Create and assign a custom leave type

Create a custom leave type if you want to assign leave types that are not available by default in Xero.

How custom leave accrues

You can choose how leave accumulates in Xero based on:

  • The employee's ordinary earnings rate (how much they work).
  • A fixed amount that accrues each period (it doesn't matter how much they work).
  • A rate that you manually enter every pay.
  • No accruals.

Create a custom leave pay item

  1. In the Settings menu, select General Settings.
  2. Under Features, click Payroll Settings.
  3. Click the Pay Items tab.
  4. Click Leave.
  5. Create Leave Image

  6. Click Add, then select Paid Leave or Unpaid Leave.
  7. Enter the pay item details, including:
    • Type of Units to choose what unit you want leave accrued and requested in, for example, Hours.
    • You can also enter the Leave Loading Rate and the total Normal Entitlement if you want this leave accrued based on a yearly number.
  8. Click Add.
You can edit, inactivate and delete leave types in the same manner as other pay items.

Assign a leave type to an employee

Once you've created a custom leave type, assign it to your employee.

  1. In the Payroll menu, select Employees.
  2. Click the employee you want to assign the custom leave type to.
  3. Click the Leave tab.
  4. Click Assign Leave Type.
  5. Complete the fields:
    • Leave Calculation Method - The way Xero calculates accrued leave for the leave type.
      • Fixed Amount Each Period – The total number of hours the employee can accrue each pay period, based on their annual entitlement (Hours Accrued Annually).
      • Manually Recorded Rate – The total number of hours the employee accrues each pay period.
      • No Calculation Required – No leave is accrued, but you can enter manual accrual amounts in each pay run.
      • Based on Ordinary Earnings – A relative number of hours the employee accrues each pay period, based on how much they work.
      • If you've selected Based on Ordinary Earnings as the calculation method, you should base the hours accrued on a full-time employee so that accruals calculate correctly.
    • Hours Accrued Annually / Hours
      • Hours Accrued Annually – The employee's annual entitlement.
      • Hours – The total number of hours the employee accrues each pay period.
    • Opening Balance - The number of units the employee accrued before they were added to Xero payroll.
    • On termination unused balance is - Choose whether to pay an employee’s unused leave as a lump sum in their final pay once they're terminated.
  6. Click Save.