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soludsnake
January 6, 2020
Question

QBO Advanced Payroll - Vacation Pay Being Accrued on Vacation Pay Payout

  • January 6, 2020
  • 2 replies
  • 0 views

Hello,

 

I have a question regarding Vacation Pay Accruals.

 

Now normal practice is to accrue vacation pay in 4%, 6% and 8% increments based on duration of employment. I was able to setup the accruals properly and the system take the gross pay and multiplies it by the specific percentage. My issue comes from when I pay employees out. Right now when I add employees vacation hours (QB Payroll Advanced w/ Wagepoint) to their pay (don't allow for $ amounts) it runs the payroll but it then accrues vacation hours on the vacation pay that is being paid out. As far as I was concerned, employees don't accrue vacation time on paid out vacation hours. Because of this it puts me in to a never ending spiral as if an employee quits or is terminated, I pay his/her vacation time out only for the system to accrue 4% on the vacation I just paid. Rinse and repeat.

 

Please help!

2 replies

J
JamesM
January 7, 2020

Hi there, 

 

Welcome to the Community. I'd be glad to share helpful information regarding vacation pay in Advanced Payroll powered by Wagepoint. 

 

Depending on your vacation policy, QuickBooks automatically calculates accruals each time you create a pay cheque based on the number of pay periods in the year. The following table shows the hours accrued per pay period for the common number of hours earned per year:

 

 

If vacation is accrues Per hour worked the employee will then accrue 2 hours of vacation time (0.05 X 40) when the pay cheque is created for that period.

 

It's important I know how you set up your vacation policy on your end. I encourage you to contact our support team for further assistance with this. Here's the link you can use to contact support. 

 

S
soludsnakeAuthor
January 7, 2020

Hi James,

 

Thanks for the response. 

 

The issue I have is when paying an employee their accrued vacation pay. Lets say 'John Smith' quits and the only thing that is owed is his Vacation Pay. His current Vacation Pay balance is $1,250.00. When I process his final pay in this example, the systems will pay him the $1,250.00 minus all the taxes and deductions but at the end of it will now accrue $50.00 to his Vacation Pay balance (4% of $1,250.00). That now means in Quickbooks my Accrual account has been overstated by $50.00 and his employee Pay Stub shows him having a balance of $50.00 that we owe him. 

 

Take that example one step further. Now to get rid of that number I pay him out the $50.00 that was falsely calculated. Now the system has Accrued $2.00 towards his Vacation Pay Balance (4% of $50.00). This turns in to a never ending cycle.

 

Am I simply missing something? Is there a way to run the pay without it getting re-accrued?

    J
    JamesM
    January 7, 2020

    I want to make sure this issue is looked at so you can get back to doing what you enjoy ASAP. I recommend contacting our Payroll Support team using this link here. Feel free to ask questions. 

     

     

     

     

    J
    janegdlupe
    August 13, 2020

    Hi there. 

    So I have the same dilemna as yours just know. I tried working around and I think I find the solution. (Hopefully it works for you, too!). So after I created the final (termination) cheque for this employee, like you QBO accrued hours for her, even if I pay all amount accrued to her account. Anyways, I went to her employment profile (Payroll>Employee>Employee Name>Employee Details) Hit Edit and got to #5 (Vacation Policy portion). You would see the extra hours (or $) acrrued still after paying them their last cheque. I just zeroed both of them out. Then I run the Vacation and Sick Leave report under (Reports>Payroll>Vacation and Sick Leave) then the balance is now zeroed out.

     

    Hope this makes sense. :)

    R
    Rochelley
    August 14, 2020

    Hello @janegdlupe ,

     

    If you read my post above you will see that the reason you are seeing additional hours of vacation owing to an employee after you paid them out the initial accrual amount, is because you are in a province where vacation pay is accruable on vacation pay and QB Desktop and QBO automatically calculates this.  This is why you must keep adding to the accrual pay-out until the $ (or in the case of QBO, hrs) come to 0.  This is the only way the employee will get the correct amount of vacation pay that is owing to them.  By going into the set-up and overriding the remaining amount to 0 is actually shorting the employee what is owing to them and could be cause for a complaint to your province's employment standards office.

     

    If the initial vacation pay-out is smaller - the additional accrual on that will be negligible and it is quite likely that an employee will not notice if the extra amount is not paid out.  But if the initial vacation pay-out is significant, then the additional accrual on that will also be fairly significant.  But in either case, this extra accrual amount should never be "zeroed" out in the background.

    J
    janegdlupe
    August 14, 2020

    Ok, thanks for correcting me there. I go back and fixed what I did and pay her the right accrued vacation hours. I did the changes after I read your post and I was like, ok I missed that and been studying in since last night. Thanks again

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