OESA with Deferred Debit for Requesting Next Year Vacation
The Ontario employment standards bank (OESA) uses the following process:
▪The vacation year most often runs from July 1st to June 30th but can run from January 1st to December 31st as well.
▪Vacation pay is accrued during the current vacation year for the next year as a percentage of earnings. A typical calculation would be 4%, 6%, 8% etc. of all paid hours based on employee seniority.
▪The entitlement (time) accrual happens at the end of the vacation year at which time seniority determines the number of weeks employees get for the following current vacation year. Time is often required to be taken in week blocks, and sometimes days if allowed. Time cannot be taken by hour or partial days.
▪The total earnings from the previous year are then divided by the current year’s entitlement to create a daily and weekly rate for time taken, instead of just using the employee pay rate. For example, if I have earned $2000 vacation pay over the previous year and am entitled to four weeks for the current year, my weekly rate is $500. My daily rate is then calculated based on the configuration for how many days is considered a week). If my week is configured as a 5-day week, my daily rate would be $100.00.
The OESA Bank Configuration
▪OESA needs to be configured under Configuration / Setup / Company Profile.
▪At the Time Bank configuration level, set up the bank to be an OESA bank.
▪On the Attendance Code setup screen, the OESA Attendance Codes must have the Vacation column ticked on. Normal rate setup can be used.
▪Attach these codes to your new bank using the Time Bank setup. You should have a Paid code, and Unpaid code and a Payout code.
▪This bank can have 2 accrual rules set up. Create the Entitlement rule and the Vacation Pay rule. Note: there is only ONE update setting used.
▪You should select bi-weekly so that the Vacation Pay can be updated at the end of each pay period. When you roll the bank to recalculate the Daily and Weekly rates, it doesn’t matter what the update frequency is.
▪You should set up the bank to include Next Year values. For banks using Hire Date for seniority, you should select Calculation next year separately and for banks using hours as seniority, you should select Duplicate next year’s earnings so there will still be values there to request time into next year. These values will be overridden with the correct number of weeks once the bank is updated at the end of the year.
▪Alternately, Vacation Pay can be imported either to the Vacation dollars field at the end of the end of the year or the general Vacation Pay under Personnel / Payroll (old method). I recommend using the Vacation Pay field of the Time Bank.
How many Days is an OESA Week
▪At the end of the vacation year when the managers know the full vacation pay amount earned over the previous year, it is time to update the bank to calculate the weekly and daily rates.
▪The weekly rate is easy because it is simply the Vacation pay divided by the employee’s entitlement (weeks by seniority). If the employee has $2000 and is entitled to 4 weeks, the weekly rate is $500.
▪There are 3 options that can be used to determine the number of days per week to calculate the Daily Rate (see screen shot below):
▪Using the Master Schedule – the system takes the average number of days of the first two weeks of the employee’s Master Schedule. For example, a schedule with 4 scheduled days of the first week and 2 on the second, would be a 3-day per week daily rate.
▪Using a fixed number of days per week which is user definable. Usually the client uses a 5-day or 7-day week.
▪Shift Rotation (Rarely used, should not be used without assistance from SSC)
Why Deferred Debit with OESA
▪The Deferred Debit process is the most efficient way to use these banks because the daily and weekly rates for vacation time requested will not be known until the end of the vacation year but will be requested before year-end. If my vacation year runs from July to June, I will likely be asked to request my summer vacation in the spring for the upcoming year.
▪The current vacation approval method will deduct the time from the bank at the point of approval. Without Deferred Debit enabled, the time would be taken out of next year's entitlement and accruing dollars at the wrong rate.
▪Using the Deferred Debit process will allow the manager to approve the vacation time based on the estimated next year accruals without the time being taken out of the bank and calculated at the wrong rate.
▪Once the vacation request is approved, the shift will be unbooked. The open shift can now be filled by seniority in advance.
▪No additional temporary Next Year vacation code needs to be created and no manual adjustments done at the beginning of the next vacation year.
▪The only thing that needs to be done is to update the Deferred Debit process to remove the time and dollars from the bank at the correct rate.
General notes about Deferred Debit
▪The Deferred Debit process is best if run ahead of time e.g., the beginning of every pay period. In advance is preferable so employees won’t end up with more days approved than they have in their banks.
▪Deferred Debit is enabled by ticking the Attendance Code's Defer Time Bank column (below).
▪When enabled, the time off requested by employees will not be removed from the bank when approved, until the Deferred Debit process is run.
Recommended use of Deferred Debit with OESA
▪We recommended that you enable the Deferred Debit process for a limited time until the approval of next year’s requests is complete.
▪Employees should be notified of a specified time period for making their next year vacation requests at which time the Attendance Code Deferred Debit option would be activated prior to approving these requests.
▪Once all the next year’s vacation requests are complete and approved, Deferred Debit should then be turned off for the vacation Attendance Codes allowing any additional requests for the current year to be approved again to come out of the bank as usual upon approval.
Examples of Requesting vacation from current and next year using Deferred Debit
▪See Carol’s Vacation bank below. She has 5 days with a daily rate of $192.75. She is allowed to take her vacation in days so there is no weekly setup.
Notice the values in her Next year’s bank as well i.e., $1000
She is going to request 2 days off in her current year since she still has vacation available:
Carol’s Schedule after the Vacation Request is approved.
Carol’s Time Bank after the vacation is approved. Notice that the time came directly out of her bank because the Deferred Debit option was not active.
Now Carol is going to request time for the summer, into the next vacation year:
See her current year and next year requests. Notice the Deferred not processed for the next year requests? The system will use the current’s years daily rate still to determine if there are enough dollars to approve the request although this will be recalculated once the bank is rolled.
Rolling OESA Banks to recalculate
Using Feb 28 as our year end date for example, please see the bank data below:
The bank after Current Year request for 3 days with no deferred debit:
See her bank after 4 days of Vacation is request for next vacation year (in this example the month of March is considered Next Year).
Updating / Rollover at Year End
We are rolling over this bank. Normally there would not be any values left for current year vacation.
Kimberlee is entitled to 4 weeks based on her seniority hours.
Her bank is set up to use her Master schedule to determine how many days make a week. This is important since her bank will update in Days since she is not required to take a week at a time.
Based on her Master Schedule, each week will be 4 days. 4 weeks x 4 days is 16 days that she is entitled too.
This is the update process that was run. I recalculated OESA values since there was data in Next Year fields.
Here is Kimberlee’s Time Bank after the update:
Here is her bank after deferred debit is run for her 4 requested days in March.