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.

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.

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) / 365 days] x number of leave days left to encash

For our Malaysia users, please note that Leave Pay will be calculated according to Ordinary Rate of Pay (26-day ruling). You can refer to this article to learn more about the calculations for this.

**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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