Working with Fundamental Leave Elements

As a requirement of the Holidays Act, annual leave is required to be paid at the rolling average rate, based on the last 12 months prior to the absence start date, or the ordinary rate, whichever is the greater.

The ordinary rate is defined in formula LVE FM ORD RATE, in which the ordinary hourly rate, HOURLY RT, is used to calculate earnings. For customary data delivery it is set up to equal the compensation rate from the Job Compensation table. The ordinary rate is defined as a subset of compensation rate codes, defined on the Job Data - Compensation page and you can alter it by adding other compensation rate codes to define the required composition of the ordinary rate.

Leave is accrued during the year and at a specified entitlement anniversary, the accrued leave becomes entitlement. An entitlement anniversary date is required so that the system knows when to consider an accrual (pro rata) as entitlement. This anniversary date is usually the employee's hire date. For example, if an employee was hired, effective April 23, then every April 23 during employment, the employee would receive at least three weeks of annual leave entitlement. Other entitlement anniversary dates commonly used are the employee's service date or company anniversary date.

The entitlement anniversary date is set up as a default at the pay group level as a supporting element override (variable LVE VR OVR ENT DAY and LVE VR OVR ENT MTH). The date formula LVE FM ACCR ST DT (leave accrual start date) checks if the pay group default or employee override entitlement date exists. If not, it uses the employee's hire date. It determines the leave accrual start date (HIRE DATE or REHIRE DT — whichever is greater).

The date formula LVE FM ENT ANN DT (leave year end date) determines the current leave year end date and is executed in the ABS INITIALIZE section of the absence process list.

A service date variable (LVE VR ANN SRV DT) has been defined for annual leave only, and is used in the anniversary date calculation. The default value for the service date variable is the employees hire or rehire date, which is populated by formula (LVE FM ANNSRV DT), when the ABS INITIALIZE section is executed. If an employee has had a break in service, and now has a new anniversary date, then the service date variable (LVE VR ANN SRV DT) can be overridden at payee level. This variable is used to populate date LVE DT ENT ANN DT, which is used by formula LVE FM ENT ANN, to move prorata annual leave into entitlement.

Rolling averages are a special type of pay rate, where an average of prior earnings is used to determine the pay rate for leave. There are two rolling average calculations, one for annual leave and another for ACC leave.

Annual Leave

The rolling average calculation will use the accumulator values of the rolling average amount and hours from the current calendar along with a historical rule that will pick up the values of these accumulators from 12 months ago (or the period specified) to formulate the average rate.

If an employee is a new hire or new rehire, formula (LVE FM ENT ANN DT), accumulates the number of pay periods in accumulator (LVE AC NUM OF DAYS), which will be used in this calculation instead of 12 months.

The rolling average rate calculation is performed by formula LVE FM AVG RT. This formula calls formula LVE FM ANN ROLAVG, which sets the starting date from where the rolling average calculation will begin and the number of periods the average rate is to be calculated over.

This date will be used with historical rule LVE HR ANN ROLAVG. This rule calculates from the current period working backwards in time to find the period begin date of the ending calendar period.

A new duration element LVE DR MTHS OF SVC has been introduced to calculate the number of continuous months the employee is in service from the hire/rehire date to the current period begin date. This element is used in Formula LVE FM ROL CALC such that average daily pay calculation for an employee with less than 12 months of employment is calculated.

The historical rule reads from accumulators LVE AC ROLLAVG AMT and LVE AC ROLLAVG HRS, and the formula LVE FM ANN ROLAVG subtracts this historical information from the values currently stored in the accumulators. The average rate is calculated by subtracting the end amount from the start amount, and dividing by the hours worked.

ACC Leave

ACC leave pay calculates the rolling averages for the last 12 months using formula (LVE FM ROLL AVG). This formula retrieves values held in life-to-date accumulators LVE AC ROLLAVG AMT and LVE AC ROLLAVG HRS for the start and end of the rolling average calculation period. The accumulators are attached to two historical rules (LVE HR R/A START and LVE HR R/A END) which determine the beginning and end balances of the hours and amount accumulators for the specified time interval.

The first rule, LVE HR R/A END, retrieves accumulator balances at the end of the specified pay period. The second rule, LVE HR R/A START, gets the balances of the same accumulators specified number of months/days interval earlier.

The average rate is calculated using differences in accumulator balances. The formula uses the supplied number of periods and frequency to calculate the average hourly rate from the previous pay period, going back the number of periods.

Formula LVE FM ROLL AVG also provides for the partial periods within the calculation. Where the entitlement anniversary date falls within the first or last period of calculation it prorates hours and amounts from those periods and includes only the portion within the leave year.