**INTRODUCTION**

Leave Provision Calculation is difficult to understand and not straight forward calculation.

The calculation of leave provision is performed in payroll via function QLPVR.

This document illustrates the manual calculation behind this function

This document is useful for functional consultants while analysing issues with Leave Provision calculations.

**EXAMPLE**

In the example below the service of the employee is 6 years

**Period July 2014**

The LSLPR table in the current payroll results table shows the LSL accrual hours, rate, Probability factors, Escalation rate, Inflation rate and the Bond Rate.

The rates can also be fetched from the table V_T5QLK

**Probability Factor**

This factor depends on the organization, the organization applies a value based on the probability that an employee will be entitled to long service leave

For the above example employee the Probability factor is 50%

**Column 4 is the leave value (Leave Accrual * Rate)**

**Column 5: **The Probability factor depends on the Organization, organization applies a rate base on the service of the employee. For the example employee here it is 50% for 6 years of service.

**Column 6:** The nominal rate is the product of the leave value and the probability factor

**Column 7: **The escalation rate is also fetched from the table V_T5QLK based on the years of service.

**Column 8: **Escalated Sub total is the sum of nominal amount and the escalation amount.

**Column 9: **Inflation Rate fetched from the table V_T5QLK based on the years of service

**Column 10:** The sum of escalation amount and the inflation amount – Refer Annexure 1 & 2 for calculation

**Column 11: **The rate is fetched from the table V_T5QLK for the net present value

**Results Table**

In the above example the total leave provision us **14997.62**

The LSL Provision calculated on the transferred quota is **13686.33**

The value calculated as of 31st July 2014 is **1311.29 – value in column ’13’**

The net present value calculated as on 30th June 2014 (last period) is** 1045.85**

Annexure 1 & 2 illustrates the calculation of inflation rate

Good explanation Viswa…finally we have something related to AU payroll here.

Regards,

Vivek

Thank you Vivek. You are the inspiration ðŸ™‚

informative!!

Good One Vish

Regards’

Ajay

Viswanath – Good article. Have a question on how did you arrive at 1045.85 as the NPV on 30 June?

Regards

Pramod

Hi Pramod,

The NPV of 1045.85 is the similar calculation of the previous month.

In my example I showed the calculation for July, if you perform similar calculation for previous month you will get the NPV of 1045.85.

Let me know for further queries

Thank you

Viswa