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What is the difference between leave type Accrual and Lump Sum?

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KB01-021

An accrual leave code calculates based upon hours worked on selected pay code(s).  The system will always calculate leave accruals if a selected pay code, with hours associated to it, is processed through payroll for the employee.  The accrual calculation is designed to give an employee a certain number of hours for every one hour worked.  However, Comprehensive Leave Manager does allow flexibility in the set up to enable you to always calculate a certain number of hours regardless of the hours worked on the pay code.  Keep in mind, pay code types that do not include hours (Other, Piecework, etc.) will not calculate accrual amounts because the system requires hours to complete the calculation.  Below there are a few scenarios of how to use an accrual calculation factor.

lump1

 

 

A lump sum leave code gives an employee a specified amount on a specified date.  Once a lump sum has processed for a specific date, it would not reprocess for the same date.  The system waits until the next posting date to process and give the employee more available time.  Typically, a lump sum leave code is used when you want to give an employee a certain number of hours regardless of if they worked or how many hours they worked.

Lump sums are a great option for a yearly accrual.  For example, every year the company provides an employee 80 hours on their anniversary or on January 1.  It is also great for monthly accruals instead of accruals by pay period.   For example, the company provides 8 hours of vacation time ever month on the first of the month.

lump2

In Microsoft Dynamics GP 2013 R2 (version 12.0.21) we added the ability to have a lump sum as part of an accrual leave type.  This allows the system provide lump sum functionality to an accrual leave type.  Or mix a lump sum with an accrual leave policy.  For example, I can earn 4.62 every pay period and once a year I receive an extra 16 hours.  This is part of the Comprehensive Leave Manager feature that allows more than one accrual rule be applied to a leave code.  Keep in mind, the lump sum calculations will not look at the hours on pay codes even though it is assigned to an accrual leave type.  The system will still determine if the lump sum should accrue time based on the dates entered.  For a detailed example on the multiple accrual feature you can review this KB article: https://www.integrity-data.com/kb-can-setup-accrual-year-lump-sum-comprehensive-leave-manager-leave-code/

lump3

Example 1:

If the policy states an employee should receive the full accrual amount, regardless of if they worked a few hours or the full week then you can set this up as a lump sum or accrual type.  However, there are key differences and processes that need to be considered for each.  A lump sum will grant the leave time based on dates thus, if the organization has several employees that take FMLA or unpaid time off a lump sum will catch an employee up on all their unpaid leave accruals on the first payroll the employee is processed.  If this is not desired the Employee Leave Maintenance window should have the Accrued Through Date updated when the employee returns from unpaid leave.  Another option is to use the Accrual Leave Type, set the calculation factor equal to the Accrual amount and use a pay period maximum.  Below is an example setup for both of these options.

Lump Sum Setup

In this example, an employee can accrue 4 hours every pay period.  We will be using a biweekly pay cycle.  Since this is a biweekly payroll not one time, monthly, quarterly or annually, we chose Recurring as the frequency.  This lets the system auto calculate the date.  We enter in the first date and the hours to post then set the days (14) for the system to set the recurring date.  If we had a weekly payroll, we could set the days to seven.  The system then populates the dates until the end of the year.  We can then update the dates yearly from the leave setup window and chose to roll down to all employees.  We can automatically allow the system to do this if we mark the “Auto calculate next year’s posting dates at year end.”  This will prompt a message when the Microsoft Dynamics Year End close is ran and the user can select yes to auto update the dates.

Considerations for lump sum setup:

If an employee was off on unpaid leave for 6 weeks, upon their return if we did not want the system to calculate leave for them during this time we can update the Accrued Through Date.  The accrued though date sets the start date for the accrual and the pay period end date sets the end date then, the system looks for any Lump Sum Posting Dates during this time frame.  By changing the Accrued Through Date to the prior pay period start date the system will then not accrue for the unpaid payrolls.  If the employee should have received time off accruals during these 6 weeks then you can leave the setup without updating the Accrued Through Date and the system will catch up the leave accruals.

If an organization processes several bonus or commission payrolls with dates after the last payroll you will want to either use the pay period end date for the accrual calculations or use the next setup example for Accruals otherwise the system could accrue earlier than expected.

lump sum

Note: if you accrued different amounts based on years worked use an accrual schedule with the “lump sum schedule” checkbox marked.