ANNUAL LEAVE PAYOUT & TOTAL GROSS SALARY

  • 1
  • Question
  • Updated 4 months ago
  • Answered
Hi I am wondering if you can help me as Im not sure if the system is calculating this correctly.
My client has an employee that is paid $92K pa.  Now he has been paid out some of his holidays during the 2017/2018 year in lieu of taking holidays. Now I'm about to do my group certificates and Ive noticed on all my yearly reports that it now has him having yearly income of $99K.  Is that correct?  I thought the salary was inclusive of annual leave?
Look forward to someone shedding some light on this for me.  I should say that my client is using the old Reckon program - QuickBooks Premier Accountant Edition 2011-2012
Thanks Anita
Photo of Anita Derrington

Anita Derrington

  • 160 Points 100 badge 2x thumb

Posted 4 months ago

  • 1
Photo of John Graetz

John Graetz

  • 18,750 Points 10k badge 2x thumb

Hi Anita.  If the employee continues to be paid each week and in addition to that gets paid out some annual leave, naturally that is going to add to the actual income he is going to receive for the year.

John L G

Photo of Elise Yung

Elise Yung

  • 266 Points 250 badge 2x thumb
If he was paid his salary as well as leave then this would probably be correct.  Essentially he should have been paid AL as a lump sum payment, but this would still increase his annual income unless he has only been paid for 52 weeks.
Photo of Robert Smeallie

Robert Smeallie

  • 850 Points 500 badge 2x thumb
Hi Anita

If the employee is on an annual salary then his Ordinary Time Earnings for the period of his annual leave would not be included. A salary includes 4 weeks of annual leave included in the overall Salary. A calculation of $(99,000-92,000)/$92000 gives 7.5% which is what Leave Loading would be approximately, and I'm not sure if leave loading applies to Annual Salaries. Someone else might know the answer to that question.

Robert Smeallie
Photo of John Graetz

John Graetz

  • 18,750 Points 10k badge 2x thumb
Robert.  The issue as described by Anita was that the employee received a lump sum payment for annual leave instead of actually taking any.  This is allowed under some awards.  As such, the employee received 52 weeks of normal pay for the year plus an extra 4 weeks in the form of a payment in lieu of taking the annual leave.  In other words, 56 weeks of pay was received during the year.
John L G