Good news! Leave encashment (calculating unused leaves for resigned employees) can now be calculated automatically in Talenox. 😁

In order to enable leave encashment feature in Talenox, head over to Profiles > Company Details > Payroll Details. Thereafter, click on the Edit button and choose "Enabled" option in the "Leave Encashment Settings" field.

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To process leave encashment in Payroll, you can follow the steps below:

Step 1: Enter the Resign Date in the employee's profile.

Step 2: Annual leave balance will be auto-prorated after that.

Step 3: When processing payroll, do choose "Leave Pay" item under Ad Hoc Payment/Deduction tab. The prorated annual leave balance will be synced over to payroll to auto-calculate the leave encashment.

Step 4: Once leave encashment is fully processed in payroll, the prorated annual leave balance will be reduced to 0 days and the deduction will be indicated under "Taken & Adjusted" display.

This is to indicate that the prorated annual leave balance is already paid out along with the employee's salary.

Step 5: The adjustment of prorated annual leave balance (after leave encashment) can be tracked under Leave Balances > Employee Name > Adjust Leave tab:

NOTE: Do not edit the Remarks section - “Annual Leave Encashment” as this might affect the automation process of the new leave encashment field in payroll.

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Below are the formulas that are used for leave encashment calculation done in Talenox:

Working Days

  • Formula: (Monthly Gross rate of pay** x 12 months) / (52 weeks x number of working days each week) x No. of leave days left to encash

Calendar Days

  • Formula: (Monthly Gross rate of pay** x 12 months) / (52 weeks x 7 days) x number of leave days left to encash

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**NOTE: Do ensure that your calculations of Gross rate of pay includes allowances that an employee is entitled to under a contract of service. (MOM)

However, MOM also recommends that allowances to be excluded from Gross rate of pay calculations are as follow:

  • Travel allowances
  • Food allowances
  • Housing allowances

Now, you'll be able to encash leave like a pro 👍

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