What's covered in this guide?
Overview
Workforce Payroll can pay out an employee's remaining leave balance when they are terminated. When a time off type is set to pay out on termination, the payout is added to the employee's final pay run as a leave line, so it appears on their pay stub and flows into your payroll totals and reports like any other earning.
You choose which time off types are paid out. Types that are not set to pay out are not included in the final pay.
Enable leave payout on termination
Payout is set per time off type, so you can pay out some types (for example, vacation) and not others (for example, sick leave).
Go to Payroll > Settings > Time Off Types.
Select the time off type you want to edit.
In section 1, set you can check Will be paid out to users upon termination.
Choose how to handle negative balances (see Negative leave balances).
Save your changes.
Important: Only time off types with this setting enabled are paid out on termination. Check the setting on each time off type before you process a termination pay run.
How the payout is calculated
The amount depends on how the time off type accrues leave.
Leave accrued by hours paid
The pay run includes a leave line for the following amount:
Original leave balance - leave taken + leave accrued
Original leave balance: the employee's balance before the final pay run.
Leave taken: any leave the employee has taken that is not already reflected in the balance.
Leave accrued: leave accrued on the hours paid in the final pay run.
Leave accrued by lump sum
The entire lump sum is paid out.
Negative leave balances
If an employee has used more leave than they have accrued, their balance is negative at termination. When you enable payout on a time off type, choose how this is handled:
Withhold pay: the negative balance is withheld from the employee's final pay.
Don't withhold pay ($0.00): nothing is withheld, and the leave payout is $0.00.
Note: State laws differ on deductions from final pay. Confirm with your state's laws to stay compliant.
Review or edit the leave payout on the pay run
Set the employee's last day. See Terminating Employees.
Open the pay run that includes the employee's final pay.
Open the employee's pay stub and find the leave line for each time off type that pays out on termination.
Check the amount. To change it, edit the leave line and enter the amount you want to pay.
Post the pay run.
Note: If you edit the amount, the line is marked as a manual adjustment, so you can see later that it was changed from the calculated payout.
FAQs
Why wasn't a leave payout added to the final pay run?
Why wasn't a leave payout added to the final pay run?
Check that Will be paid out to users upon termination is set to Yes on that time off type. If the setting is off, no payout line is created.
Can I change the amount that is paid out?
Can I change the amount that is paid out?
Yes. Edit the leave line on the employee's pay stub in the pay run. The line is then marked as a manual adjustment.