Xero Payroll Help: Review and Update Sick Leave Entitlements prior to 24 July 2021

Xero Payroll

What you need to know

  • From 24 July 2021 all eligible employees’ minimum annual sick leave entitlement of five days increases to 10 days.
  • An existing employee becomes entitled to 10 days sick leave on their next entitlement date, based on their anniversary date.
  • New employees receive 10 days entitlement as soon as they become entitled to sick leave – usually after six months.

Visit MBIE’s website for more information about increased sick leave entitlements.

You need to review and update your employees’ records to account for the new minimum sick leave entitlement. Xero automatically assigns one of the following sick leave statuses to an employee’s record based on their next anniversary date:

  • Needs review
  • Minimums met
  • Review later

Review your employees’ sick leave entitlements

  1. In the Payroll menu, select Employees.
  2. Click on the Sick Leave Review tab to review your employees’ status.

Choose the the correct Sick leave status below and follow the steps to update your employee’s record.

Employees with ‘Needs Review’ statuses

Employees with the sick leave status Needs review have their next sick leave anniversary on or after 24 July 2021 and either:

  • Current sick leave Hours Accrued Annually is below the new minimum requirement of 10 days; or
  • Sick leave Maximum to Accrue is below the minimum requirement of 20 days.

To review and update the sick leave entitlement for each employee with Needs review status:

  1. Review the employee’s sick leave entitlement based on their employment agreement.
    For example, if the employee is entitled to the minimum under the legislation, their entitlement would be 10 days.
  2. Multiply the number of sick leave days they’re entitled to based on step 1 by the Hours per Day column to get their new entitlement which you’ll need to update in the system.
    For example: An employee’s employment agreement says they’re entitled to the minimum sick leave days and their Hours per Day says four – then 10 days multiplied by four hours brings their entitlement to 40 hours sick leave per annum.
  3. Ensure their Maximum to Accrue is either blank (meaning there is no maximum) or is at least 20 times the Hours per Day.
  4. In the Status column, click the Needs review link to open the employee’s Leave record.
  5. Click Sick leave and update Hours Accrued Annually based on your calculation in step 2, and if necessary the Maximum to Accrue based on the calculation in step 3.
  6. Click Save.

Repeat the process for each employee with Needs review status.

Employees with ‘Minimums Met’ statuses

Employees with the Minimums met status have their next sick leave anniversary on or after 24 July 2021 and:

  • Current sick leave Hours Accrued Annually equal to or greater than 10 days; and
  • Sick leave Maximum to Accrue equal to or greater than 20 days.

We recommend reviewing these employees’ employment agreement to determine if they are entitled to more than the minimum.

If you need to make any adjustments to these employees’ annual entitlement, for each employee with Minimums met status:

  1. Review the employee’s sick leave entitlement based on their employment agreement.
    For example: If the employee is entitled to the minimum under the legislation plus an additional five days, this would be 15 days.
  2. Multiply the number of sick leave days they’re entitled to based on step 1 by the Hours per Day column. This is the employee’s new annual entitlement that you will need to update in the system.
    For example: An employee’s employment agreement says they’re entitled to 15 sick leave days and their Hours per Day says eight – then 15 days multiplied by eight hours and they’re entitled to 120 hours sick leave per annum.
  3. In the Status column, click Minimums met to open the employee’s Leave record.
  4. Click on Sick Leave to review the setup.
  5. Update Hours Accrued Annually based on your calculation in step 2.
  6. Click Save.

Repeat the process for each employee with Minimums met status.

Employees with ‘Review Later’ statuses

No action is required at this time for employees with a Review Later status. Their next sick leave anniversary falls before 24 July 2021.

When these employees have been included in a pay run that spans their anniversary:

  • Their Next Anniversary date will be automatically updated
  • Their Status will change to either Needs review or Minimums met

Once the employee’s anniversary has been included in a pay run, return to the Sick Leave Review tab to review the employees status and make any updates needed.

Register for Xero Education Month: Learn more to do more

For the whole of February, Xero is hosting a stack of free online webinars to help you brush up on your business smarts, learn how to improve your resilience and foster wellbeing in your team.

Here’s what you’ll learn

It’s a chance to dive into topics like:

  • managing payroll and finances with Xero Payroll
  • getting paid on time, every time
  • checking every dollar is counted with Xero Expenses
  • learning helpful tips and tricks to save time
  • sustainable workplace practice

For these topics and more, register here.

Can’t make the live sessions?

If you can’t make it to the live webinars, visit Xero Central to watch the recordings. They will be available from 3 March to 3 April 2021.
These webinars are designed for everyone, so let your team know and help them get a better understanding of how Xero helps power small businesses around the globe.

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Ready to create and grow a business where you can be the boss? Then you’ll need this!

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Get this easy read online book for free and you’ll discover how to launch yourself from tradie to independent business owner.

Xero’s Starter Plan just got better

Xero Starter Plans for SMEs

It’s been a tough year for small Kiwi businesses, so it’s always nice to get a little bit of good news. Last month Xero announced changes to its Starter plan, the entry-level Xero monthly subscription – a way to support small businesses during the pandemic as on-the-go accounting is more important than ever.

Check out the upgrades to the Xero Starter plan, effective from September 14, 2020:



Bank reconciliations

Limited to 20 per month



Limited to 5 per month

20 per month

The Starter plan is $27.50 per month, although new users can pay $13.75 per month for the first four months – and you can try Xero for free for 30 days. Remember that if you’re an SME Financial client, you get a discount on your Xero subscription, which we pass onto you.

The bank reconciliation feature keeps your numbers accurate, and you can set up bank rules to automatically reconcile regular transactions, saving you time. You also have Hubdoc, which means you can automatically get bills and receipts into Xero, making reconciliation easier. With the new higher limit on invoices, the Starter pack means you can send an invoice almost every working day of the month. Check out this video for invoicing shortcuts, and don’t forget to set up automatic reminders to help you manage outstanding accounts.

With these changes, the Starter plan is perfect for small businesses. It is designed to provide you with the flexibility to grow, at an affordable price. The Starter plan might be ideal if you’re a sole trader, a freelancer, contractor or tradie. It might even work if you’re a better-established small business owner doing only a small number of invoices each month. A few of our clients are switching from the Standard plan at $60 per month down to the Starter and saving themselves over $30 a month.

SME Financial is a Xero Gold Partner, which means our team gets a high level of training and support from Xero. We pass on that knowledge to our customers through our Xero training services and ongoing Xero support.

You can explore all the features here, and the changes are already in place so if you’re currently a Starter pack user you can start using them right now.

Questions about Xero? Wondering whether you’re in the right plan for your business needs? We can help. Get in touch with SME Financial today.