Converting Annual Leave to Weeks for Opening Leave Balances

This article covers the details of how to convert annual leave into weeks in order to load the opening balance into PayHero. For more information about where to enter these and other leave balances into PayHero, see our article: Opening Leave Balances

Why weeks?

Many older systems record Annual Leave balances in hours or days. A survey done in the early 2010's showed that 80% of companies recorded leave in hours. Since then, the recommended approach has changed.

PayHero records annual leave in weeks in line with the latest guidance from MBIE. This ensures employees get their mandated four weeks of leave if their work patterns change.

Should I include accrued leave?

No, PayHero will calculate estimated leave for your employees based on how close they are to their next anniversary. You only need to load Annual Leave which is due to the employee - that is, leave which has fallen due to them from crossing anniversaries, less any leave they've taken.

Can the balance be negative?

Yes, if an employee has taken more leave than is due to them then it's expected that their opening balance will be negative.

How do I convert to weeks?

For employees who work regular weeks, converting from hours or days to weeks is just a simple division. For example, an employee who works 40 hours per week and has 140 hours of leave due would have 140 / 40 = 3.5 weeks of annual leave.

In other situations, you may be able to come to an agreement as to what constitutes a week with the employee to use as a divisor. For example, this might be based on their recent work patterns.

What if it's not clear?

To get an accurate leave balance where employees have variable work patterns, or where their work pattern is set but has changed over time, there are two main ways you can work out their leave in weeks:

Use the employee's recent work history to define a week

To define an employee's leave based on their recent history, you'd need to agree on a period which accurately reflects the employee's 'current' work pattern. By default, PayHero uses an 8-week average to define leave for employees without a clear work pattern, so you might like to use the same period. You'd then work out the employee's average hours per week over that period, and use that as the divisor for their leave balance. 

For example, if an employee had worked an average of 23.5 hours over the last 8 weeks and had a current leave balance of 58.75 hours of leave, the calculation would be 58.75 / 23.5 = 2.5 weeks of leave.

Recalculating leave balances from first principles

PayHero does not need to know how much leave has been accrued over the last year. It is only interested in leave Due. This means that an employee who has been with you for less than a year and has not taken leave will simply have a zero balance. 

For employees who have been with you for more than a year, their entitlement is simply four weeks for every leave anniversary they have crossed, less any leave they've taken.

For example, an employee that has been with you for between 5.5 years has crossed 5 anniversaries so has become entitled to 5 x 4 weeks = 20 weeks of leave. This is the case regardless of how their leave patterns have changed over that time.

Next, you need to deduct from that balance all leave that was taken, evaluated in terms of weeks based on their work pattern at the time the leave was taken. Where employees are taking full weeks of leave this is simple. Where they are taking odd days it becomes a little trickier, but it's often fairly obvious how it should be converted based on how many hours per week they were working at that time. Provided you have good leave records this won't be particularly time-consuming.

Deduct the leave taken from the leave entitlement and you have the value to load into PayHero.