Xero Payroll Settings – How to Add a Leave Pay Item


If you have employees, they will be entitled to various types of leave. To pay them in Xero payroll for any leave they have taken, you need to set up Leave pay items. In this tutorial, we will set up a leave pay item in Xero’s demo company.

Pay Items in Xero’s Payroll Settings

To add a leave pay item, first go to the Pay Items tab of the payroll settings area:

  1. Go to Settings → Payroll in the main menu.
  2. Click on the Pay Items tab.


How to Add a Leave Pay Item

On the Pay Items tab, you should see a number of pay items that have already been set up in the demo company. In the exercise, we will add a new leave pay item called “Bereavement Leave – Unpaid”. To do this:

  • Select Leave on the left-hand side.
  • Click on the Add button on the right-hand side.
  • Select Unpaid Leave from the drop-down.


A pop-up box will appear for you to enter the details of the new pay item. For this tutorial, complete the fields in the pop-up box as follows:

  • Leave Name: type in Bereavement Leave – Unpaid.
  • Type of Units: type in Hours.
  • Leave Loading Rate (optional): leave this blank.
  • Normal Entitlement (optional): leave this blank.
  • Show Balance on Payslip: leave un-ticked.


Click on the Add button when finished. You should now see Bereavement Leave – Unpaid in the list of Leave pay items.


You’re All Set!

That’s it for this lesson. Find lots more helpful articles via the main menu or check out our main blog page here.