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Administrator Guide
Last Updated: 2023-06-23
Setup Considerations: Pay for Workers on Leave

Setup Considerations: Pay for Workers on Leave

You can use this topic to help make decisions when planning your configuration and use of pay for workers on leave. It explains:
  • Why to set it up.
  • How it fits into the rest of Workday.
  • Downstream impacts and cross-product interactions.
  • Security requirements and business process configurations.
  • Questions and limitations to consider before implementation.
Refer to detailed task instructions for full configuration details.

What It Is

You can process payroll for workers on leave by defining:
  • Which leave types impact their payroll.
  • Which earnings to pay during the leave.
  • Which deductions to calculate and put into arrears during the leave.
  • When to pay earnings.
Processing payments to workers on leave also includes related compliance calculations and preparing for regulatory reporting.

Business Benefits

Workday Payroll seamlessly integrates with Workday Absence Management to enable you to process payments to workers on leave based on absence data entered by your HR partners.
Workday also helps you comply with country-specific requirements by:
  • Calculating taxes on the payments.
  • Streamlining report preparation within 1 system.

Use Cases

You can process payments to workers on leave for:
  • Benefit and retirement deductions.
  • Bereavement.
  • Earnings differences due to statutory leave (FRA, UK).
  • Multiple jobs (CAN, USA).
  • Parental or family leave.
  • Partial pay for a sabbatical leave.
  • Short-term disability.
  • Sick leave (CAN, UK, USA).
You can also process payroll for workers who move from 1 leave type to another, such as from paid to unpaid parental leave.

Questions to Consider

Questions
Considerations
Which earnings or deductions do you need to process for workers on leave?
For workers on leave with payroll effect, Workday applies eligibility criteria to automatically process:
  • Pay components, such as retro differences or one-time payroll inputs. You can specify other pay components to calculate based on the leave and worker types using the
    Nonactive (On Cycle, On Demand Replacement)
     tab of your run category.
  • One-time payments and bonuses from Workday Compensation without additional configuration on the
    Nonactive (On Cycle, On Demand Replacement)
     tab.
For Payroll for Canada and the U.S., for workers with multiple jobs and leave types that are:
  • Both position-based and worker-based, Workday processes pay components for the union of the leave types.
  • Either position-based or worker-based, Workday processes pay components for the leave type of the primary job.
Which periods of employment do you want bonuses to cover for workers on leave? (USA)
You can configure Fair Labor Standards Act (FLSA) bonuses to:
  • Allocate on inactive periods, and have Workday reduce the total bonus by the periods when workers are on leave.
  • Ignore inactive periods and allocate the total bonus over active periods within the coverage dates. Active periods can span several pay periods.
  • Allocate the total bonus over all FLSA periods in the coverage window.
  • Allocate the total bonus over active FLSA periods, and inactive FLSA periods that have FLSA hours.
Do you need to process reclassification leaves? (FRA)
You can configure Workday to process reclassification leaves and:
  • Pay the appropriate earnings during each phase of the leave, such as the notice period or the legal period.
  • Exempt reclassification allowances for the legal period from social contributions, and subject them to CSG/CRDS on replacement income.
Which leave types are you processing? (AUS, FRA, UK)
For payroll for Australia, you can create leave types for statutory leave payments. Make sure to provide all information required for the leave type.
For Payroll for France, you can report leave types in the DSN by mapping Workday leave types to those declared in the DSN.
For Payroll for the UK, you can create leave types for statutory leave payments. Make sure to provide all information required for the leave type. Examples:
  • Expected due date for Statutory Maternity Pay (SMP) or Statutory Paternity Pay (SPP) to calculate pay rates.
  • Expected due date or week of confinement for SMP to determine the qualifying week for the paid leave.
Workday calculates statutory payments based on completed whole weeks within the pay period. Workday doesn't pay a partial week until that week is complete in a following pay period.
What are the reporting requirements for workers on leave? (AUS, CAN, UK)
For Payroll for Australia, to meet reporting requirements, use the
View STP Reporting Categories
 task to map the pay components for each of your leave types to the correct corresponding Single Touch Payroll (STP) category.
For Payroll for Canada, Workday populates Record of Employment (ROE) data for workers:
  • On a leave of absence after you submit the
    Request Leave of Absence
     business process.
  • With insurable earnings for at least 1 pay period.
You can create an ROE for those workers using the
Create ROE Data for Events
 task.
For payroll for the UK, to meet the legal requirements for reporting payroll data and National Insurance (NI) contributions, you can:
  • Prepare Real Time Information (RTI) Full Payment Submission (FPS).
  • Submit RTI reporting directly to HMRC through the HMRC RTI online service.
When workers request or return from leave midperiod, Workday generates 1 RTI FPS submission per subperiod created for the leave. In this case, access the
Run UK RTI FPS
 task to launch an RTI FPS integration for each submission, in ascending order. Wait for the acceptance of each submission before sending the next one.
How do you want to manage payslips and checks for workers on leave? (CAN, UK, USA)
For Payroll for Canada and the U.S., you can configure how many checks to provide to workers on leave when:
  • They request or return from leave midperiod.
  • The leave is a worker-based leave.
You can select
Pay Component
 as the
Proration Type
 for the
Leave of Absence GTN with Tenant Override
 payroll proration event category on the
Maintain Payroll Proration Override
 report. This setting enables you to generate 1 check for the whole pay period. You can't switch back to gross-to-net proration after you enable pay component proration and completed payroll.
For Payroll for the UK, you can send paper versions of P60 forms to workers on leave who elect to receive paper copies of their payslips.

Recommendations

To optimize performance, Workday recommends that you configure:
  • Run categories using the most specific payroll processing status to identify workers to process. Example: Use
    On Leave with One-time Payroll Input
     instead of
    On Leave
     with the
    Payroll Input (Onetime) Exists for Pay Component
     selection criteria.
  • Pay components with eligibility criteria so that they only calculate for eligible workers. Example: Configure disability pay, or parental leave only for eligible workers.
Avoid inaccurate calculations and reporting by loading payroll history before placing workers on leave. For Payroll for the UK, also load year-to-date tax amounts for each statutory type.
For Payroll for the UK, configure Statutory Sick Pay (SSP) as time off rather than leaves of absence to enter different pay rates for each leave period. Only create a leave type for SSP to manage long-term sickness, which also requires a time off configuration for short-term sickness.

Requirements

For Payroll for Canada, France, the UK, and the U.S, configure leave types to have payroll effect in Workday Absence Management.
For Payroll for Australia, configure leave payment types for each leave type in Workday Absence management.
Configure run categories by:
  • Including statuses for workers on leave when processing on- or off-cycle payments. Example:
    On Leave with One-time Payroll Input
    .
  • Selecting which pay components to calculate for those workers. Example: Disability pay (CAN, FRA, UK).
  • Selecting which pay components to calculate for those workers. Example: Disability pay or 401K (USA).
  • Selecting which pay components to calculated for those worker. Example: Parental leave (AUS).
  • Selecting specific statuses before paying workers that have multiple jobs. Example: You end their additional jobs and their primary job remains active (CAN, USA).
To apply pay component proration to an earning for workers on leave, set up the earning as position-based when you use a position-based leave.

Limitations

You can't directly reference report fields related to the Leave Request Event business object in Workday Payroll calculations, such as the leave reason.
Payroll for Canada doesn't support the ROE feature with cascading leaves of absence.
For Payroll for Canada, all leave types trigger ROEs, including the ones without payroll effect enabled in Workday Absence Management. Example: Paid leave.
Payroll for the UK doesn't support cascading leave types linked to statutory payments.
For Payroll for France, Workday considers workers on therapeutic leave as still active. To ensure accurate calculations and DSN reporting, configure this leave type using a combination of:
  • A leave type without payroll effect to use when placing the worker on part-time therapeutic leave.
  • A time off plan to represent the actual time that the worker isn't at work due to the leave.

Tenant Setup

On the
Edit Tenant Setup - Payroll
 task, you can disable processing pay components with retro differences for workers on leave in the scope of the run category. Workday then uses your pay component configuration from the
Nonactive (On Cycle, On Demand Replacement)
 tab on the run category when processing retro events.

Security

Domains
Considerations
Process: P60 (Reports) - UK
 and
Process: P60 (Run) - UK
 in the UK Payroll functional area.
Enables you to create P60 forms, including paper versions, for workers on leave.
Set Up: Payroll - Company Specific (Taxes) - USA
 in the USA Payroll functional area.
Enables you to configure state and local taxes such as for new state medical leaves.
Set Up: Payroll - FRA
 in the FRA Payroll functional area.
Enables you to map leaves from Workday Absence Management to rubric values required for DSN reporting.
Set Up: Payroll (ROE) - CAN
 in the CAN Payroll functional area.
Enables you to map Service Canada reason codes to event types for recording leaves of absence.
Set Up: Payroll (Calculations - Payroll Specific)
 in the Core Payroll functional area.
Enables you to configure payroll-specific components such as earnings and deductions to calculate for workers on leave.
Set Up: Payroll (Reporting)
 in the Core Payroll functional area.
Enables you to configure reporting options related to payslip printing.
Set Up: Settlement
 in the Banking and Settlement functional area.
Enables you to configure settlement options related to payslip printing.
Set Up: Tenant Setup - Payroll
 in the System functional area.
Enables you to configure tenant-wide parameters.

Business Processes

Business Processes
Considerations
Assign Costing Allocation
Configure as a subprocess of the
Request Leave of Absence
 business process to allocate costs for positions on leave.
You can't use this subprocess to allocate costs for workers on leave. Add a step condition to the
Request Leave of Absence
 business process to skip costing for worker-based leaves. Otherwise, worker-based leave requests stop the business process and you need to cancel them.
Request Leave of Absence
Request Return from Leave of Absence
Configure a
To Do
 step on the
Request Leave of Absence
 business process to enable workers to change their printing options. Example: Workers can elect to receive printed copies of their payslips or year-end forms while on leave.

Reporting

Reports or Dashboards
Considerations
All Pay Results Blocking Tenant Proration Option Changes
 (CAN, UK, USA)
Use to identify and complete any in-progress payroll or retro payroll results before enabling pay component proration on the
Maintain Payroll Proration Override
 report.
Tenant Analyzer
Use to verify your run category configuration against Workday recommendations for workers on leave to optimize performance.
Workers on Leave
Use to identify workers on leave and check that any existing ongoing payments they have are still applicable during the leave.
Workers Returning from Leave
Use to identify workers that returned from leave and check that you configure payroll correctly for them.

Integrations

No impacts.

Connections and Touchpoints

Features
Considerations
Absence Management
Workday Payroll processes leave types configured in Workday Absence Management with payroll effect enabled.
When configuring cascading leaves, make sure that the leave periods don't overlap.
Arrears
You can recoup arrears for pay components processed for workers on leave. You can also reduce arrears balance with a payroll input, such as when workers pay deductions using personal checks. Configure run categories so that workers on leave have a pay result that Workday can use to track arrears.
Pay components
Workday applies pay component eligibility criteria when processing payments for workers on leave. When workers go on leave midperiod, Workday creates multiple subperiods, and you can configure:
  • Pay component proration, resulting in 1 gross-to-net result that includes separate pay component values for each subperiod.
  • Gross-to-net proration, resulting in separate gross-to-net amounts for each subperiod.
Payroll input
You can use payroll inputs to override the base pay for workers on leave. Example: Configure a payroll input to pay a reduced amount during the leave period instead of using proration.
Retro pay calculations
You can process:
  • Supported retro events you enter while the worker is on leave in the current period.
  • Retro leave requests or returns.
The retro pay calculation doesn't support multiple returns from leave in 1 leave event. To return workers or correct returns from multiple leave types, do so for each type in a separate event.
Run categories
For Payroll for Australia, France, and the UK, run categories determine which pay components and workers to process on subperiod start dates. Workers have a nonactive status when they're on leave with payroll effect for the entire pay period.
Workday applies the configuration from the
Nonactive (On Cycle, On Demand Replacement)
 tab to process non-active workers .
For Payroll for Canada and the U.S., run categories and eligibility determine which pay components and workers to process on subperiod start dates. Single-job workers have a nonactive status when they're on leave with payroll effect for the entire pay period. When they have multiple jobs, Workday considers them as nonactive when they're either on a:
  • Worker-based leave in the processed pay group.
  • Position-based leave for every job in the processed pay group.
Workday applies the configuration from the
Nonactive (On Cycle, On Demand Replacement)
 tab on the run category to process non-active workers.
For all countries, when workers are on leave without payroll effect enabled, Workday Payroll considers them active, and ignores these tabs on the run category:
  • The configuration from the
    Nonactive (On Cycle, On Demand Replacement)
     tab.
  • Any configuration you define for
    On Leave
     statuses on the
    General
     and
    Off Cycle (On Demand Additional Manual)
     tabs.
Tax configuration (USA)
Workday delivers compliance updates that you can use to calculate pay for workers on leave. Some delivered configurations require that you enable it for the company. Example: To use a new state medical leave, configure it in the
Other
 section of the
Edit Company State and Local US Tax Reporting
 task.
Time Tracking
Workers can enter and submit time through Workday Time Tracking while they're on leave. You can also create a time validation to prevent submission.
Union rates (USA)
Workday enables you to define tax rates for unions and override default tax authorities for paid family and medical leave. You can enter a unique rate in the
Union Rate
 tab of the
Edit Company State and Local US Tax Reporting
 task.
Workday offers a Touchpoints Kit with resources to help you understand configuration relationships in your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.