Holiday pay converting to Annual Leave

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Experienced User krispy
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Holiday pay converting to Annual Leave

Hi

 

When shifting an employee from one entity to another in payroll, I have been advised in an answer from Jennie to convert the holiday pay amount to hours of annual leave.  Can you please advise the correct way to do this?  I seem to be getting varying amounts depending on how I calculate it.  Attached is the report I am working from.  Should I just be using the 'accrued leave' hours on the report?

 

An urgent reply would be appreciated.

 

Thanks

 

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Ultimate Partner jenniek
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Re: Holiday pay converting to Annual Leave

Hi there @krispy

The object would be to get the $ value owing to the employee across - which is $6641.88. The annual leave rate is very high compared to the ordinary rate of pay in the report you show. Technically you should take the balance owing and divide by the hourly rate which would give your employee 172 hours of leave owing - however this is much more than the entitlement. The total leave available is shown as 123 hours. If you divide 123 hours into $6641.88 - you would be paying this at $53.99 - which will give him the correct leave balance at a rate just slightly higher than his annual leave rate at present which shows as $50.31675.  So I would transfer this at 123 hours @ $53.99 which will give him a $ value of $6640.77 - which is as close as you can get it. Remember that all annual leave is paid at an average of the previous 12 months earnings, so this rate may/will change when you actually pay annual leave. The report shows me that his leave rate has been increasing when paid annual leave which tells me is doing more hours per week than his entitlement of 40 hours.

Regards,
Jennie Kingma
JK Business Systems Ltd, Hamilton, NZ
Email: jennie@jkbusiness.co.nz
Experienced User krispy
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Re: Holiday pay converting to Annual Leave

Thank you so much Jennie.

 

I have attached a screen shot of the file, does this look correct?  

Will I have to manually work out his annual leave rate when he takes leave during the year, ie his history is now in another payroll but he is still employed with the same ' umbrella company'.

 

 

 

 

 

Ultimate Partner jenniek
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Re: Holiday pay converting to Annual Leave

Hi @krispy

That looks good - however I don't like the look of his annual leave rate showing lower than the rate entered above. But I would monitor this. When you next pay annual leave to the employee I would check his annual leave rate (by clicking on the button to see the calculation) - MYOB should work it out based on the number of weeks worked plus the leave owing. You cannot have the history in this new payroll as he hasn't worked for the new company for that long.

Regards,
Jennie Kingma
JK Business Systems Ltd, Hamilton, NZ
Email: jennie@jkbusiness.co.nz

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