Vacation pay is part of keeping your team happy and your payroll accurate. This guide explains how vacation pay works in Wagepoint and the different ways you can manage it.
We'll cover topics like:
- How vacation pay works in Wagepoint — accrued vs. paid out, and year-end considerations
- More about accrued vacation pay — how accrual rates are set and adjusted
- How to pay out vacation pay — step-by-step, through payroll or directly in a people profile
- How to review and edit vacation pay details — including balances and calculation methods
When should I pay out vacation pay?
There are two situations in which you might want to pay out vacation pay for an employee:
- When an employee takes time off
- When you want to pay out their vacation balance (for example, on their work anniversary, at year end, or when they leave your company)
How does vacation pay work in Wagepoint?
You'll set up vacation pay in the employee's profile when you first add them to Wagepoint.
It's important to note that Wagepoint does not automatically reset vacation balances at year-end. If your company has a policy to reset or carry over vacation, you’ll need to adjust balances manually.
There are two ways to handle vacation pay:
-
Accrued vacation pay
- Vacation pay is calculated and tracked automatically as the employee earns wages.
- The amount accrued appears as a running balance in their profile.
-
Paid Out vacation pay
- Vacation pay is calculated and paid out on every paycheque.
- No vacation balance is tracked in Wagepoint.
- If an employee leaves, their remaining vacation balance should be paid out with their final pay.
Employers are responsible for making sure they follow the correct rules for the province or territory where the employee works. Wagepoint helps calculate and track vacation pay, but we don’t provide legal or payroll advice — so if you’re unsure about what applies, it’s a good idea to check with a payroll professional or your local employment standards office.
More about accrued vacation pay
When you set up vacation pay in Wagepoint, it defaults to the minimum legislated rate for the applicable province. You can override this percentage if an employee is entitled to more.
Wagepoint will automatically adjust the vacation calculation based on the employee's province, years of service, and hire date.
For example, in Ontario, the rate increases to 6% after five years of service. Wagepoint will apply this adjustment for you.
Here’s how accrual works in practice:
Each time the employee earns wages, Wagepoint calculates vacation pay based on their assigned percentage.
Instead of being paid out right away, this amount is added to their vacation balance.
The balance is visible in the employee’s profile under Vacation accrued and also shows on their paystub.
How do I pay out vacation pay for an employee?
You can pay out vacation pay in two ways:
Pay out vacation pay from within the Run payroll workflow
1. Begin the Run payroll workflow as normal.
2. On Step 2: Hours and Incomes, locate the relevant individual and click Edit.
3. In the slide-out window, add the income code under Wages or Additional incomes and fill in the details:
Option 1: Add the vacation pay code under Wages
Use this option if you want Wagepoint to calculate the vacation amount based on hours entered. This is typically used when the employee has taken vacation time.
Under Wages, click Add wages and select Vacation pay from the drop-down menu. Then fill out the following details:
Income name: Vacation Pay (hours)
Income code: Fills in automatically
Hours: Enter the number of vacation hours
Amount: Auto-calculated by Wagepoint based on hours entered
Option 2: Add the vacation pay code under Additional incomes
Use this option if you're entering a specific dollar amount manually — for example, a vacation payout with no time taken.
Under Additional incomes, click Add income and select Vacation pay from the drop-down menu. Then fill out the following details:
Income name: Vacation Pay (dollars)
Income code: Fills in automatically
Amount: Enter the total dollar amount (required)
Hours (optional): Enter if desired, for tracking only. Wagepoint won’t use this to calculate the amount. If this is a vacation pay out, generally you should have no associated hours.
4. When you've entered the income code details, click Save and close.
5. The added income code will be added to the Hours and Incomes table.
Pay out vacation pay from within a people profile
1. In the navigation bar, go to People.
2. Click View.
3. In the individual's people profile, go to the Incomes, deductions, and benefits tab.
4. Under Incomes, click Add incomes.
5. In the slide-out window, enter the details for the income code:
- Income name: Vacation Pay (dollars)
- Income code: This will automatically generate based on the selected income name.
- Hours (optional): Hours can be advised here but no automatic calculation will be done. If this is a vacation pay out, generally you should have no associated hours.
- Amount
- Frequency: Once on next pay
Then, click Add.
6. The Vacation pay income code will now appear in the incomes list, with the hours, amount, and frequency. The next time you go to run payroll for this individual, the income code will be applied.
How can I review and edit vacation pay details for an employee?
1. In the navigation bar, go to People.
2. In the People list, select View.
3. Go to the Job Details tab.
4. On the Job Details tab, you'll find the Vacation pay calculation and Year-to-date vacation balance for the employee.
5. To edit the calculation method or balance amount, click Edit.
6. Under Primary job (Province) vacation pay, make your desired changes, then click Done.
More FAQs: Vacation pay
-
If you wish to pay out vacation pay for multiple employees, you can use the Grid View option within the Run payroll workflow. To access Grid view, begin the Run payroll process as normal. On Step 2: Hours and Incomes, select the three dot s on the top right of the screen and choose Grid View.
Within Grid view, click Add Income, Deduction, & Benefits. Select Vacation pay (hours) or Vacation pay (dollars) and click Save. Add the desired amounts while in Grid view, click Save and close, and continue with the Run payroll workflow.
- Wagepoint automatically pays out any remaining vacation balance when you run the termination workflow for an employee. You don’t need to add the payout manually. See our step-by-step guide to terminating an employee.
-
It depends on your specific situation, however, some general guidelines are:
Use Vacation pay (hours) when you want Wagepoint to calculate the vacation amount for you based on the number of hours entered and the employee’s hourly rate. This is usually best when the employee has taken vacation time.
Use Vacation pay (dollars) when you already know the dollar amount you want to pay out. This is usually best for lump-sum payouts, such as at year-end, on a work anniversary, or when an employee leaves the company. You can enter hours if you’d like to track them, but they won’t affect the calculation.
-
An employee needs to be set to accrue vacation for any changes to apply to their vacation accrued balance
If an employee was changed to have vacation paid out each pay before the accrued balance owed was paid out, then you will need to switch them back to have vacation accrued and pay out what is owed
If you just need to edit the balance accrued to zero, you can do so by switching them to accrue vacation, editing the balance and then changing them back.