When your employees book time off, you’ll need to input this time into your Xero Payroll to make sure they’re paid correctly and holiday hours are accounted for properly.
To help you do this as simply as possible, we’ve pulled together a step-by-step run-through of how to set up time off in Xero.
Setting up time off
Xero Payroll works on hours and not days. So when you’re booking time off, always remember to multiply your employee’s holiday allowance by the number of hours in one working day – later in this FAQ, we’ll give you a brief description of each category required when setting up time off.
Firstly, you need to ensure time off is added in your Payroll Settings:
- If time off isn’t added, simply go to Payroll Settings > Pay Items > Time Off and create a time off pay item as necessary.
- Then you’ll need to add the allowance for each employee, whether it be for their holiday allowance or sick leave allowance etc.
- To do this go to Payroll > Employees > select the relevant employee > Time Off > Assign Time Off Type.
1. Time Off – Select the type of time off that’s applicable to the employee (i.e. Holiday, SMP, Sick Leave etc).
2. Schedule of Accrual – Select the schedule to accrue the employee’s time off. There are three options for this:
Beginning of Calendar Year (Hours accrued are assigned annually).
On Anniversary Date (Hours accrued on the anniversary of the employee’s start date).
Each Pay Period (Hours accrued for each pay period). The most common and simplest way would be to run it by calendar year.
3. Hours Accrued Annually – Here you’ll need to enter the amount of hours the employee accrues annually. For example, if your holiday allowance is 25 days per year and you worked 7.5 hours per day, you would enter 187.5 hours (25 x 7.5).
4. Maximum to Accrue – Now you’ll need to enter the maximum amount of hours the employee is entitled to accrue. This may change from ‘Hours Accrued Annually’ if you’ve sacrificed any of your holiday for some reason, have brought forward holiday from a previous year or need to make an adjustment for using too much holiday from a prior year.
5. Balance – This is the remaining balance of holiday hours owed to your employee. If the employee has already taken holiday then you’ll need to adjust for this. For example, take the employee’s ‘Hours Accrued Annually’ and deduct any holiday booked and enter the difference.
Inviting employees to book their own time off
To help reduce the admin work load for you or your payroll team, Xero also allows your employees to enter their own time off, by logging into Xero in the cloud.
To set this up, go to Payroll > Employees, select the relevant employees and then click ‘Invite to My Payroll’.
If you need help setting up your Xero Payroll correctly, give us a call on 01454 300 999, or drop an email to info@fd-works.co.uk
Find out more about the FD Works’ approach to finance at fd-works.co.uk