need to set up an Entitlements category, but I can't find a way to attribute a liability account that way, so maybe it needs to be an expense category??  Can someone please advise what type of category and how to set it/them up for these two scenarios:
1. A full time employee. This is a bit unusual as the LSL accrual to be attibuted will be about twice the wage (due to an unusual requirement).

2. A casual employee.  who receives $300 per week, each week. This employee works 19.5 hours each week.

 

I would also like to know how the % is worked out.  Is it 13 (weeks) divided by 10 (years) divided by 52 (weeks) x 100 which equals 2.5%?  Thus, someone on $1000 per week would have $25 added to the liability account??

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Re: LSL - Setup for payroll

@RobNob

 

Entitlements are accrued in hours not $$ and are not converted in the software to allow a direct 'feed' to a liability account. More on this later

1. A full time employee. This is a bit unusual as the LSL accrual to be attributed will be about twice the wage (due to an unusual requirement).

I assume that this means that there is no accrual showing on the file. If the employee is on Base Hours you will need to check that the accrual in LSL is correctly set to 2.5% of Gross Hours with the following exempted Overtime/s , HLL and any Allowances which are calculated using an hourly base. i.e. the amount that creates the accrual should be 38/40 hours per week and will give an accrual should be ~0.95 - 1.00 hours per week.

 

2. A casual employee.  who receives $300 per week, each week. This employee works 19.5 hours each week.

With that level of pay per hour I assume that this is a junior position. In most states LSL liability only becomes real after 7 years when it must be paid out on termination. Many people do not accrue it until ~5 years have elapsed. Is there a likelihood that this employee will reach 7 years?

In both of the above you need to set up an excel and calculate the accrual since their respective start dates to 31/5/2018.

The easiest way to enter the hours is to run a void pay - Date, 31/5/2018, ch#ADJLSL remove any $$ figures and put the relevant figures into the accrual section of the payroll screen. Answer YES to the MYOB query and record.

 

 The conventional method of getting entitlements into the balance sheet is to journal the $$ from the Wages and Salaries to the Balance Sheet account.  Set up an excel with the opening balance being taken from the Entitlement Balance Summary for end of month . In subsequent months the difference is calculated and journalled across. Most people do not track personal leave on the balance sheet as it is not generally payable on termination.

 

 My equation would be 13 weeks divided by 520 weeks which would still give you 2.5%.

 

Ron B
BAS Group
03 95588477

info@basgroup.com.au
Making MYOB work for you
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Re: LSL - Setup for payroll

Thanks Ron for that great reply which I should be able to follow and implement.

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