Year-end process

HRStop lets the super admin, or anyone with permission for the Leaves module, trigger the year-end process. An organization has to perform some activities for a smooth transition to the next year. Year End Process is triggered to process leave-related activities that need to be settled by the end of the year, such as lapsed leaves, encashed leaves and balances. It marks the closure of the leave allotted to that particular calendar year or financial year (based on the company’s policy). At the end of the year, all unused leaves are carried forward to the next year, encashed or lapsed.

IMPORTANT: Things to do before running the Year End Process

1. All pending leaves up to the transaction month should be approved/rejected. This ensures that current-year leaves are deducted from the year’s entitlement and not from next year’s leave balances, which are automatically credited to employees’ accounts later.
2. No leaves for future months should be approved. This ensures that leaves applied for next year are deducted from next year’s balances and not from the current balances. If you have already approved future leaves, don’t worry: the system automatically adjusts them after the year-end process is completed.
3. The Year End Process should be triggered after running the payroll for the transaction month. If an employee has a negative (-ve) balance and you run the year-end process before running payroll, the negative balance is carried forward to the next month and the current leave balance becomes zero. If you then run payroll, there is no negative balance, so there is no LOP in the current month’s salary.

Use case: Let’s say your leave calendar year is Jan 1 – Dec 31 (which makes Dec your transaction month). An employee has some balance available in their account and has applied for two sets of leaves: one in Dec and the other in Jan. As an admin, ensure the following before running payroll:

1. Approve all leaves applied for Dec.
2. Do not touch leaves applied for Jan or future dates.
3. Run payroll for Dec.

How to run the Year End Process

1. Go to Control Panel → Leaves → Balance.
2. Click Run Year End Process (drop-down button next to the Manually Adjust button at the top right).
3. A table shows all the leave categories created for your company that are defined as “Can be carried”, “Encashable” or both.
   • Leave categories that are neither “Can be carried” nor “Encashable” are not listed on this page, and their leave balances (for all employees) lapse.
4. Select the ‘Transaction Month’: All leaves up to the selected month (i.e., the transaction month) are carried forward, encashed or lapsed according to the values selected.
5. Define the ‘Leave Encash Based on’ parameters.
   • LOP: If selected, the encashable amount per leave unit equals the employee’s loss of pay per day. Important: If no pay component has ‘LOP’ enabled, the ‘LOP’ per leave unit in the year-end process is zero, i.e., no amount is encashed.
   • Basic: If selected, the encashable amount per leave unit equals the employee’s ‘Basic’ pay component value.
   • Specified: If selected, the encashable amount per leave unit equals the specified value for all employees.
6. If you do not want to carry forward negative (-ve) leave balances to the next year, select the option “Do not carry forward negative leave balance”.
7. Fill in the ‘Carry Limit’ and ‘Encash Limit’ for each leave category as needed and click Next.
8. The next step shows the number of leaves that will be carried forward to the next month for each employee and leave category, based on the settings on the previous screen.
9. The following screen shows the number of leaves encashed and the salary amount (based on the selected parameter) for each employee and leave category, according to each category’s encash limit.
10. Click Next and then Finish. This completes your year-end process. The carried leaves are credited to the next month, encashed leaves are added as arrears, and the remaining leaves (i.e., [Initial Leave Balance – Carry Limit] – Encash Limit) expire/lapse.

What happens when you run the Year End Process?

• Leave categories with the “Can be carried” setting enabled are carried forward to the new year according to the limits you configure.
• Leave categories with the “Encashable” setting enabled are encashed. The amount for encashed leaves is added as arrears in the system and automatically included in the next payroll.
• If the “Can be carried” and “Encashable” settings are both disabled for a leave category, all employees’ balances for that category lapse.
• If both settings (“Can be carried” and “Encashable”) are enabled for a leave category, leaves up to the carry limit you entered are credited to the next month. From the remaining balance (i.e., Initial Leave Balance – Carry Limit), leaves up to the encash limit are encashed. The remaining leaves (i.e., [Initial Leave Balance – Carry Limit] – Encash Limit) lapse.