Vacation Liability Percentage Rates

The payroll application calculates vacation pay as a percentage of vacationable earnings for employees and pays the employee the accrued amount.

You can define percentage rates by:

• The length of service for each province (if applicable) within a vacation absence plan.
• Default rates for the vacation plan or province.

Use the Vacation Liability Rate Definitions task in the Payroll area to define the rates.

The rates defined on the Vacation Liability Rate Definitions UI are retrieved to calculate the vacation liability. The liability is calculated by applying the rate to the vacationable earnings in the payroll run.

• Vacation Liability = Vacationable Earnings * Percentage

Derive the Rates

Vacation liability rates are derived basis this hierarchy:

1. Vacation Plan
2. Province of Employment
3. Length of Service

Here's how vacation liability rates are derived:

1. Check if the rates are set up for the vacation liability plan selected on the tax card.
2. Use the default rate for the vacation plan, if there are no rates set up for the plan.

   If there are no rates for the default plan, the application doesn't calculate the liability.

After you select the vacation plan:

1. Check if rates are set up for the province of employment for the vacation plan.
2. Use the default rate for the province, if no rates are set up for the province of employment.

After you select the province of employment:

1. Compare the length of service ranges with the employee's length of service.
2. Use the employee's length of service rate if it exists to calculate the vacation liability.