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How to Set Up a Paid Parental Leave in Xero

Updated on:
June 5, 2026
By:
Madhav Bhandari
Use this interactive demo to learn how to configure paid parental leave in your Xero payroll settings.

Quick summary

Setting up paid parental leave in Xero requires navigating to Payroll Settings and adding a new leave type under Pay Items. This process ensures your payroll system correctly tracks and pays parental leave entitlements for your employees.


Steps

  1. On Xero's main dashboard, head to the top menu bar and click Payroll.
  2. Choose Payroll Settings from the list of options.
  3. Tap the Pay Items tab.
  4. Choose Leave from the available choices.
  5. Click Add in the top-right corner of the panel.
  6. Select Paid Leave to proceed.
  7. Fill out all input fields with the necessary leave information.
  8. Review your input and click Add to save.
  9. Confirm the Leave Type added notification — your paid parental leave is now set up in Xero.

📌 Why this matters

Configuring paid parental leave in Xero ensures your business stays compliant with parental leave entitlements while keeping payroll accurate and automated. Xero's Payroll Settings allow HR and payroll managers to define custom paid leave types that automatically apply to employee pay runs. Proper setup reduces manual errors, saves administrative time, and gives employees confidence that their leave is being handled correctly. For businesses scaling their workforce, having structured leave management in Xero is essential for both compliance and employee satisfaction.
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