How Xero Accrues Leave Based on Ordinary Hours

This article explains how Xero accrues leave based on Ordinary Hours, highlighting challenges that may arise if employees work at multiple pay rates. It covers scenarios where staff members, such as chefs working extra shifts in a different role, might not accrue leave accurately due to varying rates or roles. By reading this, you will understand how Xero calculates leave accrual and learn a workaround to ensure all leave entitlements are properly recorded.

1. Example Scenarios of Ordinary Hours Leave Accrual

When employees work under different roles or at various pay rates, leave accrual in Xero may not apply correctly. This section explains two common examples to help identify when adjustments are necessary to ensure proper leave accrual.

In the following examples, you’ll see how having multiple pay rates can prevent leave from accruing accurately in Xero. Understanding these examples will help you spot similar issues in your own timesheets.

1.1 Chef with Varying Roles and Pay Rates

1.1.1. Brett works as a chef but occasionally takes shifts in the bar with a different pay rate.

1.1.2. His primary rate as a chef is higher than his bar rate.

1.1.3. As Brett has two different Ordinary Hours pay rates, Xero does not accrue leave automatically.

1.2 Bar Staff with Fixed Evening Rates

1.2.1. Jane works both regular and evening shifts, receiving a fixed higher pay rate for evenings.

1.2.2. Her evening rate is not a multiplier but a new rate-based pay item.

1.2.3. Xero does not apply leave accrual for this fixed-rate item, requiring adjustments.

2. Workaround for Xero Leave Accrual

When Xero does not automatically accrue leave, you can manually adjust entries to ensure staff receive correct entitlements. Follow these steps after exporting payroll from RosterElf.

This workaround involves checking timesheets and adding a zero-dollar Ordinary Hours line to timesheets with non-standard pay rates. Following these steps will ensure accurate leave accrual without overpaying staff.

2.1 Review Timesheets in Xero

2.1.1. Export payroll from RosterElf and go to Xero Timesheets.

2.1.2. Note any staff members with different rates or Ordinary Hours not in their profile.

2.1.3. Example: If Brett worked early hours, note his name.

2.2 Approve Timesheets

2.2.1. Approve all timesheets once you’ve noted the staff requiring adjustments.

2.3 Adjust Pay Run for Accrual

2.3.1. Go to the Xero pay run screen.

2.3.2. Select the pay line of staff with non-standard hours.

2.3.3. Add an Ordinary Hours line item with a $0 rate for hours outside regular pay.

2.3.4. Example: Add 6 hours at $0 for Brett’s accrual without extra payment.

3. Checking Employee Profile for Ordinary Hours

If unsure of a staff member's Ordinary Hours pay item, you can find this on their payslip or in their Xero profile.

This section shows how to check a staff member's profile to confirm their Ordinary Hours pay item. Knowing this information helps avoid mistakes in leave accrual.

3.1 Locate Ordinary Hours in Employee Profile

3.1.1. Go to the Xero Employee Page.

3.1.2. Click on the staff member’s profile, then select the Employment tab.

3.1.3. Ordinary Hours will be displayed if they worked within the pay period.

FAQs on How Xero Accrues Leave Based on Ordinary Hours

1. How does Xero handle leave accrual for employees with multiple pay rates?
Xero typically accrues leave based on a single Ordinary Hours rate. If an employee, like a chef working extra bar shifts, has multiple pay rates, Xero may not automatically apply leave accrual. A manual adjustment is often required to ensure accurate leave recording.

2. Can leave be accrued automatically for fixed-rate evening shifts in Xero?
No, Xero does not automatically accrue leave for fixed evening rates that are set up as unique pay items. Manual adjustments must be made to accurately reflect leave entitlements for these shifts.

3. What is the recommended workaround if Xero doesn’t accrue leave correctly?
A common workaround is adding a zero-dollar Ordinary Hours line item to timesheets with different pay rates. This adjustment allows Xero to record leave without altering the employee's payment total.

4. Where can I confirm an employee’s Ordinary Hours pay rate in Xero?
You can find an employee’s Ordinary Hours rate in their Xero profile under the Employment tab, or by checking their payslip for the applicable period.

5. How do I adjust a Xero pay run to ensure accurate leave accrual?
In the Xero pay run screen, select the affected employee’s pay line, then add an Ordinary Hours entry with a $0 rate for the necessary hours. This adjustment helps Xero calculate leave accurately without affecting the employee's pay.