Entitlements include 20 days holiday leave per annum, 8 days sick leave per annum, rostered days off (RDOs) and accrued days off (ADOs) that employees accrue under the terms of their work agreement. Entitlements are usually calculated as hours accrued, with a corresponding dollar value for reporting purposes only.
Three different methods are available for calculating entitlements:
Editing Entitlements in MYOB
- A User-entered Amount - This option allows you to enter an amount at the time of the paycheque is processed each pay period. Choose this method if the amount varies regularly.
- A Set percentage of hours worked - This option can only be used with employees who have a pay basis of an hourly rate (not Salary). If the employee is paid a 38 hours pay plus 2 hours overtime and both are included in Gross Hours, MYOB will calculate an entitlement on a weekly paycheque of 7.7023% of 40 hours, or 3.077 hours.
To calculate Annual Leave Accrual :
- Gross hours = 52 (weeks p.a.) x 38 (No. of hours per week)= 1976
- Number of hours p.a. = 20 (days) x 7.6 (no of hours per day) = 152
- 152/1976 = 7.6923
- 7.6923% is accrued from gross hours worked towards Annual Leave each week.
To calculate Sick Leave Accrual:
- 8 days Sick Leave per annum
- 8 x 7.6 = 60.8
- 60.8/1976 = 3.076
- 3.076% is accrued from gross hours worked towards Sick Leave each week.
To calculate Long Service Leave accrual:
- 4.33 weeks for every five years worked.
- Gross hours p.a. = 52 (weeks p.a.) x 38 (No of hours per week) = 1976
- Gross hours LSL p.a. = 4.33/5 x 38 = 32.908
- 32.908/1976 = 1.6654
- 1.6654% is accrued from gross hours worked towards Long Service Leave each week.
To calculate Rostered Days off
- A rostered day off accrues when a 40 hour week is worked for 4 weeks, but the governing award or employment agreement is based on a 38 hour week.
- Number of hours in a working day = 38/5 = 7.6
- Frequency of RDO = 4 (one RDO every 4 weeks)
- Percentage entitlement = (7.6/4)/38 = 5%
- A Fixed number of hours - This option allow you to specify a fixed number of hours to be automatically allocated every Pay Period, month or year, regardless of the hours worked by the employee.
e.g. If the employee is paid fortnightly:
"Running down method" of recording sick pay
- Entitlement per pay period = 152/26 = 5.846 hours per pay period
Most employees are due five or eight days a year from the first day of each year of employment.
- Set the Sick Leave Accrual to zero per pay period. (0.00 Hours per Pay Period)
- Go to Entitlements for each employee and edit the Carry Over column until the Total column equal the current sick leave due, right up to their next anniversary of employment.
- Every time an employee takes sick leave, record the number of hours as Sick Pay in their pay.
- When each employee's anniversary comes around, manually top up their sick leave entitlements by recording a nil value pay in which you record a year's worth of sick leave hours in the Sick Leave accrual row.
- To see all details relating to sick leave accrued and taken, go to your Find Transactions menu and click the Payroll Category tab and do an Advanced search on the employee.
Exemptions for holiday and sick leave accrual
- In the Payroll Category List window click the Entitlements tab.
- Click the zoom arrow next to e.g. Holiday Leave Accrual. The Entitlements Information window appears
- The following options can be selected:
- User-Entered Amount per Pay Period or
- Equals (7.6923) Percent of (Gross Hours)or
- Equals () hours per (Pay Period)
- Print on Pay Advice (tick)
- Payroll year end (tick) Carry Remaining Entitlement Over to Next Year
- Linked Wages Category (Annual Leave)
- When you create a new Entitlement you need to link it to a wage category
- Click the Employee button to select the employees who are entitled to e.g. Annual Leave Accrual
- A Linked Employees window will appear - select the relevant employees.
- Click OK
- Click the Exempt button and the Entitlements exemptions window will appear.
- Click the following wage categories:
- Meal Allowance
- Travel Allowance
- Unused Annual Pay
- Click OK and click OK again.
Holiday leave loading, allowances, reimbursements, bonuses and overtime are all wages categories that don't accrue holiday or sick leave.
Leave only accrues on base hourly, base salary, holiday pay and sick pay.
Entering the Carried forward holiday and sick pay
To find out how much holiday or sick pay is due to employees
- Go to Cards List and double click the employee's name you wish to edit.
- Click the Payroll Details and then click Entitlements
- Enter total hours leave due at the point of starting payroll in the Carry over column. Express these figures in hours
- Go to Reports, click the Payroll tab
- Select the Entitlement Balance [Detail] report.
- Click Customise and All Employees.
- For period select Lifetime and
- on the Finishing tab, choose whether to sort by employee name or type of leave.
- Click Display.