Americans work long hours by the world’s standards, and take very few vacations comparatively. This trend may be motivated by American’s work ethic but it’s counterproductive; overworking hurts employee productivity.
When a company offers vacation time or PTO, they have to decide on a vacation rate for the accrual. There are a few options. Vacation time can accrue by hours worked, by the day, the week, or pay period. Alternatively, employers can choose to give out a lump sum at the beginning of the year. There are many rates to choose from and they are all suited for different needs and scenarios.
We all look forward to a break from work – a vacation that lets us relax and rejuvenate. However, in the US paid time off is not a given. Employers don’t have to offer time off. Even when they do, not all Americans use it all. And still some workers don’t completely disconnect during their vacation. Vacation time is lacking compared to the rest of the world. The US has the seventh least vacation days behind Japan, Taiwan, Hong Kong, Canada, China, and Mexico.
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.
According to recent research commissioned by Ricoh Americas Corporation and conducted online by Harris Interactive, 54% of Americans work while they’re on vacation. They do things like stay on top of emails, keep in touch with co-workers, and take care of small tasks. Generally, employees don’t simply trade working full time at the office for working full time at the beach, but they aren’t disconnecting either. And this, reports Rioch, is bad for worker’s relationships and their health.
Calculating PTO by hand is a not a simple task. There are many rates to choose from and the calculations aren’t always intuitive. For this reason, most small business owners just end up using a yearly accrual rate. This method is easy. You just have to decide how many days employees should get per year and give it to them in a lump sum. However, if you’re a little more math savvy, you can calculate PTO with other accrual rates that may be a better fit for your business. I’ll explain the different rates and the calculations.