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Annual Leave

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All employees are entitled to annual leave. When calculating leave all time worked qualifies for holiday entitlement as per the Organisation of Workings Times Act 1997.

Therefore, if you intend to use the leave module of Parolla all employees hours must be entered accurately.

Annual Leave Entitlement

An employee’s statutory annual leave entitlement is calculated by one of the following methods, depending on the number of hours worked.

  • 4 working weeks in a leave year in which the employee works at least 1,365 hours in a given employment.
  • By allowing 1/3 of a working week for each calendar month in which the employee has worked at least 117 hours.
  • 8% of the hours worked by an employee in a leave year (subject to a maximum of 4 working weeks).

For example – if an employee works 39 hours a week their leave will calculate at 8% of hours worked until such time as they reach 1,365 hours in a year. At 1,365 hours their leave accrual will be capped. Therefore, if an employee works 39 hours a week once they hit 1,365 hours their leave entitlement is capped at 156 hours (39*4=156). If they worked 30 hours a week it will be capped at 120 hours etc.

By default, Parolla will calculate the most advantageous amount of leave earned for each employee and apply that at the time of payslip processing.

However, you can override the default calculation method, max leave amount, in the employee Leave Tab.

Earning Annual Leave

Employees earn annual leave on a calendar basis from the 1st of January.

Each year, the employer should keep a track of the hours the employee has worked in a month and calculate the amount of annual leave earned in that month.

It is important to note that annual leave is accrued while the employee actually on leave. So for instance people on annual leave, public holiday, maternity leave, parental leave, force majeure leave, and the first 13 weeks of careers leave do still continue to earn annual leave.

Taking Annual Leave

An employee has rights when taking annual leave. They are entitled to their pay in advance. So if someone is taking three weeks off on annual leave, they can request that they are paid for those three weeks before their normal pay cycle.

If the employee has worked for more than 8 months then they are entitled to take an unbroken period of 2 weeks annual leave if they want in.

If the employee is sick while on annual leave, and can produce a valid medical certificate, then the employer should mark those days as sick leave instead of annual leave.

The dates when annual leave taken should be agreed between the employer and the employee. The employer is able to approve or deny leave requests. But, when denying they must take into account the employee circumstances and must make a decision at least one month in advance of the desired leave date.

Carrying Annual Leave Into The Following Year

The intent of the Organisation of Working Time Act is that employees take their annual leave in the current year that it is accrued.

However, there is provision for the employee to carry over leave, for up to 6 months into the next year.

Any longer period of carry over would need to be agreed between the employee and the employer.

Common Issues

Why can’t I just pay out the leave?

The intent of the Organisation of Working Time Act is that employees actually take their annual leave. The only circumstance where an employer can pay out annual leave is when an employee is leaving their employment.

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