Before you can process employee requests for vacations and calculate the corresponding vacation pay, you must set up vacations as follows.

Vacation Accrual Types

For use with paid vacations of each type, create special accrual types in the master data: HR and Payroll > Master Data > Accrual and Deduction Types.

Make sure that an accrual (earning) type intended for vacation pay calculation, includes all the accrual (earning) types that should be used for vacation pay calculation. Generally, an accrual type intended for vacations can include such accrual types as Salary, Overtime, and Accommodation. You can set the weight coefficients in the Rate column to compose the weighted sum of the listed accruals as the basis for vacation pay calculation:

Accrual1 * Rate1 + Accrual2 * Rate2 +… + AccrualK * RateK

Vacation Types

You can add vacation types by creating new master records: HR and Payroll > See also > Vacation Types (for details, refer to Vacation Types).

A Vacation Type defines vacation duration, vacation accrual type that is the base for calculation of vacation pay, and method of calculation.

Main and Additional Vacations

In FirstBIT ERP, there are main vacations and additional vacations. Each employee is entitled to one main paid vacation and any number of additional paid vacations.

If all employees of your company are granted vacations of the same type, you can create a vacation type, specify that it is the Main Vacation and assign it to all employees in their employment contracts.

If different groups of employees should have different main vacations, create the required number of corresponding vacation types; for each select the Main Vacation check box.

Vacation Duration

A Vacation Types can be defined with a fixed number of vacation days per year or with different durations for different intervals of employment.

You can use the Set Annual Vacation Duration buttons to select how duration of vacations will be determined:

  • As Fixed Duration: vacation duration is always the same fixed number of days per year no matter what is the employment length. The duration you can specify in the Days per Year field.
  • As Based On Employment Length: for successive intervals of employment length, different durations are assigned so that duration increases with the increase of employment length.

For example, in UAE an employee is entitled to a paid vacation (annual leave) depending on the employment length as follows:

  • For length of service less than six month - no vacation days.
  • For length of service between six and twelve months - 2 days for each month worked, that is 24 per year.
  • For length of service over twelve months - 30 days per year.

In the screenshot below, you can view how durations are set for this type of vacations.


A fragment of the Vacation Type screenshot

The Recalculate Vacation Days for Previous Intervals check box selected for a specific interval indicates that once the employment length is within this interval, vacation days accrued for previous intervals should be recalculated with the duration value of the current interval. For instance, if an employee requests vacation after 9 months of employment, the employee may take 18 days of leave if the check box is selected. If the check box is not selected, it would be only 6.

After 15 months of continuous employment, the following number of vacation days will become available: 30+30*(15-12)/12 =30+7.5 = 37.5 days.

If the check boxes for 2d and 3d rows are not selected, it would be only 19.5 days.

Parameters for Average Daily Earning Calculation

Generally, vacation pay is calculated as average daily earning multiplied by the number of requested vacation days. For calculation of average daily earning there are the following options:

  • Planned Earnings: Сalculations of average daily earnings will be based on the accrual (earning) types, such as salary, accommodation, listed in the Employment Contracts and its later changes and in the Accrual Type (Vacation) master record. The averaging period is 1 month, that is the sum of planned earnings will be averaged over 1 month (the latest month).
  • Actual Earnings: Calculations of average daily earnings will be based on actual earnings received by employee during the specified number of months. With this option selected, the Averaging Period field appears, and you can specify the number of months to be used for averaging.

Also, you need to select the method for calculation of the average daily earning in the Daily Earning Calculation Method field:

  • By Average Number of Days per Month: The amount of earnings (planned) will be deleted by the average number of days per month, which is defined by the law. Notice that with this method selected, the first employment month will be not be included in any vacation calculations if the employment start date is later than the 1st day of the month. Also, you need to specify the number to be used as the Average Number of Days per Month in the corresponding field that appears if this option is selected.
  • By Number of Calendar Days: The amount of earnings (planned or actual) will be deleted by the number of calendar days in the specified averaging period.
  • By Number of Working Days: The amount of earnings (planned or actual) will be deleted by the number of working days in the specified averaging period.

Assigning Vacation Types to Employees

Generally, then you can assign the vacation types to the employees in their Employment Contracts and Employment Contract Changes if other types of vacation are granted, or earning types were changed. You can view and create these documents using the following forms: HR and Payroll > Human Resources Documents > Employment Contract or Employment Contract Changes.

For each employee, there can be only one Main vacation and any number of additional vacations.

For each employee, accruing of vacation days starts from the date of employment.

Also, in the Employment Contract, you can specify whether to accrue the earned vacation pay along with accruing earned vacation days for a specific vacation – for this, you need to select the Accumulate Vacation Pay option for this vacation. If the option is not selected for a vacation, the application will accrue only earned vacation days for this vacation.

Later, the employees can decide whether they want to use their accumulated vacation pay as their vacation payout or as compensation for not using the available vacation days, or as complete or partial repayment of their loans.

Beginning Balances for Vacations

When you just started to enter the data in FirstBIT ERP, you may need to enter the beginning balances for vacations using the following form: Accounting > See also > Opening Balances Entering.

Create a new Opening Balances Entering document with the Employee Vacations transaction type, and for each employee enter the number of earned and used vacation days, and the amount of accumulated vacation pay.

Once the setup of vacations is complete, and the beginning leave balances are entered, you can process vacation accruals and employee requests for vacations, for details, refer to Processing of Vacations.

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