Xero Payroll – How to Adjust Annual, Sick and Other Leave Balances

When an employee goes on leave, they should enter a leave request in Xero for the number of working hours they will be away. Once you approve the request and run the payroll for that period, your employee’s accrued leave balance will reduce by the number of approved leave hours.

If you do not follow those steps, your employee’s leave balance will not be reduced. When this happens, you will need to manually adjust the employee’s leave balance to reduce it to the number of hours that should remain accrued.

There are two ways you can manually adjust an accrued leave balance for an employee in Xero:

  1. Adjust the Opening Balance: enter a negative opening balance to the employee’s leave balance or reduce the positive balance
  2. Post an Unscheduled Pay Run: that contains the amount of leave hours taken by the employee as a negative number

Check out our video to find out how to adjust leave balances using both methods, then choose the best method to use for your adjustments.

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