Vacation Pay - Employee terminating or going on leave, time taken, current pay

Generally, vacation pay being paid upon termination or upon being placed on leave (with a Record of Employment being produced) is for "No Time Taken," as per payroll legislation. Please ensure that the vacation pay is actually for "Time Taken" before proceeding.

In order to produce a correct Record of Employment, this procedure leads you through all the steps required to reallocate hours and earnings for Employment Insurance purposes. Note that, for vacation time taken with a payout of the accumulator, both hours and earnings are insurable. That usually requires some manual calculations.

Because the employee has current pay, you must also evaluate the time taken as it would be after the current payroll is processed. The easiest way to do this (described below) is to Preview your payroll.

Prerequisites

Use the procedure that follows when the situation meets all of the following criteria:

  • The employee is in the process of being terminated or placed on leave on this payroll run.
  • The employee has requested a Record of Employment.
  • The employee is receiving the entire accumulated vacation pay as time taken.
  • The employee has other current pay on this payroll run.
  • There is the possibility that, after all vacation accruals on the current pay are done, the vacation payout falls under more than one pay period.

Note: If you know that the vacation time taken will NOT begin in one pay period and end in another, you can skip steps 3-7. Note in your calculation, however, that vacation pay will accrue on the employee's current pay. This increases the insurable hours for the employee.

Tasks

To pay out the vacation accumulator as time taken when the employee is terminating or going on leave with current pay:

  1. Terminate the employee with the appropriate option. To do so, complete the following steps:

    1. Open the Status Change / ROE page.Closed From the Payroll menu, select ROE / Employee Status Change > Status Change / ROE.

    2. Select the employee from the Employee List.

    3. Select the appropriate termination option from the list, and then click Go.

      Note: Because you are paying out the vacation accumulator, you must select an appropriate option that also allows the processing of current pay. For more information, see Status Change Options.

    4. Complete the Status Change page.

    5. Click Save.

  2. Enter the current pay, select an applicable period of time for the CPP/QPP exemption to be applied, and request the complete payout of the vacation accumulator as time taken.

    1. Open the Employee Timesheet page.Closed From the Payroll menu, select Regular Payment > Employee Timesheet.
    2. Record the employee's Base Rate of Pay.

    3. Enter all hours and earnings including salary overrides and permanent earnings overrides, if any.

      Note: To view the employee's regular permanent earnings, open the Permanent Rates, Factors, Earnings page.Closed From the Payroll menu, select Regular Payment > Permanent Rates, Factors, Earnings.

    4. From the Applicable Period of Time list, select a period of time that reflects the number of weeks this payout represents (current pay plus vacation pay)

      This allows the CPP/QPP exemption to be applied to all earnings plus the vacation payout (time taken).

      Note: The Current Amount in Vacation Accumulator field on the Employee Timesheet page reflects the dollar value as of the last processed payroll. It does NOT include any amounts that will be calculated on the current pay. At this point in the procedure, the total vacation accumulator payout can be estimated (an hours calculation is done in detail later).

    5. Request the payout of the Vacation Accumulator. To do so, complete the following steps:

      Select Yes - Time Taken from the Pay out entire accumulator? list.

      If you have determined that the applicable period of time is more than the current pay period, select the NEXT pay period from the For which pay period? list. This makes it easier to track the movement of hours and earnings.

    6. Click Save.

  3. Get the vacation accumulator value as accrued on past as well as current earnings.

    Because there are current earnings which may increase the dollar value of the accumulator, you need to Preview the current payroll to determine the final amount accrued in the vacation accumulator.

    1. Open the Payroll Preview page.Closed From the Process menu, select Payroll Preview.
    2. Click Request.
    3. When the payroll preview is complete, click Employee totals. Click the link on the name of the selected employee to open the Employee Details page.

    4. From the Employee Details page, record the Hourly EQ value.

      For hourly employees, this is the same as the hourly rate.

      For salaried employees, this is the salary per pay period divided by the hours per pay period.

    5. From the Employee Details page, record the VACPAY Cur. Earn Value.

      This is the total dollar amount being paid out by the accumulator, including the accrual on the current earnings.

  4. Calculate the number of Insurable Hours that the vacation accumulator amount represents so that you have both a dollars and hours value for EI purposes. (For vacation time taken, both hours and earnings are insurable.) The calculation requires dividing the Current Amount in the Vacation Accumulator by the employee's hourly rate.

  5. Record the Insurable Vacation Hours from your calculation (to two decimal places).

  6. Manually calculate the amount of vacation hours and dollars, if any, that you need to different pay periods. (Different from the pay period to which you assigned the Vacation Accumulator value on the Employee Timesheet page by selecting For which pay period.)

    To calculate the amount you need to move, you must know the Standard Hours per Pay for the employee.

    Note: The employee's Standard Hours per Pay is found on the Employee Profile page.Closed From the Payroll menu, select Hire/Profile > Employee Profile.

    If the employee worked for the entire current pay period, all vacation hours (and the vacation earnings associated with those hours) will start in the next pay period.

    If the employee worked for only part of the current pay period, Vacation hours (and the vacation earnings associated with those hours) will have to "top up" the current hours worked until the Standard Hours per Pay amount is reached for the current pay period.

  7. Move any hours (and the dollars associated with those hours) to the pay periods to which they belong. Use the calculations you completed in the previous step.
    1. Open the Insurable Earnings Adjustments page.Closed From the Payroll menu, select ROE / Employee Status Change > Insurable Earnings Adjustments.
    2. Select the employee from the Employee List.

    3. From the Action to be taken list, select Reallocate Insurable Earnings and/or Insurable Hours from one pay period to another, and then click Go.

      Note: The payroll has NOT been processed, therefore, the History section does NOT  include entries you have made on the current pay period.

      Note: After moving hours and dollars, the pay period from which you are moving will contain negative values. After the payroll is processed and the Insurable Earnings History is updated, the Insurable Earnings History is corrected using the hours and earnings from the current payroll.

    4. From the Move from which pay period? list, select the pay period that you originally selected on the Employee Timesheet when paying out the accumulated vacation pay.
    5. From the Move to which pay period? list, select the pay period to which the predetermined hours and dollars should be moved.
    6. Enter the hours and dollars amounts to be moved.

    7. Click Save.

      If any vacation hours (and the dollars associated with those hours) also belong to a third pay period, repeat the reallocation process for the third pay period.