There has recently been a change to the setting for "Paid Out" Long Service Leave on cessation. It automatically reverts to "Paid Out". I think this is incorrect or at the very least misleading and prone to error. My understanding is that despite different State legislation the common provision is that whilst LSL accrues throughout working life on the basis of ordinary hours worked, there is not actual entitlement to payout of accrued LSL unless an employee works for at least 7 years continuously. By automatically defaulting to "Paid Out" the setting for a Final Pay automatically attempts to pay out accrued LSL on a similar basis to Annual Leave. But this is not correct if employment is within the seven years. It also by default means that a casual employee, once a final pay is processed, will be automatically paid out accrued LSL, again this is not correct within the seven years. My suggestion is to revert to "Not Paid Out" as the automatic setting as in my experience the great majority of employees don't exceed seven years or they are at least in the very minority. Alternatively, build into the algorithm a reference to the Start Date or some other "check point" which at the minimum gives an option that you have to answer. A bit like having to select "Leave Taken" against "Leave Paid Out in Cash", the latter can only be done with ATO approval in certain circumstances but at least it means the employer is aware and has to make a choice. As things stand, Xero has automatically recoded all of my existing employees LSL accrual to "Paid Out" on cessation and this is incorrect for any one with less than seven years employment.
I have raised this with Xero Support and attach the response from Veronika. While I appreciate her explanation, frankly, I think Xero has got this the wrong way around and it is preferable to force the choice to select "Paid Out" rather than have it as the default position and having to change it to "Not Paid Out" every time an employee who does not meed the seven year requirement ceases.
Hi Peter,
Hope you're having a lovely week!
Thanks for your feedback in regards to how Xero treats Long Service Leave.
The change for this leave type to be automatically paid out at termination was done to comply with regulations set out by the Fair Work Ombudsman. I've included a link to the Fair Work Ombudsman website for more information on this.
We understand this situation isn't ideal for all business' as you've mentioned some very valid points about employee's not reaching their appropriate tenure to receive Long Service Leave.
In this scenario, as you're aware in you can change the setting to be not paid out at termination then changed at a later date if the employee is eligible to get this paid out at termination.
It doesn’t look like this idea has been raised to Xero Product Ideas yet. Xero Product Ideas is a Xero website where our customers can share and support ideas for change.
We recommend raising this as a product idea as you can gain votes and some traction for your idea. Also, if there are any developments on your idea you'll be updated on this.
I’ve included a link to the website where you can view and support current ideas or create a new idea to share your thoughts. Please note, you may be asked to log in to Xero first.
Fair Work Ombudsman website: Payment of Long Service Leave
Peter Melbin
supported this idea
·
There has recently been a change to the setting for "Paid Out" Long Service Leave on cessation. It automatically reverts to "Paid Out". I think this is incorrect or at the very least misleading and prone to error. My understanding is that despite different State legislation the common provision is that whilst LSL accrues throughout working life on the basis of ordinary hours worked, there is not actual entitlement to payout of accrued LSL unless an employee works for at least 7 years continuously. By automatically defaulting to "Paid Out" the setting for a Final Pay automatically attempts to pay out accrued LSL on a similar basis to Annual Leave. But this is not correct if employment is within the seven years. It also by default means that a casual employee, once a final pay is processed, will be automatically paid out accrued LSL, again this is not correct within the seven years. My suggestion is to revert to "Not Paid Out" as the automatic setting as in my experience the great majority of employees don't exceed seven years or they are at least in the very minority. Alternatively, build into the algorithm a reference to the Start Date or some other "check point" which at the minimum gives an option that you have to answer. A bit like having to select "Leave Taken" against "Leave Paid Out in Cash", the latter can only be done with ATO approval in certain circumstances but at least it means the employer is aware and has to make a choice. As things stand, Xero has automatically recoded all of my existing employees LSL accrual to "Paid Out" on cessation and this is incorrect for any one with less than seven years employment.
I have raised this with Xero Support and attach the response from Veronika. While I appreciate her explanation, frankly, I think Xero has got this the wrong way around and it is preferable to force the choice to select "Paid Out" rather than have it as the default position and having to change it to "Not Paid Out" every time an employee who does not meed the seven year requirement ceases.
Hi Peter,
Hope you're having a lovely week!
Thanks for your feedback in regards to how Xero treats Long Service Leave.
The change for this leave type to be automatically paid out at termination was done to comply with regulations set out by the Fair Work Ombudsman. I've included a link to the Fair Work Ombudsman website for more information on this.
We understand this situation isn't ideal for all business' as you've mentioned some very valid points about employee's not reaching their appropriate tenure to receive Long Service Leave.
In this scenario, as you're aware in you can change the setting to be not paid out at termination then changed at a later date if the employee is eligible to get this paid out at termination.
It doesn’t look like this idea has been raised to Xero Product Ideas yet. Xero Product Ideas is a Xero website where our customers can share and support ideas for change.
We recommend raising this as a product idea as you can gain votes and some traction for your idea. Also, if there are any developments on your idea you'll be updated on this.
I’ve included a link to the website where you can view and support current ideas or create a new idea to share your thoughts. Please note, you may be asked to log in to Xero first.
Fair Work Ombudsman website: Payment of Long Service Leave
Xero Central article: Set up long service leave
Xero website: Xero Product Ideas
Cheers,
Veronika