ANSWER ID:11212

Sometimes employees work unpaid hours which they later take as a type of leave commonly known as "Time In Lieu". For example, in some organisations, an employee may choose to work on a public holiday and rather than receiving pay for that day, they can take an equivalent number of hours as paid leave at another time.

This support note explains how you can setup special Payroll Categories to track Time in Lieu (TIL) hours owed to and taken by employees.

You might also be interested in setting this up a different way as described in our support note .

What Payroll Categories do I need to setup?

You will need to setup 3 payroll categories:

• 2 hourly wage categories: one for when TIL is earned and one for when TIL is taken.
  
• 1 entitlement category which establishes a link between the two wage categories, increasing and reducing the TIL balance as TIL is earned and taken.
  
  

Task 1 - Setup a wage category for unpaid hours used when an employee earns TIL

1. Go to the Payroll command centre, click Payroll Categories. Under the Wages tab, click New.
   
2. Enter a name for the category such as Non Paid Hours or TIL Earned. Make sure you select the Hourly option in the Type of Wages section.
   
3. In the Pay Rate section, make sure you select a Fixed Hourly Rate of $0.00. Leave the Optional Account section as is.
   
4. Click Employee and select all employees who are eligible for TIL.
   
5. Click OK to both the Employee selection window and the Wage Information window to complete this step. See our example below.
    

Task 2 - Setup a Wage Category for when an employee takes TIL

1. Go to the Payroll command centre then click Payroll Categories. Under the Wages tab, click New.
   
2. Enter a name for the category such as Time in Lieu Taken or TIL taken. Make sure you select the Hourly option in the Type of Wages section.
   
3. In the Pay Rate section, select Regular Rate Multiplied by 1.0000. Leave the Optional Account option deselected.
   
4. Select the Automatically Adjust Base Hourly or Base Salary Details option. This will ensure that any hours allocated to this wage category will automatically be deducted from the employee's Base Salary. See our example below.
   
   
5. Click Employee and select all employees who are eligible for TIL.
   
6. Click OK to both the Employee selection window and the Wage Information window to complete this step.

Task 3 - Setup an Entitlement category to track TIL hours earned, TIL hours taken and the balance of TIL hours

1. Go to the Payroll command centre and click Payroll Categories. Click the Entitlements tab and then click New.
   
2. Enter a name for the entitlement such Time in Lieu or TIL.
   
3. Choose the Equals Percentage of option in the Calculation Basis and enter 100 (%) in the field next to Equals. 
   
4. In the Percent of field, select the Non Paid Hours/TIL Earned wage category created in Task 1. This means that all (100%) of the hours recorded against this unpaid hours category will be added to the TIL entitlement.
   
5. Select the Time In Lieu Taken wage category created in step 2 as the Linked Wage Category. This means that whenever an employee receives pay for a given number of hours through this wage category, the balance of this entitlement will reduce by that number of hours for that employee.
   
6. Click Employee and select all employees that are eligible for TIL.
   
7. Click OK to both the Employee selection window and the Wage Information window to complete this step. See our example below.
   

How do I use these categories?

The following steps you through a typical scenario:

Mary Jones is paid weekly. During this pay period, she worked an additional day during the weekend in exchange for the option of taking some other day off. She receives her pay for her standard weekly hours and 8 hours are recorded against the Non Paid Hours wage category as shown in the following example:

Notice that the inclusion of 8 hours against the Non Paid Hours wage category does not populate the Amount column nor increase the Net Pay.

The Time in Lieu Entitlements category has 8 hours against it and will increase the balance of the Time in Lieu Entitlement by that number of hours.

How can I check the balance of TIL hours?

1. Go to the Reports menu and choose Index to Reports.
   
2. Click the Payroll tab.
   
3. Click the Balance Summary Report (under the Entitlements sub-heading).
   
4. Click Advanced or Customise (as applicable).
   
5. Choose the applicable employee in the Employees field.
   
6. Specify whether to sort the information by employee or entitlement. In AccountRight v19.8 and earlier you will find this filter under the Finishing tab.
   
7. Click Run Report or Display (as applicable). See our example report below.
   

The following week, Mary arranges to use her TIL and takes a day off. So she is paid 8 hours of the Time in Lieu wage category. This is in place of a normal day's work. Notice that the Base Salary amount is automatically reduced by the amount of Time in Lieu. See our example below.

Because the Time in Lieu category had 8 hours paid against it, Mary's TIL available hours will have reduced by 8 hours and the report confirms this as shown in the following example.