Employees are entitled to be paid when on annual, sick and compassionate leave in accordance with the rules discussed in the following section:
Salaried employees’ leave pay is included in their salary as the amount is fixed, irrespective of actual hours worked. Hourly-paid workers only receive income for actual hours worked, so they must be paid extra when they take paid leave. This leave pay is based on the employee’s ordinary hourly rate, e.g. one day’s annual leave should be paid at the same rate as one regular day of work.
Annual Leave Pay Extra
The BCEA states that, for employees earning overtime, commission and other variable types of income, such extra income must be taken into account when they go on annual leave. This is paid over and above what they would normally receive. SimplePay calculates this automatically using the employee’s fluctuating leave rate.
To enable / disable the calculation of the fluctuating rate for the whole company, go to Settings and click on BCEA Leave Pay under Payroll Calculations. You can then decide whether to tick / untick the box next to Enable fluctuating rate and set the effective date.
You can also remove the annual leave pay extra item for an individual employee by overriding the employee’s fluctuating leave rate as follows:
- Go to the employee’s profile and click on Leave > Record Leave*
- *If you are still on the old leave system (i.e. you joined SimplePay before 3 September 2016), you will click on Record Leave Taken
- Enter 0 in the Custom fluctuating rate box
- Click Save Rate
The fluctuating leave rate for an employee is usually calculated based on the income of the previous three months. However, there are two potential reasons why three months of income history might not be available. These two scenarios are discussed below:
On SimplePay for less than three months
If you’ve only been using SimplePay for one or two months, three months of income history will not be available. (Take-on balances cannot be used to calculate the fluctuating rate.)
In order to ensure compliance, you might want to enter a custom fluctuating rate (as discussed above) – based on a combination of the information from your previous payroll system and SimplePay. If the employee does not earn fluctuating income, no changes are required.
Employed for less than three months
It could also be that an employee has only been employed for less than three months. In this case, no changes are required because the BCEA stipulates that a period of shorter than three months should be used if the employee has only been employed for that shorter period.