Recalculating Leave when Standard Hours Changes

Employees are entitled to 4 weeks Annual Leave based on their current Standard Hours. When an employee changes work patters (i.e. Standard Hours Per Week are reduced from 40 hours to 20 hours) they should still be entitled to 4 weeks leave – however the number of hours in 4 weeks has changed. As a result their leave balances (not only Annual Leave) need to be adjusted to keep the same value and amount of leave.

There are a number of steps which need to be followed in order to successfully recalculate an employees leave when their Standard Hours Per Week changes.

Changing the Employee Group to reflect the new Work Pattern

To convert an employee's existing Annual Leave balance based on their current Standard Hours, navigate to the employee's details view and create and/or assign the new work pattern to employee with the relevant effective date.

Adjust Historic Leave Earnings

Note: this step is only required if the employee is currently using the "Std Hours – Manual Change" Leave Rate Option.

Navigate to the 'Leave' button in the ribbon > 'Leave View' > Historic Leave Earnings.

In the 'Historic Leave Earnings' view of the relevant employee, change the 'Qualifying Hours' and 'Actual Ordinary Hours' to reflect the new work pattern then 'Save'. In this example we would be changing the hours from 80 to 40 to reflect a 20 hour week, as this employee is paid fortnightly. If an employee has only worked for part of a period (e.g. they started work in this year part way through a period) then only the portion of hours worked should be included in that period.

Adjust the Accrual Component

Select Employee Component setup screen, then the Annual Leave Standard Accrual component.

In the 'Annual Leave Standard Accrual values' view, change the option to 'Use Current Standard Hours'

Recalculate Leave Balances

In the Annual Leave Summary screen, zero out the accrual and save the screen (or click Recalculate). This will force the system to recalculate the new accrued hours based on the Current Standard Hours. While the accrued hours might change, the value of accrued leave will remain constant as it is still based on a percentage of Holiday Earnings (Gross Earnings since last anniversary). The Accrued Taken cell will need to be manually recalculated with the same method used below for entitlement. Only the hours should be changed, and not the value of Accrued Taken.

Entitled leave taken needs to be manually recalculated based on:

               (Current Balance / Old Standard Hours) * New Standard Hours

In this example, the calculation for the Current line would be 160 / 40 * 20 = 80 hours Amount, and 152 / 40 * 20 = 76 hours Taken

Both the Amount and Taken columns need to be adjusted for any entitlement. When adjusting the Taken amount, only change the hours and not the value of the leave taken.

Note: if the employee's work pattern has reduced hours per week, the 'Avg Rate' and 'Ord Rate' will increase accordingly to compensate the change.

For instance in this example, the rates may nearly double in order to keep the same total value of leave. Value is calculated as hourly rate * balance. If the balance halves due to the work pattern change, then the rate needs to double to keep the same total value. 

Update Leave Requests

Any Leave Requests applied for previously will have been submitted using the work pattern the employee had at that time. These may need to be updated to reflect the new work pattern as:

• The portion of a day taken may have changed - e.g. if an employee goes from 8 hours per day to 4 - then an old Leave Request of 2 hours has gone from 0.25 days to 0.5 days.
• The number of hours required for that day may may now be different - e.g. an employee wanting to take an entire day as leave may have applied for 8 hours, but this should now only be 4
• The employee may no longer be scheduled to work on that day, so the Leave Request can be withdrawn / cancelled, or edited if the number of days required has changed.

Leave Requests can be edited via the Company tab > Leave Requests screen.