Defining Leave Accrual Methods

Leave Accrual Methods are the rules that define how an employee's leave is accumulated. In order to use this feature, the following are needed:

  • Accrual Method steps, defining the amount of leave to accrue for each period of service, need to be defined.
  • For each step, the amount of time an employee must work before gaining entitlements to accrue leave needs to be defined.
  • If leave is to be accrued based on the employee's base hours, actual worked hours or average weekly worked hours over a nominated period needs to be specified.
  • The user needs to specify whether or not the accrual method involves With or Without certificate accrual, e.g. Sick Leave.
  • Theoretical standard weekly base hours.
  • A theoretical number of hours over which leave is proportioned each week should be nominated. It provides a means of covering all employees' base hours.

Example:

 If employees are grouped based on different weekly base hours, such as 37.5 hours, 38 hours, and 40 hours, you can either:

  • Establish a separate accrual method for each leave type and base hours combination.
  • Define the standard hours representing a theoretical weekly base hours of 40 hours. This takes the Base Hours on the employee's record and divides it by the Base Hours on the Accrual Code.

The following is a simplified requirement of an Annual Leave stepped accrual:

Period No. Entitlement Unit Type Length of Accrual Length Type
1 4 W = Weeks 12 M = Months
2 5 W = Weeks 12 M = Months

 

In the first period of employment of 12 months, 4 weeks are to be accrued. In the second period of employment of another 12 months, 5 weeks are to be accrued.

  • The last step of an accrual method is used as the ongoing way of accruing leave, unless a valid period number exists in the Branch to Period Nos. field. This allows for cyclic accruals.

When performing accruals, the value in the Length of Accrual field and the employee's Start Date, adjusted Service Date or any of the User Dates are used to determine the appropriate period number to be used when more than one period number exists.

The Annual Leave accrued is determined by the Pro-Rata field option selected on the Accrual Method record. Accrual values calculated are apportioned by a factor based on Hours Worked divided by the employee's Base Hours:

If Pro-Rata field option on Accrual Method = Y The amount from the Base Hours record matching the Employee's Base Hours Code is used.
If Pro-Rata field option on Accrual Method = W The Actual hours worked last pay amount from the Employee's master record is used.
If Pro-Rata field on Accrual Method = A The Calculated Average Hours amount from the Employee Average Hours Record.
If Pro-Rata field on Accrual Method = N The value in the Units to Accrue field is granted up front to the employee.

 

If the Standard Hours value is defined on the accrual method, then this amount is used as the base hours for the week replacing employee's Base Hours. This is a mandatory field if the Unit Type for accrual is specified as H - Hourly.

Consider the following employee information:

Employee Number Employment Type Base Hours per Week Actual Worked Hours (for 1 week) Average Weekly Worked Hours (over 12 months)
1 FT 40 39 38
2 FT 38 40 38
3 FT 20 21 19

 

Given that the accrual values are stored in hours, after 1 year of service, the following entitlements could be granted.

Employee Number Base hours Actual Worked Hours Average Weekly Hours
1 160 hrs (4 weeks @ 40 hours) 156 hours

4 weeks (160 hours) @ 39/40

(weekly accrual 160/52 x 39/40 = 3.00000 hours)		 152 hours

4 weeks (160 hours) @ 38/40

(weekly accrual 160/52 x 38.40 = 2.92307 hours)
2 150 hrs ( 4 weeks @38 hours) 160 hours

4 weeks (152 hours) @ 40/38 =

(weekly accrual 152/52 x 40/38 = 3.07692 hours)		 152 hours

4 weeks (152 hours) @ 38/38

(weekly accrual 152/52 x 38/38 = 2.92307 hours)
3 80 hours

(4 weeks @ 20 Hours)		 84 hours

4 weeks (80 hours) @ 21/20

(weekly accrual 80/52 x 21/20 = 1.61538 hours)		 76 hours

4 weeks (80 hours) @ 19/20

(weekly accrual 80/52 x 19/20 = 1.46154 hours)

 

This table assumes that the employee accruing under the worked hours method has worked the same hours for each pay period during the year.

It can clearly be seen how the different prorate options influence the actual accrual generated for employees.