Vacation Pay - Employee terminating or going on leave, time taken, NO 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.

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 NO other current pay on this payroll run.
  • There is the possibility that 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 2, 3, 5 and 6.

Tasks

To pay out the vacation accumulator as time taken when the employee is terminating or going on leave with NO 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 (regardless of whether there are any other current earnings). For more information, see Status Change Options.

    4. Complete the Status Change page.

    5. Click Save.

  2. 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.

    • For hourly employees, use the Base Rate of Pay from the Employee Profile page.Closed From the Payroll menu, select Hire/Profile > Employee Profile.

    • For salaried employees, divide the Base Rate of Pay by the Standard Hours per Pay.

      (For a salaried employee, the Base Rate of Pay is the salary received every pay period. Dividing this value by the Standard Hours per Pay gives you an hourly value for the employee's wages.)

    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.

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

  4. Enter zero-amount overrides of any salary amounts and permanent earnings, request the complete payout of the vacation accumulator as time taken, and select an applicable period of time for the CPP/QPP exemption to be applied.

    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. Record the Current Amount in Vacation Accumulator.

      Note: The Current Amount in Vacation Accumulator field on the Employee Timesheet page shows the dollar value as of the last processed payroll. Because there are no current earnings, you can use this value to calculate the Insurable Hours.

    4. From the Applicable Period of Time list, select an period of time that reflects the number of weeks this payout represents.

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

    5. Enter zero-amount salary overrides and permanent earnings overrides, if any.

      The employee is NOT to be paid any salary or permanent earnings, therefore, you must override these earnings by entering $0.00 as the override values.

    6. 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.

    7. Click Save.

  5. 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.

  6. 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, these negative values will be replaced with the final values as a result of the system computing the insurable hours/dollars based on the vacation amount being paid for that pay period. These correct values will be reflected on the ROE as well.

    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.