Set up a long service leave wage category

Wage categories are used in AccountRight to pay amounts to employees. Here's how to set one up to pay long service leave payments.

1. Go to the Payroll command centre and click Payroll Categories.
2. Click the Wages tab.
3. If a Long Service Leave wage category already exists, open the category. Otherwise, click New and name it Long Service Leave.
4. If it isn't already selected, select Hourly as the Type of Wages.
5. If you're reporting to the ATO via Single Touch Payroll, select the applicable ATO Reporting Category. Learn more about assigning ATO reporting categories for Single Touch Payroll reporting.
6. For the Pay Rate, select Regular Rate Multiplied by 1.0000 in the Pay Rate section.
7. Select the option Automatically Adjust Base Hourly or Salary Details. Here's our example:
   
8. Click Employee, select the employees who are entitled to long service leave, then click OK.
9. Click OK.

Set up a long service leave entitlement category

Entitlement categories are used in AccountRight to track the accrual of leave. Here's how to set one up to track long service leave accrual.

1. Go to the Payroll command centre and click Payroll Categories.
2. Click the Entitlements tab.
3. Click New and name the category Long Service Leave Accrual.
4. For the Calculation Basis, choose how you want to calculate the leave accrual.
   
   If your employees are paid:
   

   • Hourly: Choose Equals [x] Percent of [Gross Wages]. Click Exempt to select any categories that shouldn’t be included in the calculation, such as overtime. Then click OK.
     
     Use this formula to calculate the correct percentage:
     
     (Total hours entitled / Total number of working hours over eligibility period) x 100 = %

     Example 1: Say your employees work a 38 hour week (7.6-hours x 5 days). After 10 years of continuous service they’re entitled to 1 week of leave for every 60 weeks they’ve worked. So, after 10 years of continuous service, they’re entitled to 8.6667 weeks of long service leave.

     To calculate the leave accrual percentage:
     Leave hours entitled: 38 hours x 8.6667 weeks = 329.3346
     Hours worked over 10 years: 38 hours x 52 weeks x 10 years = 19760
     (329.3346 ÷ 19760) x 100 = 1.6667%
     
      

     Employees who remain linked to this entitlement will continue to accrue leave at the rate of 32.9340 hours per year.

     Example 2: Say your employees work a 38 hour week (7.6-hours x 5 days). After 10 years of continuous service they’re entitled to 13 weeks of leave (494 hours). They also continue to accrue leave at the rate of 1.3 weeks per year.

     To calculate the leave accrual percentage:
     Leave hours entitled: 38 hours x 13 weeks = 494 hours
     Hours worked over 10 years: 38 hours x 52 weeks x 10 years = 19760
     (494 ÷ 19760) x 100 = 2.5%

     Employees who remain linked to this entitlement will continue to accrue leave at the rate of 49.4 hours per year.

   • Salary: Choose the Equals [x] Hours per [Year] option.
     
     Enter the number of hours the employee accrues in long service leave each year. These examples might help you calculate the correct rate for your business.

     Example 1: Say your employees work a 38 hour week (7.6-hours x 5 days). After 10 years of continuous service they're entitled to 1 week of leave for every 60 weeks they’ve worked. So, after 10 years of continuous service, they're entitled to 329.3346 hours (8.6667 weeks) of long service leave. 

     In this case you would enter 32.9335 as the rate per year.

     Example 2: Say your employees work a 38 hour week (7.6-hours x 5 days). After 10 years of continuous service they're entitled to 13 weeks of leave (494 hours). They also continue to accrue leave at the rate of 1.3 weeks per year. 

     In this case you would enter 49.4 as the rate per year.
     
     

5. If you want to show the hours the employee is entitled to on the employee pay advices, select the Print on Pay Advice option.

6. Select the Carry Entitlement Over to Next Year option.

7. In the Linked Wages Category field, select the Long Service Leave wage category.

8. Click Employee and select the employees who are currently entitled to long service leave and then click OK.

9. Click OK.

When an employee chooses to take their long service leave, enter the hours they are taking in the Hours column of the wage category. Be sure to remove any Base Salary and Base Hourly hours and amounts to ensure the employee isn't overpaid.

The hours they are entitled to take will automatically be reduced by the hours you enter for the wage category. Also, because you chose the option Automatically Adjust Base Hourly or Base Salary Details when setting up the wage category, and hourly or salary values on the pay will be adjusted accordingly.

I have just set up this entitlement, but some employees are already entitled to long service leave. How do I update the employee's leave balance?

There are two ways you can enter the hours an employee is already entitled to take.

• In their card (Payroll Details tab > Entitlements > Balance Adjustment column):
  
  
  
• On their pay, enter the hours against the Long Service Leave entitlement category.
  

I don't want pays to show the accrued hours until the employees are entitled to take leave

If you select employees who are not currently entitled to long service leave, and you’ve chosen the Print on Pay Advice option, their pays will show the leave hours that are accruing.

If you don't want this, it might be better to only link employees to the Long Service Leave entitlement when they are actually entitled to take leave.

What if I have employees that accrue at different rates or if I have a combination of hourly and salaried employees?

You'll need to create additional entitlement categories. For example, create one entitlement for salary employees, and another for hourly employees.

How do I pay pro-rata long service leave?

When an employee leaves before they are eligible to take their accrued long service leave, they might be entitled to a pro-rata payment.

Whether or not the employee is eligible to receive this payment, and how that payment is calculated, depends on the regulations in your state or territory. Check the Fairwork website for more information.

To pay pro-rata long service leave:

1. Set up the wage category as described above.
2. Enter the pro-rata hours against the long service leave wage category on the employee's final pay.

Also see Processing a final pay.

How do I calculate long service leave if the employee's hours varies?

If an employee works different hours each week, you'll need to consult the relevant long service leave rules for your state or territory to calculate their leave accrual:

• ACT - WorkSafe ACT 
• NSW - NSW Industrial Relations 
• NT - NT Government 
• Qld - Queensland Industrial Relations 
• SA - SafeWork SA 
• Tas. - WorkSafe Tasmania 
• Vic. - Business Victoria 
• WA - Department of Mines, Industry Regulation and Safety 

How do I show the long service leave entitlement on pay slips?

1. Open the long service leave entitlement category (Payroll command centre > Payroll Categories > Entitlements > open the long service leave entitlement category).
2. Select the option Print on Pay Advice.
   
3. Click OK.