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Understanding Termination Accruals
 | I have an employee that is about to leave. When I looked at the Leave Owing report, it showed the employee is owed a certain number of days. When I go into Termination Pay, it appears the number of days is different. What is going on? |
This is one of those questions that everyone asks once and can be difficult to explain verbally.
 | The following screen shows an estimate of how many days Melanie Jones is owed as a current employee. The report shows that she currently has 22.04 days available. She was given her annual entitlement of 20 days and has taken 3 of these leaving 17 days. In addition, the Current Year Entitlement is 5.04 days. |
Current Year Entitlement
A current year entitlement is an estimate of how many days an employee has accrued this year towards their next anniversary date.
An employee is not legally owed these days until they reach their next anniversary date, but most employers like to show the accrual counting upwards during the year.
 | Now we look at the screen when Melanie terminates her employment. |
Termination Payment
On the above screen the first thing that catches the eye is that the Full Year Days Owing is 17 days.
Clients sometimes see this and think "Why is it not 22.04 days, as it was on the Leave Owing report?".
The answer is that the 17 days are one half of the equation, namely, the number of days owing at the last anniversary date.
In addition, the employee receives 8% of Gross for the part year.
Fundamental Concept
When an employee terminates, the current year entitlement to days is eliminated.
It is replaced by 8% of the gross earned from the last anniversary date.
In other words, it is the actual dollar value of the estimated days that had been accruing towards the next anniversary date.
This is specified by Section 25 of the Holidays Act 2003.
More on public holidays
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Public Holiday Entitlements Ace Payroll receives many calls immediately after every public holiday, asking whether a particular employee is entitled to be paid for the public holiday more.. |
Public Holiday Taken Use this method for an employee who did not work on the public holiday, but would have worked had the day not been a public holiday more.. |
Public Holiday Worked Use this method for an employee who works at any time on a public holiday more.. |
| Public Holiday Calendar A facility in Ace Payroll to check when public holidays fall in this and future years more.. | Christmas and New Year 2016/2017 Working out public holiday entitlements during the 2016/2017 Christmas and New Year holiday period more.. |
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Waitangi Day Waitangi Day commemorates the signing of a treaty at Waitangi on 6 February 1840 more.. |
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Queen's Birthday The Queen's Birthday is always observed in New Zealand on the first Monday in June more.. |
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Default Provincial Anniversary Day Select the provincial anniversary day observed by the majority of your employees to make it the default more.. | Payment For Sick Leave If Taken On A Public Holiday You are not required to pay your staff time and a half if they call in sick on a public holiday they would have otherwise worked more.. |
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Ace Payroll FAQ Contents All the most common Ace Payroll questions grouped by categories in a short table of key words more.. | Ace Payroll Frequently Asked Questions All the most common questions we are asked at Ace Payroll listed in a question format and grouped by category more.. |
More on holiday pays
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Cashing Up Holiday Pay From 1st April 2011 it is legal for an employee to cash up to one weeks annual leave each year more.. |
Understanding Termination Accruals Handling of accrued holiday pay upon termination can be confusing. Ace Payroll explains the concept of accruals and demonstrates how termination pay is calculated more.. | Holiday 52 Week History It is not absolutely necessary to enter a full 52 week earnings history for correct holiday pay calculation more.. |
| Holiday Pay - Daily Rates An explanation of the calculation of a daily rate for an employee taking holidays after a full years service more.. |
Employee Leave Profile The employee leave profile records which are the normal days worked by an employee more.. |
| Casual Holiday Each Pay This tutorial shows how to have Ace Payroll automatically pay a casual employee 8% holiday pay every time they are paid more.. |
Taxation of Holiday Pay This article shows how easy it is to tax holiday pay according to IRD requirements more.. |
Annual Compulsory Closedowns An annual compulsory closedown is where a business traditionally closes down for a number of weeks each year, usually over Christmas more.. |
| Changing Holiday From 8% Each Pay The procedure for changing a casual employee over to being a permanent employee in Ace Payroll for holiday pay purposes more.. |
Termination Holiday 8% Part Year Payment How to pay the 8% of part year gross for an employee who has been employed for more than a year, receives four weeks holidays a year, and is terminating their employment more.. |
| Holiday Pay Miscellaneous The reason why only full days holiday pay owing is shown on payslips rather than fractional days more.. |
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Ace Payroll FAQ Contents All the most common Ace Payroll questions grouped by categories in a short table of key words more.. |
Ace Payroll Frequently Asked Questions All the most common questions we are asked at Ace Payroll listed in a question format and grouped by category more.. |
Other leave sections
| Public Holiday Entitlements Ace Payroll receives many calls immediately after every public holiday, asking whether a particular employee is entitled to be paid for the public holiday more.. |
Public Holiday Taken Use this method for an employee who did not work on the public holiday, but would have worked had the day not been a public holiday more.. |
Public Holiday Worked Use this method for an employee who works at any time on a public holiday more.. |
| Alternative Holidays An Alternative Holiday is a day an employee is entitled to take off as paid leave, in return for having worked on a public holiday more.. |
Annual Holiday Entitlements This article looks at entitlements to holidays as provided for by the Holidays Act more.. |
Annual Holiday Payments This tutorial shows how to record holiday pay taken using the Annual Leave method more.. |
| Irregular Work Pattern In this article we look at the calculation of Relevant Daily Pay for an employee that works irregular hours more.. |
Leave Owing Report The Leave Owing report provides an estimate of holiday pay owing to all staff at a selected date more.. |
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Ace Payroll FAQ Contents All the most common Ace Payroll questions grouped by categories in a short table of key words more.. | Ace Payroll Frequently Asked Questions All the most common questions we are asked at Ace Payroll listed in a question format and grouped by category more.. |