Answer
The simplest way to record unpaid leave is with the Unpaid leave type that is already built into Lightning Payroll. You do not need to create a custom leave balance for it. It pays at zero dollars automatically, and it is already set so that holiday, sick and long service leave do not accrue while it is being taken.
Record unpaid leave in a pay
In the desktop app: when editing a pay under Pays >> Edit Pays, open Edit Leave Taken in this Pay and select Unpaid as the leave type.
In the online (web/mobile) app: when editing a pay, select the Leave Taken tab and add a row using the Unpaid leave type.
Important: check how the employee accrues leave
Whether unpaid leave reduces an employee's accruals depends on how that employee accrues leave in the first place. Check this under Employees >> Leave >> Leave Settings, at the option Accrue leave based on actual hours paid (pro rata)?.
- If the option is ticked (pro rata), accruals are worked out from the hours in the pay, so the built-in Unpaid settings apply and holiday, sick and long service leave will not accrue for those hours.
- If the option is not ticked, the employee accrues a fixed amount every pay period regardless of the hours worked. In that case leave keeps accruing during unpaid leave and no leave setting will change that. If you need to stop it, either switch the employee to pro rata accrual or adjust the balance manually.
This is the most common reason customers report that leave is still accruing after they have set unpaid leave up correctly.
If you need a custom Unpaid balance instead
A custom leave balance is only needed if you want unpaid leave tracked as its own balance, or you are setting up something similar such as an RDO or time in lieu. Create it in the desktop app under Company >> Leave Balance, or in the online app under Company >> Leave Balances.
- Name: Unpaid
- Treat As Overtime?: Ticked
- Pay At Zero Dollars?: Ticked
- No Balance/Accrual Required?: Ticked
Treat As Overtime? matters more than its name suggests. For an employee on pro rata accrual it is what keeps the unpaid hours out of the ordinary hours that accruals are calculated from, so leave it ticked.
Ticking those options is still not enough on its own. On a custom balance, holiday, sick and long service leave accrue by default whenever the leave is taken. To stop that you must also untick the four options on the same form:
- Accrue Holiday Leave when this leave is taken?
- Accrue Sick Leave when this leave is taken?
- Accrue Long Service Leave when this leave is taken?
- Accrue Custom Leave when this leave is taken?
Please note: these four options are only available in the desktop app, and they are permanent once the balance is saved. If you set up a custom Unpaid balance in the online app, you will need to open the desktop app to change them. This is why we recommend the built-in Unpaid leave type instead.
After creating a custom leave balance, link it to each relevant employee under Employees >> Leave >> Custom Leave Accruals in either app.
For more information on setting up custom leave types for RDOs, TOIL, and similar arrangements, see How Do I Add Additional or Custom Leave Types?
