Support for Leave Carryover Pots

Description

Enhancements have been made in this release so that if leave is configured to allow a limited amount of unused leave entitlement to be rolled over from one leave year to the next, the leave entitlement that has been rolled over into a new leave year can be managed as a carryover pot.

When an unused leave entitlement balance is rolled over into the carryover pot, the following applies:

• leave taken in the current leave year draws down the entitlement balance of the carryover pot before drawing down on the balance of the current year pot (i.e. the entitlement that has accrued in the current leave year)

• the carryover pot is automatically cleared down after a defined number of weeks or months from the end date of the previous leave year.

To facilitate this, the following changes have been made in FastTrack360:

• Reset Rules that are defined for a Leave Type now support carryover pot settings that:

  • identify that leave entitlements that are rolled over from one leave to another are to be tracked as separate carryover pots rather than remaining available as part of the current year pot

  • identify the number weeks or months after the start of a new leave year that the carryover pot must be automatically cleared if the balance of the carryover pot has not been used up by that time.

• The Leave Service has been enhanced to:

  • on close of a leave year, calculate and record the expiry/clear-down date for any entitlement balances that are being rolled over into the carryover pot

  • trigger the reset/clearing down of the balance of the carryover pot when the expiry date is reached.

For more information, see Configuration below.

How do carryover pots work in FastTrack360?

Pre-existing functionality allows Reset Rules to be defined for a Leave Type in the system so that leave entitlement balances are cleared down by the Leave Service when a leave year is closed. A Cap Value can be defined on the Reset Rule so that the leave entitlement balance is not cleared down below a specific number of units, thereby allowing a limited number of units of unused leave entitlement to be rolled over into the new leave year.

New options have been added to Reset Rule in this release so that if a Reset Rule is configured as described above, it is possible to treat any leave entitlement balance that is rolled over into a new leave year as a separate carryover pot. When a payee takes leave in the current leave year, if they have a carryover pot for the respective leave type, the balance of the carryover pot is drawn down before any entitlement that has accrued in the current leave year. Any entitlement balance that remains in the carryover pot after a certain period from the end date of the previous leave year, as defined by new options on the applicable Reset Rule, is expired/cleared down automatically by the system.

Allocation of Leave to a Leave Year

Leave accruals are allocated to a leave year based on the transaction date. For leave accrued in a pay batch, the transaction date is the end date of the pay period in which the leave accrues while for leave accrued via the Leave Service, the transaction date is the date on which the service triggers the accrual.

A leave balance that has been allocated to one leave year remains available to be used to pay leave that is taken in any pay period where the period end date falls within that leave year, even if that leave year has already been closed and therefore a portion of the remaining entitlement balance has been rolled over into the carryover pot for the next leave year and the remaining entitlement balance has been cleared down.

For example, consider a scenario where for the leave type Annual Holiday the leave year is equivalent to the calendar year (1 January to 31 December). Assuming a weekly pay frequency from Monday to Sunday, the last full pay period for the 2024 leave year is 23/12/2024 – 29/12/2024, which is not processed and paid until 01/01/2025. The leave year is closed on 31/12/2024, triggering a rollover of a maximum of 5 days of Annual Holiday leave into the carryover pot and the clearing down of any remaining entitlement balance that accrued in the 2024 leave year.

In this scenario, irrespective of the fact that the last pay period is processed after the close of the 2024 leave year, a payee’s leave balance for the purposes of paying any Annual Holiday leave taken during that last pay period of the leave year is based on the balance as at 29/12/2024. That is, the balance prior to the leave year close and resetting of entitlement balances that occurs on 31/12/2024 and prior to any leave that may have already accrued in the next period (30/12/2024 - 05/01/2025), which is allocated to the 2025 leave year.

Carryover Pot Cost Calculation

Whenever leave is accrued, FastTrack360 stores the monetary rate associated with the accrual on a first-in-first-out basis so that the estimated cost liability of payees' leave entitlements can be reported on. To calculate the cost liability at any given point, the system sums the number of units of leave (days, hours etc.) that were accrued at each unique rate and multiples the result by the rate. The result of this calculation for each unique rate are then summed together to give the total overall cost.

By contrast, when a leave year is closed and unused leave entitlement is rolled over into a carryover pot, a single transaction is generated to transfer the rolled over amount into the carryover pot for the new leave year. Because this is done via a single transaction, there can be only one rate associated with the transaction and therefore that rate is the average of all the rates that applied when the corresponding leave entitlement was originally accrued.

Carryover Pot Balances on Accrued Leave Balance Report

The Accrued Leave Balance Report, which is available under Leave > Reports, allows reporting on leave entitlement balances on an as at date. Where a payee has an entitlement balance for a given leave type on the as at date, one or more entries are shown for that payee and leave type combination as follows:

• one entry for each instance where the original accrual of the leave is linked to a specific client/job order

• one entry for any balances accrued where the accrual is not linked to a specific client/job order.

If a payee has a carryover pot balance for a leave type on the as at date, the report will show a separate entry for the carryover pot versus the current year pot. The entry that corresponds to the carryover pot will not display any client/job order details because the link to the original accrual job order is not retained when the balance is rolled over from a previous leave year.

Benefits

This enhancement supports scenarios where your business wants to allow payees to rollover a limited amount of unused leave from one leave year to another while ensuring that the rolled over leave is used within a defined period after rolling over into a new leave year.

Configuration

The ability to manage carryover pots for a given type of leave is reliant on a pre-existing options on the header of the Leave Type and a combination of new and pre-existing options on Reset Rules for the Leave Type.

Leave Type Header

Carryover pots can only apply to Leave Types where the following pre-existing options are configured in the header of the Leave Type:

The abovementioned header fields are highlighted in Figure 1 below.

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Figure 1: Configuration of Leave Type Header

Reset Rule Configuration

Reset Rules can be configured on Leave Sets that belong to a Leave Type to define if and when the balance of unused leave is to be cleared down. To manage carryover pots, an existing or new Reset Rule must be created under the relevant Leave Set for the Leave Type and the following pre-existing options on the Reset Rule must be configured as described in the table below.

When a Reset Rule is configured as described in the table above, a new field grouping labelled Carryover Settings is enabled on the Reset Rule, as shown in Figure 2 below.

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Figure 2: Leave Reset Rule - Carryover Settings

The fields that are available within the Carryover Settings field grouping are described below.

To understand how these settings work together to achieve a rollover of unused entitlement into the carryover pot, consider the Reset Rule that is shown in Figure 2 above. Based on the configuration shown in that example, the following would apply:

• The first time the Leave Service runs after each instance of the leave Leave Year - UK being closed, if a payee’s unused entitlement balance is greater than 5 units, the system clears down the entitlement balance to 5 units.

• The remaining entitlement balance (i.e. a maximum of 5 units) is rolled over into the carryover pot and remains available to use until one month after the end date of the closed leave year.

Calculation of Carryover Pot Cleardown Date

The closing of a leave year is a manual process and can be triggered at any time. However, the cleardown date of the carryover pot is calculated relative to the leave year end date.

For example, based on the configuration shown in Figure 2 above, the carryover pot will be cleared down one calendar month after the end date of the leave year. So, if the leave year that is selected on the Reset Rule ends on 28/02/2025, the carryover pot will be cleared on 28/03/2025 irrespective of when the close of the leave year was actually triggered.

Reset Rule Cap Functionality

If you are already using the Cap Value field on a leave Reset Rule to limit the clearing down of leave entitlement balances on close of a leave year, it important to note that how the cap is applied differs when the Reset Rule is configured to rollover unused leave entitlement into a carryover pot (i.e. the Transfer Balance into Carryover Pot field is ticked).

Prior to v12.33, no Reset transaction was generated if a payee’s remaining entitlement balance was equal to or less than the cap amount. For example, if the cap value was set to 5 units, if the remaining balance at close of the leave year was 5 units or less then no Reset transaction occurred and the remaining balance continued to be available as part of the overall entitlement balance indefinitely.

From v12.33 onward, the same functionality applies unless the Transfer Balance into Carryover Pot field is ticked on the Reset Rule, in which case Reset transactions are triggered on close of a leave year even if the entitlement balance is equal to or less than the cap value, so long as the balance is greater than zero. The are two separate Reset transactions that are generated as follows:

• one transaction that clears down the entitlement balance for the previous leave year to zero

• one transaction that transfers the remaining balance, up to the defined cap amount, into the carryover pot for the new leave year.