Two pay codes are required for this functionality: one for all vacation, and one for previous vacation. Add both of the pay codes In Pay Setup > Pay Code:
As depicted above, for the previous vacation pay code, select only the Is Shift and Is Absence checkboxes. For the vacation pay code, select both of these checkboxes and the Is Pay Adjustment and Is TAFW checkboxes.
Note: For more information about how to configure pay codes, see Pay Codes.