Unpaid leave can be set up to automatically deduct from payroll based on predefined pay items. Follow the steps below to configure unpaid leave correctly in your system.
1. Go to Leave > Leave Settings > Leave Types.
2. Click on the Create button to set up a new custom leave type, or select an existing leave type to modify its settings.

3. In the leave type settings, check the option “Is Unpaid Leave?”.
Next, select the appropriate pay item that will be used for payroll deduction.
You may use the default unpaid leave pay item provided by the system.
Alternatively, you can create a new custom pay item. Ensure the variable amount type is set to Percentage (%) of Hourly Rate.
Once an unpaid leave request is approved, the system will automatically sync the deduction to the employee’s payroll using the selected pay item.
Troubleshooting: Unpaid Leave Not Showing in Payroll?
If the unpaid leave is not appearing in the payroll, check the following:
A pay item has been correctly mapped to the leave type
The selected pay item’s variable type is set to percentage of hourly rate
The employee has a Basic Hourly Rate of Pay configured under their Payroll settings
The employee’s work week is set up correctly in the system
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