Considerations for Processing Vacation Liability

Consider these factors to ensure proper processing of vacation liability payments.

Enroll Employees in Absence Plans

Use the Absence Records task in the Person Management work area to enroll employees in a vacation absence plan.

Create Employee Absence Records

Employee vacation absences reduce the vacation liability balances. When you record a vacation absence for an employee, by default, the current vacation period’s accrued vacation liability amount is reduced by the paid absence.

To reduce the vacation liability in a prior term, use the Vacation Accrual Reduction Date on the absence UI. This reduction date is only used in special scenarios and specifies the vacation period (or term) to reduce the accrued vacation liability balance by the vacation payment.

If both earnings and vacation absences are processed in the same run, the earnings add to the liability first, before the vacation absence reduces it. Depending on how the wage basis rules are defined, a vacation absence element can also contribute to the liability.

Assign Vacation Liability Plans to Employees

In order for vacation liability to calculate, the employee must be enrolled in a vacation plan and be assigned a Vacation Liability plan.

Select the vacation liability plan for the employee in the Associations section of the Tax Credit Information Calculation Card. The Vacation Liability Plan lists all vacation plans associated with the employee. Select one plan for each tax reporting unit.

Note: If there is no vacation liability plan on the employee's calculation card, the liability isn't calculated for the employee.

View Wage Basis Rules for Vacationable Earnings

The wage basis rules determine if an element is included in vacation liability calculations. A check mark in the Use in Wage Basis column for the component Vacation indicates the earning is included. The rules create a vacation earnings balance.

Wage basis rules are predefined for all delivered secondary classifications but you must create them for user-defined secondary classifications.

Use the Component Group Rules task in the Payroll area to view the vacation earnings rules for each province.

Use these steps to create wage basis rules for vacationable earnings:

1. Navigate to the Payroll area and select the Component Group Rules task.
2. Select a Legislative Data Group and click Search.
3. Select the Regional node and navigate in the tree structure to Regional > Wage Basis Rules > Vacation.
4. View the vacationable earnings rules for each province.

Configure Earnings Elements

Create a vacation payout element and assign it to the employee. While creating a supplemental earnings element with any secondary classification, answer Yes to this question to payout a vacation liability balance to an employee. Use the Supplemental Earnings Elements template, and view this question under the Additional Details section.

• Is this a vacation payout element?

If you select Yes, the processing priority of the element is set to 4000 to ensure that the payout occurs after all other vacation liability contributing element entries are processed.

Note: Use this option only to pay out vacation liability plan balances, not normal supplemental vacation pay earnings in which no vacation liability is processed.The liability balance is normally paid out when the employee terminates, goes on a leave of absence, or when reconciling at the end of the vacation year.The supplemental earnings payout base element input values include:

• Vacation Payout defined by the Vacation Payout rule value selected during element creation.
• Vacation Accrual Reduction Date you enter, that determines the vacation term balance that's reduced.

Override Length of Service

The employee's hire date determines how the length of service of the employee is calculated. If the employee's hire or rehire date isn't the date that should be used to calculate the length of service for vacation pay purposes, use the Vacation Service Date on the employee's calculation card to specify a different date. If the Vacation Service Date is entered, it's used to calculate the employee's length of service.

Override Vacation Liability Province

The Province of Employment on the employee’s calculation card captures the province used for vacation liability calculations. If an employee has a US or ZZ province code and their earnings should be included in Vacation Liability calculations, you can override the province. To override the province for the employee, populate the Vacation Liability Province Override using the Payroll Relationships task under Payroll.

Pay Vacation Liability in Every Payroll

Employees not entitled to vacation time off, for example, part time or casual employees may have the vacation liability paid to them every pay period. You can enable this by introducing a recurring payout element that's processed every pay period. The payout element pays the vacation liability amount accrued in same pay period in which the element is processed.

Assign a Payout Element

Vacation payout earnings reduce the vacation liability. When the vacation liability balance is to be paid to an employee, assign the payout element to them.

Use the Element Entries task in the Person Management work area to assign the element to the employee.

If the payout is for the current vacation term, the Vacation Accrual Reduction Date isn't required. This is the default behavior. If no date is provided, all accumulated liabilities in prior terms are paid out.

If you have to payout the vacation liability for a specific previous term, use the Vacation Accrual Reduction Date on the Entry Values of the Element Entries page. This reduction date is only used in special scenarios and specifies the vacation period (or term) to payout the vacation liability balance.

To process the payout for multiple assignments, assign the payout element to each assignment.