Leave Management
Accruing, requesting, approving and paying absence.
Workflow
- 01Accrual
- 02Request
- 03Approval
- 04Balance Update
- 05Payroll Input
If you change this
It implies 11 topics across 2 modules, including Financial Accounting which you might not expect.
See the path ahead →Why it matters
Leave is a balance sheet item. Accrued annual leave and long service leave are liabilities that have to be provisioned, valued and paid out correctly on termination.
- It accrues continuously: Wrong accrual rules understate or overstate a liability every cycle.
- It is valued at current rates: A balance accrued years ago is generally paid at today's rate, sometimes with loading.
- It varies by type: Annual, personal, compassionate, parental, long service and unpaid leave each have their own rules.
The workflow
- 01
Entitlement setup
Accrual rules are configured per leave type, employment type and instrument.
- 02
Accrual
Entitlement builds as service accrues, on the right basis — hours worked or ordinary hours.
- 03
Request and approval
The employee requests, the manager approves against balance and operational need.
- 04
Absence recording
Approved leave flows into time and attendance and then payroll.
- 05
Payment
Leave is paid at the correct rate, with loading where it applies.
- 06
Balance and liability reporting
Balances are reported to managers and the liability is valued for finance.
Leave loading is the detail most often missed in configuration. Where it applies, it applies on payment and on termination, and it is frequently found during an audit rather than before one.
What you need in place
- Accrual rules per type and instrument: Including what happens for part-time, casual and shift workers.
- Long service leave rules by jurisdiction: State-based in Australia, and materially different between them.
- Termination handling: Which balances pay out, at what rate, and how they are taxed.
- Balance visibility: For employees and managers, so requests are made against real balances.
- Liability valuation: A report finance trusts, at current rates.
Questions to ask
01Accrual basis
Do entitlements accrue on ordinary hours or hours worked?
The answer differs by instrument and drives every balance.
02Loading
Where does leave loading apply, and does it apply on termination?
Configure it deliberately; it is a common source of underpayment.
03Long service
Which state's rules apply for each employee?
It follows the employment, and multi-state employers carry several rule sets.
04Negative balances
Can leave be taken in advance, and what happens on termination?
Decide before it happens, not during a final pay.
05Liability
Does finance's provision match payroll's balances?
If the two reports disagree, one of them is wrong and both are used.
Metrics and KPIs to track
Leave liability
Value of accrued leave, by type, at current rates.
Excess balances
Employees above the threshold where balances should be actively managed.
Unapproved absence
Time recorded without an approved leave request.
Termination payout accuracy
Final payments requiring correction after the event.
Alongside this