Leave Accounting - Advanced Scenarios

Leave Accounting - Advanced Scenarios

Leave accounting is a fairly complex activity with multiple methods of leave accrual, different types of leaves for different sets of employees, changes in employee status due to promotions, transfers or changes in leave policies. In this article we provide an overview of the methodology being adopted to manage leave accounting.

1. Change in employee leave eligibility due to a parameter change from previous year

Accrual due to back-dated modification - If an employee is becoming eligible for a leave due to a change in one of his parameters from previous year then system will only accrue leaves from the beginning of current leave year. This is being done as the accounting for the previous leave year has been closed with the year end batch job.
Example 1.1
Employee department - Corporate
Leave details - Sales Department leave with eligibility condition Department = Sales, Accrual 1 beginning of month
Department changed from Corporate to Sales with effect from 10 April 2022 on 15 September 2023

In this scenario system will accrue 8+15/30 = 8.5 Sales Department leaves to employees account. There will be no accrual on account of 2022.
Reduction due to back-dated modification - If an employee is becoming ineligible for a leave due to a change in one of his parameters from previous year then system will NOT reduce employee's accrued leaves.
Example 1.2
Employee department - Sales
Leave details - Sales Department leave with eligibility condition Department = Sales, Accrual 1 beginning of month
Department changed from Sales to Corporate with effect from 10 April 2022 on 15 September 2023

In this scenario system will not reduce any leaves.

2. Approval of separation with a last working date in past

If a separation is approved where the last working is in past then the leaves which have been accrued are corrected based on the approved last working day.
Example 2.1
Today's date - 15 September 2023
Last working day - 25 June 2023
Leave details - Casual Leave, Accrual 1 leave beginning of month

In the above scenario credit of 25 working days is to be given but the extra leaves which have been given have to be reduced. System will reduce
3+5/30 leaves from employees balance. An entry will be visible in Details of Leave Credit report - "Separation approved" with a value of -3.17
Note - if the above example if last working day is 25 June 2022 and we are approving the request on 15 Sep 2023 then system will recover 15.17 leaves from employee's account.

3. Changes in parameters of separated employees -

Accrual due to back-dated correction - Once separation is approved further accrual of leaves is stopped but if any parameter is changed from a back date due to which employee is becoming eligible for a leave then the leave balance is corrected.
Example 3.1
Last working day - 25 June 2023
Separation status - Approved
Employee department - Corporate
Leave details - Sales Department leave with eligibility condition Department = Sales, Accrual 1 beginning of month
Department changed from Corporate to Sales with effect from 10 April 2023 on 15 September 2023

In this example system will accrue 21/30+1+25/30 = 2.53 Sales Department leaves to employees account.
Example 3.2
If in the above example we make the change from previous year then system will give the accrual from 1st of January of the current year only.
Last working day - 25 June 2023
Separation status - Approved
Employee department - Corporate
Leave details - Sales Department leave with eligibility condition Department = Sales, Accrual 1 beginning of month
Department changed from Corporate to Sales with effect from 10 April 2022 on 15 September 2023

In this example system will accrue 5+25/30 = 5.83 Sales Department leaves to employees account.
Reduction due to back-dated correction - if employee was eligible for a leave but due to a back-dated change he is no longer eligible then system will NOT reduce any accrued leaves.
Example 3.3
Last working day - 25 June 2023
Employee department - Corporate
Leave details - Sales Department leave with eligibility condition Department = Sales, Accrual 1 beginning of month
Department changed from Sales to Corporate with effect from 10 April 2023 on 15 September 2023

In this scenario system will not reduce any leaves.

4. Changes in eligibility conditions - Impact on separated employees

When changes in eligibility conditions are done they have to be done from a future date and even though there is no accrual of leaves for separated employees their mapping with respect to leaves is corrected on the basis of modified eligibility criteria.
Example 4.1
Last working day - 25 June 2023
Employee level - Manager
Leave details - Manager leave with Eligibility condition = Manager changed to Eligibility condition = Senior Manager from 1-Sep-2023.

In this scenario system will make employee ineligible for this leave from 25 June 2023. At a later date when separation is withdrawn he will not be eligible for this leave.
Example 4.2
Last working day - 25 June 2023
Employee level - Senior Manager
Leave details - "Manager leave" with Eligibility condition = Manager changed to Eligibility condition = Senior Manager from 1-Sep-2023.

In this scenario system will make employee eligible for this leave from 25 June 2023. But the impact of this change will be visible only when separation is withdrawn. If separation is withdrawn he will get "Manager leave" from 1-Sep-2023.

5. Addition of employee with date of joining in past

When you add an employee with a date of joining which is of previous year, since the year end closing has been done in the system then the leaves which are accrued are adjusted with the year end carry forward logic.
Example 5.1
Date of joining - 15 July 2023
Date of updation - 10 February 2024
Leave details - Casual leave, Accrual 1, Beginning of month, Carry Forward Max = 4, Carry Forward Min = 2

In the above scenario system will first calculate the leaves for 2023. As shown below 1.14 leaves will be lapsed and 4 will be carried forward.
Year
Opening Balance
Accrued
Consumed
Lapsed
Closing Balance
2023
0
5.54
0
1.14
4
Then it will calculate the leaves for 2024
Year
Opening Balance
Accrued
Consumed
Lapsed
Closing Balance
2024
4
2
0
0
6
If any leave is created for 2023 it will first adjust from the lapsed balance of 1.14.

6. Change in last working day of an approved separation

If we change the last working day of an approved separation the system will process the changes in leave eligibility in two steps
Step 1 - withdrawal of separation
Step 2 - approval of separation with the new last working day
The impact of leave accruals will be handled in a sequential manner with both these steps.


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