HRStop

How-to

Year-end process

Last updated December 30, 2024 · Tushar Agarwal

HRStop lets you run the year-end process to manage employees' leave counts according to your company's leave policy. You can run this process only once in a financial year. The Year End Process is triggered to process leave-related activities that need settlement by the end of the year, such as lapsed leaves, encashed leaves, and balances. It marks the closure of the leave allotted for that 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.

Things to do before running the Year End Process:

  1. All pending leaves till transaction month should be approved/ rejected. This ensures that current-year leaves are deducted from the entitlement for the year 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 again ensures that leaves applied for next year are deducted from the balances credited for the next year and not from the current balances. I didn't understand this point.
  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, this 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 certain balances available in their account and has applied for two different sets of leaves: one in Dec and the other in Jan. As an admin, ensure the following before running payroll:

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

Follow these steps to run the year-end process:

  1. Navigate to Control Panel → Leaves → Balance.
  2. Click the drop-down on the Manual adjust button (in the page action bar) and click the Run Year End Process option.
  3. A new page opens, showing fields to enter the details.
  4. Enter the Transaction Month (all leaves up to the selected month expire, and carried leaves are credited in the next month).
  5. Select the Leave Encash is Based On option (LOP/Basic/Specified; for Specified, enter a value, which is used as the amount per leave unit).
    • LOP: If selected, the encashable amount per leave unit equals the employee's loss of pay (salary) 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. Enter the Base Days (this helps calculate the number of days in a month on which the salary is calculated).
  7. To avoid carrying forward negative leave balances, select the Do not carry forward negative leave balance checkbox.
  8. To include deactivated employees in the year-end process, select the Allow Deactivated employees checkbox.
  9. In the table below, enter the Carry limit and Encash limit for each leave type.
  10. Click Next to go to Carry forward balance.
  11. This page shows details of all employees with their leave data.
  12. An Import Variable pay option is also available in the top-right corner.
  13. Click the Next button to go to encashment.
  14. This page shows the calculated encashment values along with the other details.
  15. For manual adjustments, an import option is again available at the top.
  16. Click the Next button.
  17. Click the Finish button to complete the year-end process.

Note that you can run this process only once in a financial year. All changes are made instantly.

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 as per the limits you configure.
  • Leave categories with the “Encashable” setting enabled go for encashment. The amount for encashed leaves is added as arrears in the system and automatically included in the next payroll.
  • If the “Can be carried” or “Encashable” settings are disabled for a leave category, all employees' leave balances for that category lapse.
  • If both the “Can be carried” and “Encashable” settings 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.