Cashing out leave allows employees to receive payment for their accrued leave instead of taking time off work.
This feature is now available for annual leave, personal leave, and long service leave, making it easy for payroll admins to process leave cashouts without additional setup.
How Does Cash Out of Leave Work?
We’ve introduced system-defined leave cashout options for the following leave types:
Cashout Annual Leave
Cashout Personal Leave
Cashout Long Service Leave
These options are pre-configured, so there’s no need to set them up manually.
You can start using them right away in the pay run.
It also ensures the employee's leave balance is reduced accordingly.
The cashout options available to an employee depend on their assigned leave types:
If the employee is assigned annual leave and personal leave, they will only see Cashout Annual Leave and Cashout Personal Leave earnings in the pay run.
If they don’t have long service leave assigned, the Cashout Long Service Leave option will not be visible.
Important Points to Note:
The cashed-out amount will be taxed at the Schedule 5 tax table, ensuring compliance with ATO regulations.
The cashout of annual leave, long service, and personal leave is reported to ATO under Type C - Cash out of leave in service
Employees cannot request leave cashouts via the mobile app or employee web app.
A payroll admin must process the cashout request in the pay run based on the employee’s request.
Steps to Process Cash Out of Leave
If an employee wants to cash out leave, you need to process it in a pay run.
To do this:
Create a Pay Run
Select the "Pay Schedule", "Payment Date", "Period End Ons", and "Pay Run Template" & click on "Create" to create a "Pay Run".
Add Cashout of Leave earning
Click on the “+” button under the Earnings section.
Select the relevant cashout option (Cashout Annual Leave, Cashout Personal Leave, or Cashout Long Service Leave).
Enter Hours to Be Cashed Out
Add the number of hours the employee wishes to cash out for the selected leave type.
The system will automatically reduce the leave balance from the respective leave type by the number of hours cashed out.
Example
Let’s say an employee wishes to cash out 20 hours of annual leave:
Create a pay run and click “+” under Earnings.
Select Cashout Annual Leave earnings and enter 20 hours.
The system will automatically deduct 20 hours from the employee’s annual leave balance
The payout amount, applying the correct tax rate will be calculated.
Note - If the same employee requests to cash out personal leave, follow the same steps and enter the requested hours under Cashout Personal Leave.
Complete the Pay Run
Publish the pay run.
File the Pay run
Pay Out Leave Loading with Cashed-Out Leave
When you cash out a leave, you also have the option to pay out leave loading along with the leave entitlement. This ensures that employees receive the correct loading in line with their entitlements.
How Does It Work?
Set Leave Loading for Leave Types at the employee level
Navigate to Employees > Leaves to review the assigned leave types.
For each leave type, you can define a loading rate (e.g., 17.5% for annual leave).
Loading Rate Application
If a leave type has a loading rate assigned, and the cashout earning is selected in the pay run, the loading rate will be applied to the respective cashout earning.
Notes in Pay Run
When leave loading is applied in the pay run, the system will display a note such as: “Annual leave @17.5%”
If you have any questions or feedback, please email us at support@payroo.com.au