How to Process Leave Monetization in the Sprout Payroll System

In Sprout Payroll, the entire process of converting leaves, determining which are taxable and non-taxable, and uploading leaves is tedious and manual.

The Leaves Monetization module allows payroll administrators to convert employees' unused leave credits, such as Vacation, Sick, or Emergency leaves, into monetized leave. The feature aims to automate what was previously a time-consuming and error-prone manual process, improving efficiency by enabling payroll admins to categorize taxable and non-taxable leaves based on company policies and process the monetized amounts accordingly.

How to Monetize Leaves in Sprout Payroll

Step 1: Set Up the Leaves Monetization Process in Payroll Run

The Leaves Monetization module will be placed in the Payroll Run module.

Here, admins can do the following:                                  

1. Download the Leave Report Template
2. Select which Tax Policy to implement in the computation
   • Standard: Only the first 10 Vacation Leaves are non-taxable.
   • Flexible: Sums up all types of unused leaves and sets the first 10 as non-taxable.

Step 2: Fill Leaves Monetization Template

The admin needs to download the report and fill out the necessary details required by the Leaves Report Template. For those clients with Sprout HR accounts, one of the Sprout HR Admins may generate the leave report: How to Generate Leave Report

Based on the pay group selected, the template will contain the auto-populated names of the employees. From there, the admin will determine how many unused leaves each employee has.

Step 3: Monetized Leave Summary Page

Once uploaded, the admin will be presented with the Monetized Leave breakdown.

This page will show the list of employees and their taxable and non-taxable monetized leaves.

• This is a summary page for admin viewing and confirmation.
• Once the admin presses Save, these monetized leaves will be uploaded as One-Time Monetized Adjustments to the employees’ adjustment profiles.

Step 4: Upload of Monetized Leave Adjustments to Employees

The leaves Monetization module will present a success banner, indicating that the One-Time Monetized Leave Adjustments have been uploaded to the employees already.

Admins can view the breakdown again before saving and processing the payroll run. Please note that based on the current system design, the Non-Taxable Monetized leave is still reflected as a Monetized Adjustment. However, we recommend using the Deminimis Adjustment since it should be reflected under the Deminimis portion of the 2316 report.

If the admin wants to reset the process, the admin can simply press the delete or ‘X’ button. This will reset the entire process.

IMPORTANT NOTE: However, please note that Non Taxable Monetized leave is presented as part of  Salaries and Other forms of compensation on 2316. Since non-taxable monetized leave should be part of the Deminmis, we suggest editing the non taxable monetized leave to Taxable Deminimis Adjustment. Here's how:
 

1. 1. In the Payroll run, Export the adjustment

 
2. Press the delete or ‘X’ button to reset the Adjustment

 
3.From the exported one time adjustment template, copy the Monetized leave adjustments. Then download the  excel template.

4.  Paste the Monetized adjustment on One time adjustment template. The Non taxable monetized leave should be reclassified to "Deminimis Adjustment"
5. Then click select > locate the one time adjustment > import file.