Understanding Leave Liability Calculation

The amount of leave that an employee is owed needs to be considered as a liability in the general ledger. For leave liability reporting, Global Payroll for Malaysia uses earnings that store the monetary value of each employee's leave entitlement. The earnings are not paid as earnings because they do not contribute to MYS GROSS SALARY. Consequently, they appear in a section of their own, following the other earnings sections.

Because the GLI flat file requires only the difference between the liability for the last pay period and the current pay period, that difference is calculated by the Application Engine Leave Liability process and passed to GP_GL_DATA.

If an employee is terminated, the stored value of the processed liability must be reversed in the general ledger, because it is no longer a liability.

The earning element LIAB TER DYS is the leave liability earning that is used for reversing the liability on termination.

This earning element uses an amount calculation rule if the amount is derived from earning element LIAB ANN DYS. The generation control element CMN GC TERM STAT checks only for terminated employees by using the formula CMN FM TERM STAT. This formula determines whether the employee is currently terminated (that is, the termination date is in the current segment) or the employee was terminated in the past but the termination is entered in the current period. The termination leave liabilities are calculated only when an employee is terminated so that they reverse any remaining liabilities that are in the general ledger.

The earning element LIAB TER DYS contributes to the accumulator LIAB TER DYS_FPTDA.

If an employee is terminated, the leave balance liability earning value becomes the termination liability earning for reversal.