Summer is the traditional vacation time. What should come to the accountants’ attention when calculating the leave allowance at this hot period? Let's consider the special aspects in assessment of the leave allowance amounts, accounting of certain employee payments when calculating the leave allowance, the leave allowance refund for non-worked time as well as the payment of an indemnity of unused annual leave.
The right to rest is guaranteed to each employee, particularly the right for the paid leave by the Labour Code of Ukraine (hereinafter – the Labour Code).
The state guarantee of right on the leave, the conditions, the duration and the procedure for granting the rights to the employees for rehabilitation, health promotion and also for the children’s care, the satisfaction of personal vital needs and interests, comprehensive development are enshrined in the Law of Ukraine “On Leave” of 15.11.1996 № 504/96-ВР (hereinafter - the Law on leave).
According to Art. 21 of the Law on leave, the employer should calculate and pay off the leave allowance (employee’s wages during the vacation) for the three days before the vacation. Note that the banks accept vouchers on payment of the leave allowance only providing the concurrent submission of accounting document for the transfer of Personal Income Tax and Unified Social Contribution to the budget of the charged the leave allowance. Therefore, the accountant should make all the necessary calculations for assessment of the leave allowance amounts.
Amounts of the leave allowance determination
The calculation of employees’ wages during the annual leave is carried out according to the Procedure for calculation of average wage, and it is approved by the Resolution of the Cabinet of Ministers of Ukraine of 08.02.1995 №100 (hereinafter – the Procedure № 100) According to p.2 of the Procedure № 100 the calculating of the average wage for the payment of annual leave time, additional leave due to the studying, sabbatical leave, additional leave for employees who have children, or for the payment of an indemnity of unused annual leave are carried out based on the payments of the last 12 work calendar months, which precede the month of the vacation or the payment of an indemnity of unused leave. The employee, who has worked in the company less than a year, has the average wage which is calculated based on the payment for actual hours viz. as of the first day of the month after the enrolling till the first day of the month, when the vacation is granted and the indemnity of unused leave is paid. The calculation of the leave allowance is carried out based on the average daily wage rate. The average daily wage rate is calculated by dividing of total earnings for the last 12 months before the granting of vacation or for the less actual period of work by equal number of calendar days of the year or the less period of work. (p. 7 of the Procedure № 100). The holidays and the public holidays (their list is defined by Art. 73 of the Labour Code) are not included into the number of calendar days of the year. The obtained result is multiplied by the number of vacation calendar days (including weekends). Note that the holidays and the public holidays, which are fallen on a vacation, are not included in the calendar days when the calculation of the leave allowance total amount.
It seems to be easy. However, the accountants often make mistakes when calculating the leave allowance amounts viz. in the determination of the total wages. The fact is that the list of employee benefits, which are not taken into account in determination of average wage or which are partially taken into account, are in the Procedure № 100.
To be continued.
