Year End Process

Hawk HR enables the super admin or someone with the permission of leaves module to trigger the year end process. There are some activities which an organization has to perform for a smooth transition to the next year. Year End Process is triggered to process leave-related activities that need settlement by end of year such as lapsed, encashed, and balances. It marks the closure of the leave allotted to that particular calendar year or financial year (based on the company’s policy). It is at the end of year, that all the unused leaves are carried forward to the next year or encashed or lapsed.

IMPORTANT: Things to do before running Year End Process

1. All pending leaves till transaction month should be approved/ rejected. This is to ensure that the balances for the current year leaves are deducted from the entitled numbers for the year and not from next year leave balances that will get automatically credited to employees’ accounts later.
2. No leaves for future months should be approved. This is again to ensure that balances for leaves applied for next year are deducted from the balances that will be credited to them for the next year and not from the current balances. In case, if you have already approved future leaves, there’s no need to worry. The system will automatically adjust them after the leave year-end process is completed.
3. The Year End Process should be triggered after running the payroll for the transaction month. If there is (-ve) balance for an employee and if you run year end process before running payroll then this (-ve) balance will get carry forwarded to the next month and the current leave balance becomes zero. Now if you run payroll then there is no (-ve) balance, hence there will be no LOP for the current month salary.

Use case: Let’s say your leave calendar year is Jan 1 – Dec 31 ( which will make Dec your transaction month). An employee had certain balances available in his/ her account and has applied for two different sets of leaves: one for the month of Dec and second for Jan.  As an admin, you need to ensure below before running payroll:

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

How to run Year End Process?

1. Go to Control Panel-> Leaves-> Balance.
2. Click on Run Year End Process ( Drop down button next to Manually Adjust button on top right)
3. You will see all the leaves categories your admin team would have created for your company in a tabular format which were defined as either “Can be carried” or “Encashable” or Both.
   • The leaves categories which are neither “Can be carried” nor “Encashable” types are not listed on this page and the leave balances for these leave categories (for all employees) will get elapsed.
4. Select the ‘Transaction Month’: All the leaves till the selected month i.e. the transaction month will get carried forwarded/ encashed or elapsed as per the values selected.
5. Define ‘Leave Encash Based on’  parameters.
   • LOP: If this is selected then encashable amount per leave unit would be equal to the loss of pay of salary per day for the employee. Important- If there is no pay component for which ‘LOP’ is enabled then in year end process the ‘LOP’ per leave unit would be zero i.e. zero amount would be encashed.
   • Basic: If this is selected then encashable amount per leave unit would be equal to the ‘Basic’ pay component value for the employee .
   • Specified: If this is selected then encashable amount per leave unit would be equal  to the specified value for all employees.
6. If you do not want to carry forward (-ve) leave balances to the next year, then check the option “Do not carry forward negative leave balance“.
7. Fill the ‘Carry Limit’ and ‘Encash Limit’ for each leave category as needed and click on next.
8. The next step would show you the  number of carry forwards for each employee for each leave category that will be carried to the next month as per the settings in previous screen.
9. The following screen would show the number of leaves encashed and the salary amount (as per the parameter selected) for each employee for each leave category according to the encash limit for each leave category.
10. Click on next and then on Finish. This will complete your year end process. The carried leaves will get credited to next month, encashed leaves will get added as arrears and the remaining leaves (i.e. [Initial Leave Balance – Carry Limit] – Encash Limit) will get expired/ elapsed.

What happens when you run Year End Process?

• Leave Category whose “Can be carried” setting is enabled, gets carried forwarded to the new year as per the limits you configure.
• Leave Category whose “Encashable” setting is enabled, goes out for encashment. Amount of Encashed leaves gets added as arrears in the system which gets automatically added to next payroll.
• If for a Leave Category “Can be carried” or “Encashable” settings are disabled, then all the leave balances of all employees (for this leave category)  will get elapsed.
• If there is a Leave Category for which both settings i.e. “Can be carried” and “Encashable” are enabled then the carry limit rules you entered will get credited to the next month. From the balance (i.e. Initial Leave Balance – Carry Limit) the encash limit leaves will get encashed. The remaining leaves (i.e. [Initial Leave Balance – Carry Limit] – Encash Limit ) will get elapsed.