However, leave is still calculating on the LWOP hours.
How do we stop leave from accruing on these hours?
This will be due to an error in the setup, however not all of the initial configurations are viewable once set. It sounds like it may have been set up as an Hourly/Salary Leave - eg Sick/Holiday/LSL - instead of a "Regular" Pay Item:
Can you upload screenshots of each window (when you double click/"Edit" it) ?
1. Add new payroll item
2. Payroll item type: Wage
3. Wages: Hourly Wages
4. Wages: Regular Pay
5. Name: LWOP
6. Expense account selected
7. Tax tracking type: Gross Payments
8. Taxes: None
9. No inclusions. Include in Every hour worked leave accruals unticked.10. Finish
Leave is still accruing on this code. Not sure why.
Selections 1-4 above are only available when initially setting up a Payroll Item, not when viewing/editing it so, as mentioned previously, it may not have been setup correctly.
Have you used this Payroll Item previously? If not, set it up again as advised previously. If yes, did it work correctly then? If so, it's something in this particular employee's record causing the leave accrual - As per Adrian's advice, check the employee doesn't have "Per Pay" set as the Accrual Period.
(& ... just to confirm, you should be using this Payroll Item with a "$ 0.00" rate ...)