If an employee takes unpaid leave, you can show it in their pay by setting up a new wage pay item. This also lets you keep track of how much unpaid leave has been taken, and who's taken it.
Let's take you through it.
1. Create an unpaid leave wage pay item
Go to the Payroll menu and choose Pay items.
On the Wages and salary tab, click Create wage pay item.
Enter a Name for the pay item, such as "Unpaid Annual Leave" or similar.
Choose the applicable ATO reporting category. If unsure, check with your accounting advisor or the ATO.
For the Pay basis, select Hourly (regardless of whether your employees are on a salary or paid hourly).
For the Pay rate, choose Fixed hourly rate of and leave the rate as $0.0000
Under Allocated employees, choose the employees who are entitled to unpaid leave.
When you're done, click Save.
2. Prevent leave from accruing while on unpaid leave
Depending on your employment arrangements, you might need to prevent leave entitlements, like annual leave and personal leave, from accruing during unpaid leave. To check your leave entitlement obligations, visit the Fair Work website.
To prevent leave accruing on unpaid leave
Go to the Payroll menu and choose Pay items.
Click the Leave tab.
Click to open the leave entitlement which shouldn't accrue while on unpaid leave.
Under Exemptions, choose the Unpaid Annual Leave wage pay item.
Click Save.
Repeat for all leave entitlements which shouldn't accrue while on unpaid leave.
3. Record unpaid leave
When you process the employee's pay, record the number of unpaid hours taken against the Unpaid Annual Leave wage pay item you created above.
Depending on how much of the pay period is unpaid, you'll also need to modify other amounts on the employee's pay.
Like all pay items and amounts in the employee's pay, unpaid leave will also appear on the pay slip.
If the unpaid leave is for | Do this |
|---|---|
the entire pay period | Remove all other amounts to ensure the Net Pay is $0.00 |
a portion of the pay period | Reduce the Base Hourly hours by the unpaid leave hours. |
a portion of the pay period | Reduce the Base Salary amount to cater for the unpaid leave. You can calculate this by multiplying the unpaid leave hours by the employee's hourly rate (found on the Payroll details tab > Salary and wages tab of the employee's record). |
4. Track how much unpaid leave has been taken
To see how many hours of unpaid leave has been taken by an employee, run the Payroll register report (Reporting menu > Reports > Payroll tab > Payroll register) and check the number of hours against the Unpaid Annual Leave wage pay item.
You can specify a date range for the report and filter it for one or more employees.