There are several ways to calculate time off but only one of them is ideal for employees who work variable schedules. The by hours worked accrual rate ensures that employees only earn time off by the number of hours they actually work. This might amount to earning less than or more than the other rates would provide. This rate is good for part time workers, periodic workers, and it satisfies many state and local sick time requirements.

## Accruals By Hours Worked

The by hours worked accrual rate is particularly great for employees who work a variable number of hours per year or take periods of unpaid leave. By using this rate, you can have the accrued time off only reflect that time spent at work. Likewise, if your employee puts in extra hours, you might want him to be able to earn extra vacation time.

Calculating accruals by hours worked offers this flexibility. But calculating it isn’t as easy as just throwing it all into the bank at the beginning of the year. Here’s how to do it:

## The Calculation

First, decide on approximately how many hours you want your employee to accrue per year – maybe it’s 40, 80, or some other number. Then you can figure out the fraction of an hour that they should earn for each hour they work.

Let’s say the employee should get 2 weeks, or 80 hours per year. There are 52 weeks in a year but he won’t be working 2 of them so we’ll multiply 40 hours times 50 weeks to get 2000 hours. 2000 hours is how many hours the employee would work if he worked full time and took 2 weeks off (this does not include paid holidays. You might want to subtract those out too).

Divide 80 by 2000 (max hours to earn per year/hours worked per year) to obtain .04. So for every hour our employee works he should earn .04 hours of time off. (If the employee actually worked full time, he would earn 80 hours of time off. Since the accrual rate by hours worked is usually used for employees who don’t work full time, the employee may never actually accrue that much time off.)

Once we’ve set this number in the system, our employee will earn appropriate time off regardless of whether he works 50 hours a week or 30.

### Example

To see this in action, let’s say our employee averages 50 hours a week for the whole year and took 2 weeks off. So, 50 hours times 50 weeks gives us 2500. 2500 multiplied by .04 gives the employee 100 hours of vacation. That’s an extra couple of days he’s earned.

Conversely, if the employee only averaged 30 hours per week for the year, he would only get 60 – not quite a full two weeks.

## Set It and Forget It With Timesheets.com

With Timesheets.com, you can select the by hours worked accrual rate and enter the number of hours to accrue per year. All the calculations are done automatically after that.

If you don’t already have an account with Timesheets.com, give us a call so that we can help you set one up.

[…] cannot decide to cut wages without warning, you can’t cut vacation either. “Vacation pay accrues (adds up) as it is earned, and cannot be forfeited, even upon termination of employment, […]

The US government says there is 2087 work hours per year. I am a contractor paid by the hour with no PTO at all. This means I have to figure in the 5 major holidays as well as anything else where I might not be able to make up the time on other days in the pay period. I went with a 2 weeks of vacation, 5 days of “sick” time and the major holidays a total of 20 days or 160 hours of PTO.

2087 – 160 = 1927 This gives me my target maximum hours worked

160 / 1927 = 0.083 or 8.3% The rate of accrual I need to set aside to go into my PTO savings.

For me the actual value is calculated after taxes and other payroll deductions such as healthcare insurance.

Anyone see something wrong in this calculation?

The calculation looks good. And keeping track of your accruals as a contractor is very smart!

My company is going to transition to an accrual system. My anniversary date is Sept 21st and would be awarded 80 hours vacation. Would they simply figure what I would of earned from 9-21-15 to 7-1-2016? and then allow me to earn the rest up-to my anniversary date?

If your company is using our system, they’d just figure out what you should have earned since your hire date and plug that number into the Currently Accrued Hours field. Then they would set the Hours to Accrue Per Year field to 80, set the calendar date, and let the system start working. Easy peasy.

How do you figure out vacation time for employees that have a 6-month no-vacation time, 10 days (accrual of 0.83 vacation day/month) for 1-5 years. Transitional of 5 to 6 years (.83 x … before the anniversary month) +(1.25 x…months left in the year after anniversary), 6-10 years (1.25 a month) and transitional again of 10-11 years ((1.25 x … + 1.67 x …) and 11-on (1.67 a month)

My boss refuses to buy any new software and has me doing it on Excel, and it’s worked but the more language I put in to incorporate what exactly he’s looking for, the more it becomes inconsistent. Help!

Carolyn,

Let me see if I understand you correctly. If you are in the transitional period and your anniversary month was March, then you would get (.83×3=2.49) + 1.25×9=11.25) vacation days. So about 14 days. In the transitional period, then, you would have more days off than you did in the first 1-5 years. However, if your anniversary month was December, then you would only get (.83×11=9.13) + .83. Better hope you get hired by this company early in the year because your vacation time would be significantly lower if hired later in the year!

Does it look like I am understanding you correctly?

What are your thoughts on establishing maximum accrual caps when you calculate vacation earned this way? The “standard” seems to be 1.5 times the annual rate, but we have a variety of part-time employees who work different numbers of hours from each other and from week to week, and I’m not sure what number I should use for that “annual rate.” I’m also unable to tell if there’s any issue with providing different caps for different employees and/or how you would go about deciding how to categorize them into groups for capping purposes. I hope that all makes sense – I haven’t been able to find much info about this; we decided to have our employees accrue by the hour because it seemed like the simplest way to keep everything fair, but it doesn’t seem like the most common way to do things! Thank you.

Hi Kristen,

It sounds like you’re doing this exactly right. The “by hours worked” method is a very good choice to calculate vacation for an employee who works part time and random schedules. For employees who are full time, or part time and working a predictable number of hours, you can give them a set value of time per year. Like 40 or 80 hours, as an example, and then set the cap accordingly.

Meanwhile for employees who work more randomly and less than full time, the by hours worked method gives a very fair way to allow them to accrue time off, but only for the time they worked. As for coming up with an appropriate cap for these part timers, there’s no real ‘standard’ way to do this. One way would be to assume they work full time, and calculate the cap as the amount of vacation they would earn if they worked full time for the entire year. Or as you mentioned you could do 1.5 times that value.

The cap is really most applicable for the full-time employees anyways, as they’re the ones most likely to accrue a large number unused hours. We’re still deciding whether or not to set a cap, but I think we’ll just base it off of full-time hours if we do. Thank you!

I am curious how you calculate vacation time for an employee after a pay increase is given? For example if a person was making $25 an hour and had 40 hours of vacation accrued on the books they would have a vacation accrual of $1,000 ($25 X 40). If that person is given an increase to $30 an hour what happens to the person’s available hours of vacation and vacation accrual. There seems to be two options. The first option is increasing the vacation accrued amount to match up with the increased rate. In this case since the person has 40 hours of vacation and their rate is now $30 an hour the vacation accrual would be increased on the balance sheet to $1,200 ($30 X 40) thereby allowing the employee to have the same number of vacation hours but costing the company more because the employee didn’t use their hours when they were given at a lower rate. The second option would be to reduce the number of hours available to the employee. Since at the time of their increase the employee had earned a vacation accrual of $1,000 then their available hours are now 33.33 ($1,000/$30). This would reduce the number of hours available to the employee but they would be paid the amount that was accrued for them. In this case the employee has less hours at a higher rate and their is no additional cost to the company as a result of the employee’s pay increase. Going forward the employee would accrue all additional vacation hours at the higher rate. The only issue is with the hours accrued prior to receiving their new rate. Are both options allowed? Is the company required to pay the employee the same number of vacation hours at a higher rate just because they chose not to use them before they were given a raise?

Tim,

That is a good question. I don’t know if it is standard to make any adjustments to an employee’s vacation pay based on a raise. I understand you concern, especially if an employee has a lot of time in the bank, but I tend to think of vacation accruals as time, not dollars.

That said, you are probably free to deal with the situation as you please. Our federal government does not impose any rules on employers regarding vacation pay.

This is from the Department of Labor website: “

How are vacation pay, sick pay, holiday pay computed and when are they due?The FLSA does not require payment for time not worked, such as vacations, sick leave or holidays (Federal or otherwise). These benefits are matters of agreement between an employer and an employee (or the employee’s representative).”

Beyond that, I would check the laws in your state.

The society for human resources management put out this document detailing vacation laws by state:

Vacation, Sick, PTO Laws. Revised June 2013If you are still not sure, please consult your lawyer.

I’m trying to calculate based on “vacation is 1 hour for every 50 hours worked” so the standard calculations aren’t doing it for me. Any suggestions on how to calculate this?

Hi Lily,

I would do the calculation like this: First take 40 hours per week times 52 weeks, so 40 x 52 = 2080 to get the total hours a full time employee would work per year. Now divide the total yearly hours by 50 hours to get 41.6. This is how many hours a full time person would accrue per year under your system. Now divide 41.6 by 2080 to get .02. This is how many hours should accrue per hour worked for your employee. If you are using our hours accrual system, all you have to enter is that number, and the system will add the appropriate amount of time per hour. If you are doing it by hand, you would multiply .02 by the total hours on each paycheck. You can check your work by multiplying .02 by 50 to get 1.

Hello my employer has started this same method And I don’t get it.

I would normally get 40 hours vacation per year but with the accrual program ,I’m only getting 28. HR said I only worked 1500 hours

[…] By hours worked […]

I work at Elmwood and I have been working alot of hours,and I have 17 hrs. of PTO and i dont think that is right,could somebody please explain this to me. Please e-mail me at jomuhlbauer09@gmail.com Please, and Thank you for your time.

If an employee has 4.17 hours of accrued vacation time, and only took 1 day and 1 hour, how would you calculate the balance

1 day is presumably 8 hours, so 1 day and 1 hour are 9 hours. 4.17 – 9 leaves the employee with -4.83. This means he or she needs to accrue more time to bring the balance positive.

Hello. I was wondering if you might be able to help me with some math for a new proposal in regards to pay increases. I am proposing that my employer consider changing the current pay step increases from years of service to hours worked (because we work a ton of overtime).

So the concept would be to convert 1 year of service (or full time employment) to equal 2080 hours. And give consideration to overtime hours worked (at a rate of 1.5 hours, not 1 hour) towards your next pay increase that occurs every 2 years or 4160 hours.

Can you help me show the math on how this concept would work?

Thank you

Hi Hope you have good day so far.

I want to know about vacation hours,

I have worked as Part time Employee, I worked 6days a week 5hrs a day. so (6day*5hrs/day=30hrs weekly)

I have worked from December 21st,2014 to October 26th,2015 and in this period of time i have worked total

1433.45Hrs ( including extra hours and over time and working for other coworkers also )

So how hours of accrued vacation time I should have ??

I have left the job and they paid me for 25hrs as my vacation and sick leave.

( which i had asked for only 1 day from Dec-21-2041 to Oct-26-2015 and that also was counted as unpaid leave )

So, I want to know how may hours I should have a accrued as Vacation and Sick.

Please give me any estimate on this.

Every company has their own policy on accruals. The accrual rate at one company will be different than another and the amount that is offered to employees can vary from employee to employee. You will have to contact the company for complete details.

Thanks for the quick reply but I have been paid for 25hrs so from there I know the rates but I am confuse about how many hours it should be.

Once my manager told me you will earn 1hr every 30hrs you work and as you work 30hrs/week 5 6days only 1 day off in a week so you get 5sick days in a one year, but still how they count I can not figure it out. if I take his words in count than 1433.45/30=47.78hrs should be there. So can you please suggest me something on this.

Based on the numbers you provided, that looks correct. You would also want to subtract the one day you took off. I would go talk to your employer. They might still owe you 15 hours. They should have been keeping records on this and providing you with totals on each paycheck.

When PTO is accrued for each hour worked, do employers typically include hours paid for holidays as part of the hours used to determine the accrued amounts? For example, if the employee works 4 days at hours each during the week of Thanksgiving but is paid the 8 holiday hours for Thanksgiving, is it typical to include the 8 holiday hours in the calculation for accrued PTO that week? Thanks.

Hello Erin,

No that is not typical. Our accruals system does not include holiday hours in time accruals.

If I am working average 40 hours a week with 80 hours every two weeks. Do I multiple 40 ×52 =2080. Then Multiple 2080 By .0384= 79.872. Will this be the average pto I can accumulated a year at my job. ?

I have a .8FTE (summer off) who per our PTO policy is earning PTO at the rate of 200 hours per year x .8 = or a total of 160 hours per year. My Quickbooks Mac version only lets me enter PTO rates per year (ie. 160 hours/year) paid per pay period (every two weeks). The problem is rather than working 26 pay periods per year she works 19. How can I manipulate the Quickbooks so that she accrues at the correct rate? By my calculations she should be accruing 160hrs/19 pay periods = 8.4210 hrs/payperiod. As it is currently set she is only accruing 6.1538 hrs/pay period x 19 pay periods = 116.92 hrs per year. Any suggestions?

Our vacation time is prorated for hours and accrued. At both 5 years and again at 10 years employees are given an additional week. What do you do for workers who were part time at the beginning of working with the company but now are full time. Would you give them the full extra week at 5 years – or do you wait until they have accrued hours equal to 5 years of full time work. Example: I have a worker who was very part time for 2 years (10 hours per week). For the last 3 years she has been full time. Do I credit her with 5 years of service and give her another week of vacation?

This is such a good question, Joan, and the answer could vary from business to business. If it were me, I would ask myself why the employees get the extra week at 5 years. Is it because they have put in so many hours with you or because they have remained loyal to your company for 5 years? Is it because they have proven they are sticking it out with you and you are rewarding their tenure?

I think it just depends on which aspect you value, the time they’ve put in or the general commitment.

Why would a small company of only 1 employee us the accrual method of vacation? The first year, I did not receive any vacation time. Had to ask the second year, receiving 40 hours. Now, going on the 3rd year asking for 2 weeks vacation. At this rate, half the year will be over before I have accrued enough time to take a decent vacationl

Not understanding why this method is being used.

Hi June,

Often times, when companies have a probationary period of one year, they will give employees their vacation time as a lump sum so that, after employees have been there one year, they will be able to take their full vacation. However, there may be any number of reasons why employers choose not to do it this way. If an employee works part time, for example, the accrual rate may be “by hours worked” instead of “once yearly”.

Not knowing your employer or your situation, I cannot be of much more help.

Could someone please assist as to how to calculate PTO for someone who works 24 hours per week? Our full time EES get 104 PTO hours annually. We have them accrue time on tri-mester basis. The first allotment is given to them 30 days after hire, then starting each trimester to follow. Thank you!

My husband works on call 24/7 and last year he had 1299.50 hours for this company. They just told him he didn’t work enough to earn vacation pay for the year 2015. What should he have earned. He did start working weekends for another company last September, because they couldn’t guarantee him enough work. Any thoughts?

Hi Claudia,

There is no standard for a company’s vacation policy and accrual rate. I do not know what your husband might have earned with that company because I do not know their policy. Sorry I cannot be of more help.

If you worked 83 minutes over the hour at a pay rate of $17.25hr..in overtime then why Is your pay out amount less than your overtime pay am you receive an hr??..please explain this to me

I have been auditing our PTO accruals and have found a big problem. Our policy manual is confusing – it was supposed to be one week for your first year, two weeks the second, three weeks the third and it maxes out there. Last summer we changed it to be available up front instead of at an accrual rate (accrual for first week during first year but two weeks available at two year anniversary). This only confused bookkeeper and it was never changed on the payroll so everyone got confused so I changed it back to use as accrued. I went through and did an audit and found that everyone was only accruing the one week, no second or third week after their anniversary.

I am having trouble with two things 1) wording this properly in the handbook 2) setting the policy. I am trying to figure out what the average office is doing and kind of tailor for us from there.

So do I say for #1: Full time employees accrue 1 week for the 1st year, 2 weeks after the 2nd year and maximum 3 weeks afterwards.

And for #2: on the payroll of their anniversary, start the new accrual?

Thank you so much for your unbiased opinion. I am just needing an outside opinion who has no stakes in it. 😉

I understand your reason for wanting to have time accrue in the first year since you don’t know the new employee well enough to give them all their time at once but, unfortunately, it could be complicated to switch the accrual rate to once yearly after the first year. It is probably better to pick an accrual rate and stick to it, like you’ve decided to do. You could just keep the accrual the way you have it or you could use a once yearly accrual rate with a probationary period. So the employee wouldn’t get their week of time off until the third or the 6th month of employment.

As for your wording, I might word it like this:

#1 Full time employees accrue 1 week of vacation during their first year of employment at a rate of __ per __ (month, hour?). Beginning at their one year anniversary date, they will earn 2 weeks of vacation in their second year of employment at a rate of __ per __ (month, hour?). Beginning at their two year anniversary date and in every year thereafter, they will earn 3 weeks of vacation at a rate of __ per __ (month, hour?).

Our company offers 80 hours of vacation benefits, 40 hours of sick leave and 9.5 holidays. Would the appropriate calculation to determine the vacation accrual rate be as follows:

Hours worked per year:

2080 – 80 (vacation) – 40 (sick) – 76 (holiday) = 2080 – 196 = 1884

Vacation Accrual Rate:

80/1884 = .0425

If our handbook states each employee is entitled to 10 days of vacation, would your suggestion still be appropriate? If full time employees (averaging 40 working hours/week) are entitled to earn a 10 days vacation time per year, how could they earn the benefits they are entitled to without an accrual rate that accounts for the number of working hours they would actually work each year?

That is my question now too. If an employee gets a few paid holidays off and takes some PTO they’d never be able to earn their full allotted time based on 2080 hours calculation! Does anyone account for this by including paid days off in accrual?

You are right, Debbie. The accrual rate of 2080 would never allow them to get up to their full allowed time off. If the employee worked full time and got paid holidays, the divisor would need to be 2080 minus vacation days and holidays.

Are vacation and sick leave days taken included in time accruals, earning additional vacation hours and sick leave hours?

When using our software to track accruals, the time off would not count towards time accruals when using the By Hours Worked option.

im trying to figure out how many hours i need to average in the next 4 weeks so i get a paid vacation,can anyone help me with this please.im averaging 30 hours a week and i need to get to an average of 32 hours per week in 4 weeks.how many hours a week do i need to work in the next 4 weeks?

Hi Dan. I don’t have enough information to help you. I do not know your accrual rate. How many hours of paid vacation do you get in a year?

Our part-time employees (those who work 20 hours or more per week) are paid for official holidays worked, proportionate to the number of hours scheduled per month. Can you tell me how I would calculate this?

I’m not sure if I understand you correctly. Do you mean that your employees will get holiday time based on their average daily shift? If so, then find the number of hours scheduled for the month – let’s say it’s 90 – and then find the number of work days in the month in question. So that might be 21. Now divide 90 by 21 to get 4.28. So the employee should get about 4 and a quarter hours for their holiday pay.

Question: My offer letter states vacation pay as: “Ten days per annum”. I was let go after 6 months, having taken only 4 days of vacation total. Does employer still owe me 1 day, or 6 days? or nothing?

Im in Illinois

Thanks for your help!

According to illinois.gov, employees do have to be paid out for their unused vacation. If you met the probationary period, you were awarded the full 10 days, and you only took 4 days, then you would be owed payment for 6. Check your hiring contract to be sure.

https://www.illinois.gov/idol/FAQs/Pages/Vacation-FAQ.aspx#faq3

I think I may be making this more complicated than it has to be but doing my calculations I’m now wondering what hours to consider in the accrual. If we have 6 paid holidays per year (if it falls on work day) and employees get paid time off, should these house be included to calculate their earned PTO? If we don’t then it would never be the case that an employee who works 36 hours per week, has had 5 holiday days paid and used 8 days off to get their full 12 days of 86.5 hours. Do most people who use the calculation of 2080 hours of work for full time in a year to come up with rate include the hours for paid days off in the PTO accrual calculation?

Our policy, for instance is 12 days of PTO for employees who’ve worked for us 2-4 years. What we consider a day is their usual week divided by 5 (common to have employee who works 36 hour in the week but these hours vary each week). Help!

If I have 88 hours of vacation time I want to go on vacation from September 21- October 4 do I hove enough hours

Hi Shannon,

September 21- October 4 is 10 working days which adds up to 80 hours. So, yes, it looks like you have enough time saved up.

Hi. Just wondering if there’s any other companies dealing with the following question. If the policy states that vacation accrual for employees working less than 40 hrs/week are prorated per the # of hours the employee actually works, do you include holidays, sick days and even vacation days taken into the hours used to calculate the vacation accrual?

For example an employee on a 30 hr/week (6 hr days) schedule would accrue 30 hrs per year or .5769 hrs. per week. What if in one week the employee took a vacation day, a sick day and there was a holiday. It would be 18 hrs. for those three days where the employee didn’t physically work but still got paid for. That week the employee only physically worked 12 hours. What # of hours do you use for that week’s accrual? We are a CA employer and we would like to use 12 hours. If our vacation policy states that the accrual is based on the # of hours physically worked, Instead of the # of hours scheduled to work, is this policy ok? and are there any other CA employers doing this?

Hi Paola,

As long as you are using the by hours worked accrual rate, then you wouldn’t include time off hours in your calculation since those are not actually hours worked. The accrual rate by hours worked is the only rate for which you would exclude the time off used. If you were using a weekly rate, for example, employees would continue to earn their accruals even when they take time off.

You mentioned using a weekly rate, but you also mentioned using the hours worked rate so I’m not sure which one you are actually using.

Our software does all of that which I described behind the scenes so you don’t have to subtract the time off yourself.

I have the same question as Paola Gaytan and Debbie above. If my work gives me 80 hours of PTO, but then uses the 2080 rule to calculate my accrual, there is no possible way to actually accrue the time given. If I were to take my 80 hours each year I would consistently be in the negative for accrued PTO. If I were to leave the company I would then be expected to pay back the total negative time. I live in NC.

Jenny,

If your company uses the hours worked rate, they determine the multiplier based on the number of hours you would get in a year if you were a full time employee. They aren’t necessarily saying that you get 80 hours off per year. Some companies use the divisor 2080 (especially in the first year, when employees aren’t taking any time off) and some companies subtract the number of time off hours from that. This gives an employee a chance to actually acquire 80 hours if they worked a full year minus time off. Ultimately, what divisor a company chooses to use is their decision.

If you are an employee that ends up earning slightly less than 80 hours per year because of the hours worked rate that is used, then you should not take any more time off than what you earn. This way, you will never be negative in your time off.

We work 12 hour shifts, and get 10 days vacation ,but its 8 hours pay for vacation,why isnt it 12 hour days pay

Hi Danny,

This is a question for your employer. Employers design their own time off rules.

I started work on August 8, 2016 and was promised 4 weeks vacation. As of Dec 31st/2016 how many days of vacation have I accrued? My company calculates vacation from Jan to Dec.

Thanks

I work for REAL FOOD COMPANY and I have been working for 15 months and I have never used any of my Vacation Pay (PTO) 60.94 I recently used some of my sick time off (STO)25.88 but it was brought to my attention that one year of working full-time would bring me 80-100 Hrs of PTO . I have figured out the difference see that I have “104.94 Hrs” of PTO From my store Assistant manager how can I fix this problem. Thank you RENE

I was told that after 90 days I get ten days vacation. I’ve been with this company 7 months. Now I’m told that I accrue 0.83 days a month. Explain please in laymens term? Then I was told to just wait for the new year that I automatically get ten days anyway. I would like to understand the term 0.83/ Accured days please . I’m feeling cheated am I wrong?

I don’t see this question above or anywhere, for that matter.

We allow employees to use their accumulated vacation time while it accumulates. When you calculate the accrual, do you include the week that the employee takes AND the paid holidays? So, say the employee takes a week within the year and within the year there is a total of two weeks of paid holidays – that equals 3 weeks already paid. So, I would calculate the accrual on 49 weeks (1960 hours)?? Oh, and accrual does not begin until after the initial 90 days… would the year anniversary start 90 days after their hire date or do we need to calculate the first year differently??

40/1960=.02 hr/hr worked??

Elisa,

That’s right. You would base your calculation on 49 weeks. For the first year, just don’t set up your accruals until after the 90 days. Other than starting 90 days after the hire date, the process is the same.

A) 2080 hrs – 80(vacation) – 40(holidays) – 8(birthday) = 1952

80/1952 = 0.041hr/hr (rate)

or

B) 2080 hrs – 80(vacation) – 40(holidays) – 8(birthday) – 48 (sick time) = 1904

80/1904 = 0.042hr/hr (rate)

With choice A.

If they use sick time, they will not accrue 80hrs/year .

They will accrue 80hrs/year if they do not use sick time.

With choice B.

If they don’t use sick time, they would accrue more than 80hrs/year.

They will accrue 80hrs/year if they use all 48hrs sick time.

Which is the correct one?

You’re right about the problem with accruing time by hours worked. It is a calculation for an ideal world and definitely not an option for all scenarios.

With this in mind, I would use choice B. Then at the end of the year, you could zero out their accruals. If doing this won’t work for your company, then go back to one of the more traditional accrual rates.

What would the formula be to figure prorated holiday pay based on a 40 hour week? Would it be different for 4 days worked or 5 days worked? I work 24 hours per week, 4 days. I’m being told my holiday pay would be 4.8 hard. I think it should be 6.

Hi Linda,

There are 5 workdays in a week. A normal workweek consists of 40 hours, or 8 hours in a day. If your work week is 24 hours, then spreading that out over 5 days gives you 4.8 hours. 24/5=4.8

Would it not be figured differently if you are only working a 4 day week? I would think it would be 24/4 not 24/5.

I guess it depends on how the company’s time off policy is written. Offering holiday pay is not a requirement by law. I think the issue is a little complicated because holiday can fall on any of 5 work days. Since you only work on 4 of those, what happens when a holiday falls on a day on which you’re off anyway. I would use the 5 day workweek to figure your holiday pay if I were going to give you holiday pay on every holiday, whether it was a normal work day for you or not. If I were only paying you for holidays on which you actually worked, I would dived it by 4. But like I said, the company policy is just whatever they think is reasonable.

Our employee manual says that less than 1 year of service entitles you to 1 week of vacation time prorated by month based on hours. How do I calculate this?

It really depends on what accrual rate the company uses. They might use the hours worked rate but they also may use monthly for part time of full time employees. Please ask your HR department for clarification.

It would be the hours worked rate.

If you are a full time employee working 40 hours a week this would make a total of 2080 hours worked in a year. you also had 200 hours overtime in that year making hours worked 2280. Does this overtime fit in to the accruing time earned?

Hi Sheila,

The hours worked accrual rate is intended to capture the actual hours worked. So if someone worked more or less than 2080 hours in a year, the accrual would reflect that.

I worked since March 2008 to January 2017as a full-time in the same company. Did you know how much vacation time I have.

That depends on the policies of the company you work for.

Hi Peggy,

Thank you for your response. Would it not be different if we only work a 4 day week? It seems to me it should be 24/4=6. It would think the hours you actually work should be divided by the number of days that you work. I really appreciate your help in clearing this up for me.

Hello,

Could someone respond to my question on January 6? Please.

My Anniversary working date is June 2012 and my company will finish the contract in March 2017. I haven’t claimed any PTO in the past few years up to the present time. My question: Am I entitled for PTO for all the previous years. My other question is: If I claim my PTO now, will this affect the rate I’ll get or it’s better to wait till the company finishes its contract on March 31st?

This all depends on the company’s PTO policy and in which state you’re located.

So i have 9.24 pto time how many day they are I don’t understand this I been working on the same job since 2010 now someone else buy the company is all different please let my kwon

If you work for a company that gives you 104 hours of PTO the first of the year and you leave in February 17, How many hours do the company owe me as far as PTO?

That depends on the accrual rate used and how many hours you used so far.

A f/t employee is contracted to work 40 hrs/week with 2 weeks vaca/year, calculated Jan-Dec. Overtime is paid at time and a half but does not add to vacation earned. Vacation pay is only awarded for time worked, not on a lump sum basis. Since employee wanted an additional week off at end of last year, which actually meant the first week of January, that week was given as ‘time without pay’. How do I calculate vacation pay for this year? Do I calculate it on 51 weeks instead of 52?

Great question, Amy. Let me try to make sense of this. If you give your employee 80 hours per year, then you are giving her 1.538 hours per week, with 52 weeks in the year. If you want to give her time off for 51 weeks of service instead, then you’d give her 1.538*51=78.46 hours of time off this year. Does that sound right to you?

Hello,

Our regular employees work 7.5 hours per day and 7.5 hours is deducted from their PTO for each PTO day they use. For an employee with a regular schedule of 6 hours per day, do we deduct 6 hours of PTO for each PTO day taken, or do we deduct the standard 7.5 hours of PTO from their bank balance? The part-time worker receives less PTO time each year, pro-rated based on their 30 week schedule as opposed to the full-time 37.5 schedule. Thank you.

Hi Martha. Yes, in general, for part time employees, you will give them time based on their schedule and also deduct time based on their schedule. So, for example, an employee that works 6 hours a day, 5 days a week, who gets 2 weeks vacation per year, rather than getting the standard 80 hours, they’d be getting 60 hours of time off per year. And so, when they take a day off, they would need to deduct only the 8 hours.

If employees need to wait until they accrue the number of hours needed for a vacation, it pushes vacations out to middle or end of year, instead of spreading through the year. If firms let employees borrow vacation days for earlier vacations what happens if they terminate and end up owing back vacation days?

Hi Mary,

If your employees’ accruals were based on their anniversary dates and not, say, January 1st, then this might not be an issue, since everyone’s hire date isn’t usually the same.

With that said, some states do not allow deductions for time off loans from employee’s paychecks so, if you’re in one of those states, you would just be short that cash. If you’re not in one of those states and deductions are allowed, you still need to make sure that employees get paid at least minimum wage when you make the deductions. So if the employee worked 32 hours and made $15 per hour when she quit you would have to make sure and pay her at least $232. The remaining $248 could go toward her time off loan. (minimum wage might be different depending on state)

I have an employee who works 30 hours per week entitled to 120 hours of vacation. We use a paid time off. Is her accrual .08? 30 x 52 = 1560 120/1560 = .08

Thanks.

I would do 30×48. I got 48 from 52 weeks in a year minus 4 weeks vacation. Otherwise, she could never actually hit her full 120 hours because she’d never work enough weeks to get all the way there.

This is the PTO information that will be published in our New Employee Handbook., which is still in DRAFT.

Questions–1) does this accrual rate of 5.23 that the HR Director calculated look too high? I calculate 40 x 50 = 2000 80/2000 = .04 because i did not include the 6 Holidays and 1 floating holiday.

2) Should we remove the Paid Holidays and Floating Holiday from the paid accrual?

Thank you for your help–

Lisa

Paid Time Off (PTO)

Unless applicable state or local law requires otherwise, full-time employees accrue PTO hours for every pay period worked in accordance with the following schedule:

Years of Service Annual Accrual Total

0-4 years 10 PTO days/year, plus 6 paid Holidays and 1 Floating holiday 17 PTO

days

5-9 years 15 PTO days/year, plus 6 paid Holidays and 1 Floating holiday 22 PTO

days

10 + years 20 PTO days/year, plus 6 paid Holidays and 1 Floating holiday 27 PTO

days

PTO begins to accrue on the first day of employment and employees are eligible to take PTO after the successful completion of a 90 day introductory period. Employees will accrue 5.23 hours per pay period. Since employees are not eligible to take PTO hours in the first 90 days of employment, there will be no PTO hours owed if the employee separates employment prior to the achievement of 90 days unless state or local law requires otherwise. If an employee changes from full-time to PRN status, the employee’s PTO balance will be paid out in cash immediately following the employment status change.

Non-exempt hourly employees may take PTO in 4 hour increments; however, salaried employees must take PTO in daily increments (8 hours). The maximum number of PTO hours paid daily will correspond to the full-time employees regularly scheduled workday. One Home Health encourages all employees to use their accrued time, by the end of the year or it will be lost. In rare instances, a portion of unused time may be carried over by January 15th of the following year, if prior approval is received from the President.

In general, supervisors will make every effort to grant time off requested; however, when an employee’s absence may be detrimental to the operation of the company, time off may need to be rescheduled. When requesting PTO, employees must complete a PTO request form and obtain supervisor approval. The form will be kept in the employee’s personnel file at the agency.

Once all accrued time has been exhausted, request for time off, other than for leaves of absence, may be rejected.

Your calculations seem to be using the hours worked accrual rate. She is using the rate by pay period so it’s going to be higher. The only thing I don’t understand is why she only has one rate on there. There should be a rate for each of the three seniority levels. And yes, removing the time off from the equation is a good idea. You can also remove the vacation days, just like you removed the holidays.

Hi there. I own a business in California. I am wondering if I offer vacation days based on the accrual system do the hours that the employee works overtime have to be included? I am asking more specifically about the fact that we happen to have unscheduled overtime occur quite a bit. So if my typical full-time employee works 40 hours but sometimes works more hours, how can I calculate the hourly accrual rate so that I can max vacation time accrued per year at 80 hours? Is it better to just provide a lump sum per year in this case?

Hi Evelyn,

I would definitely suggest using a different accrual rate. You could do a yearly lump sum, yes, or you could do an accrual rate to match their paycheck. So biweekly or monthly… This way, overtime hours would never bump up their accrued time off. Let me know if you have more questions!

If our employees work an average of 36 hours a week and we want them to accrue 40 hours of PTO for their first two years with the business what calculations would I use? They will also get 6 paid holidays.

There are several different ways you can track your employee’s vacation time. Check this article for more information. https://www.timesheets.com/blog/2013/04/ways-to-calculate-vacation-accrual/

[…] hat for an employee that works 40 hours some weeks and 10 others doesn’t make much sense. So calculating the time off by hours worked ensures employees earn a fair amount of time […]

A company has a schedule of 9 hour days – 4 days a week (Monday-Thursday) = 36 hours worked per week. The employer pays employee for 4 hour lunches per week giving the employee a total of 40 hours per week paid (lunches are free). The employee gets 120 vacation hours per year.

QUESTION: When the employee takes a day of vacation is the employee charged 9 hours of vacation or 10 hours of vacation?

Employers can setup their policy any way they see fit. However, if the employer only gave a 9 hour day for vacation, since employees are used to the 40 hour paycheck, then each week they take off would hurt. Their paychecks would be short 4 hours and there wouldn’t be any way they could make up for it.

I have a question, my company policy is employees accrue vacation at a rate of .83 hours and sick time at .67 hours based on a 37.5 work week/ 7.5 hour day.

I have a couple employees leaving at end of January. I was told that so need to at them based on amount accrued.

So, to figure their sickpay do I just multiply .83 X 7.5 and do same with for vacation at .67?

This gives me a decimal number is that number hours they have coming as pay?

If you need to pay employees out before they leave then, yes, just multiply their hours worked by the rate, minus any time they have already taken.

Hi,

Our company previously calculated PTO based on an employees scheduled hours. Things have evolved and employees schedules are not always consistent, and some employees are taking unpaid time off. Sometimes employees take unpaid time when the office closes for things like a snow day, that is not a paid day, or if doctors are out of the office, etc. I in turn, want to calculate PTO based on hours paid the previous year. Most of our employees are 4 day/40 hours/week employees, so paid holidays do not always equal the hours an employee would typically work on a given day, since they would normally work 10 hours and they are paid 8 hours for a holiday (even if it is not their normal scheduled day to work).

We are experiencing much discontent and grief over this new policy from 4 employees, all whom have been with our medical practice over 15 years. They feel they should be “Grandfathered” in and should have PTO calculated by their “schedules”. These 4 employees have been taking 32 hour vacation weeks to extend their paid off days, so essentially are taking unpaid time, by their own choice, so their average weekly hours are lower than their “scheduled” hours.

What do other companies do? Are most companies figuring PTO by hours worked?

Any other advise or insights into calculating PTO fairly?

I was put on a 12 hour shift. If my off day is on a holiday. How many hours of holiday hours do I get?

My company is trying to downsize to one vacation policy. Our current policy states you receive X amount of vacation days per years of service. My question is if you have an hourly position that is scheduled to work 9 hours per day and they may or may not work those 9 hours every day and IF they work over 40 in a week they receive overtime, would their accrual be based on 9 hours per day or 8?

We want to set our system up based on days not average hours worked, what would the correct way to do that?

If you’re setting your accrual by the day, the number of hours is not a factor. If you want the number of hours worked to be a factor, then you would use the hours worked rate.

Out company allows new employees 80 hours in the first year of employment. This is prorated by your start date. We are not on an accrual basis it is a flat number of hours beginning January 1. If an employee starts in the Oct. 15 then they will work 11 weeks at 40 hours per week. This will be 440 hours worked in total from Oct. 15 through Dec. 31 of this year. How do I determine how many PTO hours they are allowed?

Help please!!

You would divide the number of hours worked in a year by the PTO hours to get your multiplier. Then multiply that by 440 hours to get 17.6.

Hi there

My company’s PTO increases as follows:

0-2 years 120 hours 5/period

3-4 years 160 hours 6.67/period

5+ years 200 hours

I started on 3/27/2017 and had my 2 year anniversary, but my accrual has not changed and when I asked, I was told the following:

“…the 160 kicks in the beginning of the 3rd year vs. at the end of the 2nd year…”

They included a visual reflecting the change effective on 3/31/2020…

Shouldn’t the policy read 0-3 years 120 hrs as it would support completing 3 full years before the increased PTO accrual rate?

I think I this us simple math but I’m experiencing cognitive dissonance here…

Thank you for your help.

Hi. You may want to talk to someone in your company about your policy to clear up the confusion. I would even suggest that they re-write the policy to make it more clear. You have already worked at that company for 2 full years, meaning that the 160 should have been applied this year (based on the numbers you provided). If you get 160 hours in 2020, that would mean that you would have had to complete 3 full years before getting your hours. I would check on this with your management just to be clear about this situation.

Hi,

may you please help me sort out an issue:

Employee worked .9FTE for 4 months and 1FTE at 8 months.

she works 40 hours a week and receives 160 hours or 20 days of vacation on a 1FTE.

help me calculate the total amount of vacation time for the 4 months she worked @ 36/hours a week and the 8 months at 40 hours.

thanks

Let’s see. At 4 months of 36 hrs/week= 144 hours of vacation a year & 8 months of 40 hrs/week is 160 a year. This means that in 4 months the employee earned 48 hours of vacation & in 8 months 1FTE the employee earned 106.64 hours of vacation time. This brings the total to approximately 154.64 hours for the year. This is a great question for our forums at the Kingmaker Society. Try asking questions like this there (link in righthand pane).

than you-

may you please show me the steps to reaching that number.

I will go to the Kingmaker Society forum .

I figured it out- thanks

If you are paying by hours worked, does this mean if someone works overtime, the overtime hours should also be charged the per hour accrual rate for PTO/vacation? Or is that open to company discretion?

The “By Hours Worked” calculation applies to all regular hours worked by the employee. For example, if the employee works 43.5 hours in a work week, the by hours worked accrual will apply to all 43.5 hours worked. This means that the by hours worked accrual calculation will also apply to the 3.5 hours of overtime. The by hours worked accrual calculation doesn’t apply for any hours taken for vacation time, sick time, or holiday time– by hours worked is only calculated for the regular hours worked, and that includes overtime hours.