Vacation pay is part of keeping your team happy and your payroll accurate. This guide explains how vacation pay works in Wagepoint and the different ways you can manage it.
We'll cover topics like:
- How vacation pay works in Wagepoint — accrued vs. paid out, and year-end considerations
- More about accrued vacation pay — how accrual rates are set and adjusted
- How to pay out vacation pay — step-by-step, through payroll or directly in a people profile
- How to review and edit vacation pay details — including balances and calculation methods
When should I pay out vacation pay?
There are two situations in which you might want to pay out vacation pay for an employee:
- When an employee takes time off
- When you want to pay out their vacation balance (for example, on their work anniversary, at year end, or when they leave your company)
How does vacation pay work in Wagepoint?
You'll set up vacation pay in the employee's profile when you first add them to Wagepoint. By default employees are set up as "not applicable."
It's important to note that Wagepoint does not automatically reset vacation balances at year-end. If your company has a policy to reset or carry over vacation, you’ll need to adjust balances manually.
There are two ways to handle vacation pay:
-
Accrued vacation pay
- Vacation pay is calculated and tracked automatically as the employee earns wages.
- The amount accrued appears as a running balance on the employees tab and on the employees paystubs
-
Paid Out vacation pay
- Vacation pay is calculated and paid out on every paycheque.
- No vacation balance is tracked in Wagepoint.
- If an employee leaves, their remaining vacation balance should be paid out with their final pay.
Employers are responsible for making sure they follow the correct rules for the province or territory where the employee works. Wagepoint helps calculate and track vacation pay, but we don’t provide legal or payroll advice — so if you’re unsure about what applies, it’s a good idea to check with a payroll professional or your local employment standards office.
More about accrued vacation pay
When you set up vacation pay in Wagepoint, it defaults to the minimum legislated rate for the applicable province. You can override this percentage if an employee is entitled to more.
Wagepoint will automatically adjust the vacation calculation based on the employee's province, years of service, and hire date. By default, if an employee was rehired, it will use the re-hire date as the basis for tenure, but you can select a different date if needed.
For example, in Ontario, the rate increases to 6% after five years of service. Wagepoint will apply this adjustment for you.
Here’s how accrual works in practice:
Each time the employee earns wages, Wagepoint calculates vacation pay based on their assigned percentage.
Instead of being paid out right away, this amount is added to their vacation balance.
The balance is visible on the employee page and is also shown on their paystub.
Important Notes:
- If an employee is set to accrue vacation originally and then switched to pay out vacation with each pay cheque, the accrued balance should be paid out in full before you change the vacation setting.
- Wagepoint only keeps track of the dollar amount accrued by the employee, not the employee's vacation entitlement.
- Vacation hours can be displayed on the employee's pay stub by enabling it in paystub settings. The hours displayed are calculated by taking the employee's accrued vacation dollar amount and dividing it by the employee's current hourly wage. Click here for the steps to customize your employee pay stubs.
How do I pay out vacation pay for an employee?
You can pay out vacation pay in two ways:
- 1. Begin the Run payroll workflow as
2. On the Hours step enter the number of hours an employee worked in the VACATION HRS column
3. On the Salary tab, enter the number of hours worked in the VACATION HRS column.
Adjust the CURRENT PAY column less the vacation amount (for example, If vacation is being paid at $200 and the normal salary is $2000, adjust to $1800).
4. Enter the number of hours actually worked in that pay period in the hours' columns.
5. Continue with the normal payroll process, making sure to review the payroll preview. - 1. Click on EMPLOYEES
2. Click on the employee's name
3. Click on Income
4. Click Add Income
5. Select VACATION PAY in the Income Type drop-down list
6. Enter the dollar $ amount of vacation pay to be paid out
7. Select Once on the next pay from Frequency
8. Review and edit the number of hours if needed
9. Click on Save Income
10. Go to Payroll and begin to process as normal
11. On the Salary Employee page, adjust the CURRENT PAY column less the vacation amount (for example, If vacation is being paid at $200 and the normal salary is $2000, adjust to $1800).
12. Enter the number of hours actually worked in that pay period in the hours' columns.
Note: DO NOT enter any hours in the Vacation hours column.
13. Click Save/Preview to review the amounts and ensure all looks correct. The vacation pay you added to the employee's profile will show up here.
How can I review and edit vacation pay details for an employee?
An employee's accrued vacation balance is located in the Employees tab, in the vacation column.
If you need to edit the vacation balance without paying it out, please reach out to us by email at support@wagepoint.com. We can make changes to the current accrued balance for you.
Other frequently asked questions
- Wagepoint doesn’t automatically reset or adjust accrued vacation balances at the start of a new year. The amounts carry over by default.
If you want to pay out unused vacation at year-end, be sure to include the vacation pay in the employee’s final pay of the year. - No. Wagepoint won’t prevent you from paying more vacation than an employee has accrued. If you do, their vacation balance will go into the negative.
As the employee earns more vacation time, their balance will increase and eventually return to a positive amount.
If your policy doesn’t allow negative balances, be sure to double-check the employee’s Vacation balance before paying out vacation time. - 1. Click on EMPLOYEES
2. Click on the employee's name
3. Click on Income
4. Click Add Income
5. Select VACATION PAY in the Income Type drop-down list
6. Enter the dollar $ amount of vacation pay to be paid out
7. Select Once on the next pay from Frequency
8. Click on Save Income
9. Go to Payroll and begin to process as normal
Note: DO NOT enter any hours in the Vacation hours column.
10. On the payroll preview, make sure to review the amounts and ensure all looks correct. The vacation pay you added to the employee's profile will show up here.