Changing or creating payroll item with type "Vacation Pay"

The Vacation Accrual Adjustment directly reflects in the Employee Summary table without impacting the employee's Vacation Accrued (VAC. ACCRUED), Jessica.

The Vacation Hourly Rate in the Earnings table can be used to update the employee's Vacation Available ($) and Vacation Accrued ($) amounts. The table below outlines how the entered hours affect these values:

Please note that we cannot change the payroll types once created. The only option is to mark them inactive and create a replacement item. 

For guidance in creating a time off payroll item, you can refer to the steps outlined in this article: Set up and track time off in QuickBooks Payroll.

We'll be right here if you need more clarification or if have other questions.

How do I change an employee's vacation hourly rate?

I've attached a list of all our vacation-related payroll items and I don't see "Vacation Hourly Rate"

On the employee's final pay, we attempted to enter a negative amount under "VacPay-Accrual Paid Out" to show they were paying back an amount in arrears, but QuickBooks didn't let us, so we had to find a work around.

Thanks for the screenshot you provided. You'll need to go to the Employee's profile to change or edit the vacation hourly rate, Jessica.

To do so, follow the steps below:

1. Go to the Employees menu and select Employee Centre.
2. Right-click the employee's name and choose Edit Employee.
   
3. From the Payroll Info tab, select Vacation Hourly Pay.
   
4. Make changes on the rate.
5. Click OK.

In relation to this, the "VacPay-Paid Out" item currently being used is categorized as an Addition Payroll Item. This type of item only allows the entry of positive numbers. You can use the payroll Deduction Item you've previously created and enter the arrears amount  (e.g., $100) as a positive value in the deduction field. QuickBooks will automatically subtract it from the employee's final net pay. I've added a screenshot for your visual guide:
 

You can always get back to us if you have any other questions or concerns when dealing with vacation rates or payroll items in QuickBooks. We're always right here to help you. 

Thanks! This employee was paid out by salary, so they didn't have an hourly rate. We simply manually enter in amounts under VacPay-Accrual Paid Out when they use vacation time. See attached screenshot (I have more, but can only attach one screenshot).

Here's the second screenshot of a sample pay cheque with accrued vacation pay being used.

Thank you for the update and for sharing the second screenshot, Jessica. Based on the process you've described, manually entering amounts under VacPay-Accrual Paid Out for salaried employees is a great way to track their vacation payouts.

Since you mentioned that they left with an outstanding amount after the final payroll was processed, or if you're looking to adjust the employee's vacation balance within their historical records (Year-to-Date), you can consider using a YTD adjustment instead. This approach ensures that the overpaid vacation amount is reflected as an adjustment in their payroll history.

Here are the steps:

1. From the Employees menu, select Payroll Setup > Set Up YTD Amounts.
2. Select Next to proceed.
3. Enter the correct dates for When should YTD summaries affect accounts?, then select Next.
4. Input the Earliest QuickBooks payroll date, then select Next.
5. Choose the employee’s name, then select Enter Summary.
6. In the YTD Adjustment screen, enter the overpaid amount as a negative value in the Period Amount column beside VacPay-Accrued. Then, select OK.

For additional guidance, you can check this article: Clear under accrued (overpaid) vacation for an employee no longer with the company.

If you need further assistance or help, feel free to comment below.

Thanks! This is really helpful. I was going to use the option listed in the link below, but I don't believe I can create a cheque for this employee now, since I've already created an ROE for them. If I remove their Release Date and ROE Code, will that undo the ROE I've already created in QB?

Oh! I see in that page that it has directions for an employee no longer with the company too. Will setting up those YTD amounts impact our GLs at all or can I be rest assured it'll only impact the vacation balance for this one employee's account?

Hi there, Jessica,

Setting up the YTD amounts for the vacation balance can be configured in a way that doesn't affect your general ledger accounts. However, this depends on your account setup and how you choose to proceed.

Additionally, to ensure everything aligns with your accounting processes, I highly recommend consulting with your accountant. They can confirm and check whether any accounts will be impacted and ensure that everything is recorded accurately for this specific employee.

If you have other questions or concerns feel free to comment them below.