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How to Calculate the Annual Leave Pay for a Terminated Employee?
How to Calculate the Annual Leave Pay for a Terminated Employee?
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Written by Workstem CS
Updated over a week ago

Annual leave pay is one of the employee’s benefits. If the employment contract is terminated and the employee still has unused annual leave, the employer should calculate the employee’s annual leave salary based on the average daily wage in the past 12 months and pay it to the employee within the specified period.

Step 1

Add a pay item called [AL Balance Days] in [Pay Items], and the pay type is [Others]


[Formula Alias] does not need to be filled in, the system will automatically enter the [Formula Alias] after filling in the [Name]

Step 2

Add a new [AL Balance Pay] pay item in [Pay Items], and the pay type is [Income]

If you use the system to calculate the average daily wage of an employee, you can set the calculation formula of [AL Balance Pay] as value = AL Balance Days * Average Daily Rate, otherwise, no formula is required

Step 3

Click [Add] on the [Variable Pay Items] page and enter the existing annual leave balance data for the resigned employees. The amount entered is the actual number of days of annual leave that has not been used, and the occurrence date is entered as the actual date of resignation. The reason could be "Final Pay".

Note: If you haven’t calculated the employee’s daily average wage in the system, you only need to enter the employee’s actual [AL Balance Pay] amount on the [Variable Pay Items] page, and enter the actual date of resignation on the occurrence date. The reason could be "Final Pay".

Step 4

Choose [One-time Pay Run] in [Payrun], enter the payroll policy of the resigned employee in the [Payroll Policy], select [Former employee under this pay rule] in the [Employees included in this pay run], and click [Calculate] to calculate the resignation Employees’ annual leave pay

If you want to display [AL Balance Days] and [AL Balance Pay] on the employee payslip, you can enter [Settings] > [Payslip Display] > Drag the items to the [Show Pay Items on Payslip] on the right

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