Bombay YMCA - Leave Management Process and Configuration

ERPNext Leave Process – Complete Guide

The leave management process in ERPNext is tightly integrated with payroll, salary slips, and attendance. Below is a step-by-step breakdown of prerequisites, processes, and linkages to other documents.

1. Prerequisites: Configuration Before Leave Processing

Before running the leave process, the following configurations must be in place:

A. Setup Leave Types

1. Go to: HR → Leave and Attendance → Leave Type
2. Create different leave types (e.g., Sick Leave, Casual Leave, Earned Leave, Maternity Leave).
3. Configure:
4. Whether leave is paid/unpaid.
5. Whether leave is carried forward.
6. Leave encashment eligibility.
7. Whether leave needs approval.

B. Configure Leave Policy

1. Go to: HR → Leave and Attendance → Leave Policy
2. Define rules for each leave type:
3. How many days an employee is eligible for.
4. Carry-forward rules.
5. Leave without pay deductions.

C. Assign Leave Policy to Employees

1. Go to: HR → Leave and Attendance → Leave Policy Assignment
2. Assign policies to specific employees or employee groups.

D. Define Holiday List

1. Go to: HR → Leave and Attendance → Holiday List
2. Define official holidays that are auto-excluded from leave calculations.

E. Set Up Leave Approval Workflow (Optional)

1. Go to: HR → Leave and Attendance → Leave Application
2. Configure approval workflows if required.

F. Payroll and Salary Structure Configuration

1. Ensure salary components are set up properly:
2. Leave Without Pay (LWP) deduction.
3. Leave encashment rules.
4. Go to: HR → Payroll → Salary Structure
5. Assign salary structures to employees, ensuring the following salary components exist:
6. Leave Without Pay: Deduct salary based on unpaid leave.
7. Leave Encashment: If encashment is enabled, configure encashment rules.

2. Step-by-Step Leave Processing in ERPNext

Step 1: Leave Application Submission

1. Go to: HR → Leave and Attendance → Leave Application
2. Employee submits a leave application, selecting:
3. Leave Type
4. From and To Dates
5. Reason for leave
6. The system calculates:
7. Leave balance
8. Paid/unpaid status
9. Application goes for approval (if workflow is enabled).

Step 2: Leave Approval/Rejection

1. Approver receives notification.
2. Approver can either:
3. Approve: The leave is recorded in the system.
4. Reject: The employee must resubmit if needed.
5. If approved, leave gets reflected in Employee Attendance & Leave Ledger.

Step 3: Impact on Attendance

1. Go to: HR → Leave and Attendance → Attendance
2. If leave is approved, an auto-entry is made in attendance records.
3. If an employee is on Leave Without Pay (LWP), it reflects in payroll processing.

Step 4: Linkage to Payroll & Salary Slip

1. Go to: HR → Payroll → Process Payroll
2. During payroll processing:
3. The system checks Leave Without Pay (LWP) and deducts salary accordingly.
4. Leave Encashment (if applicable) is added as earnings.
5. If an employee has taken unpaid leave:
6. The salary slip will show a deduction in the Leave Without Pay (LWP) section.
7. Go to: HR → Payroll → Salary Slip
8. The salary slip reflects:
9. Days Present
10. Days Absent
11. LWP Deduction
12. Leave Encashment (if applicable)

3. Linkages of Leave Process to Other Documents

4. Special Cases

A. Leave Encashment

1. If an employee encashes leave, the amount is calculated based on salary structure rules.
2. Reflected as Earnings in the Salary Slip.

B. Half-Day & Short Leaves

1. Can be configured in Leave Types.
2. Does not impact payroll unless defined in the salary structure.

C. Carry Forward Leave

1. If configured, unused leaves from one year are added to the next year's leave balance.