How to Calculate Paid Time Off (PTO) Accruals – Wagepoint

As an administrator, setting up time off accrual plans correctly is crucial for managing your organization's leave policies. This guide will walk you through the process of setting up sick and vacation plans in our system, ensuring that employees accrue time off accurately and efficiently.

Setting Up Annual Hours

Navigate to Settings. Then click on Break Plans and Paid Time Off

Next, click Edit at the top right to begin configuring your time off accrual plan.

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First, decide how many hours of sick and vacation time employees get for the whole year. For instance, let’s say employees get 80 hours of vacation and 80 hours of sick time per year. You will input these amounts into the system for each plan.

Configuring Accrual Periods

The accrual policy period determines how often employees earn a portion of their total annual hours. Here are the options and how the accrual is calculated for each:

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Weekly: Employees earn 1.92% of their annual hours each week.
- Example: For 80 hours a year, employees earn 1.54 hours per week (80 hours / 52 weeks).
Bi-weekly: Employees earn 3.85% of their annual hours every two weeks.
- Example: For 80 hours a year, employees earn 3.08 hours every two weeks (80 hours / 26 periods).
Semi-monthly: Employees earn 4.17% of their annual hours twice a month.
- Example: For 80 hours a year, employees earn 3.33 hours twice a month (80 hours / 24 periods).
Monthly: Employees earn 8.33% of their annual hours once a month.
- Example: For 80 hours a year, employees earn 6.67 hours each month (80 hours / 12 months).
Annually: Employees earn all of their annual hours at once.
- Example: For 80 hours a year, employees get all 80 hours at once at the end of the year.

Setting Accrual Resets

Choose when the accrued time resets back to zero:

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Custom Date: Any specific date you pick.
Hire Date: The date the employee started working.
Calendar Year: January 1st every year.

Maximum Hours Earned and Carry Over

You can also set limits on how much time off employees can save up and carry over:

Maximum Hours Earned: Define the maximum number of hours an employee can accrue in a year. For instance, if the maximum is set to 120 hours, an employee cannot accrue more than 120 hours in a year.
Allowed Carry-Over Hours: Determine how many unused hours can be carried over to the next year. You can also choose unlimited carry-over, allowing employees to carry over all unused time.

Avoiding Manual Adjustments

Our system isn’t designed to handle manual adjustments in the time accruals, like giving extra time for working extra hours. Manual adjustments can confuse the system and cause it to miscalculate accruals. When manual adjustments are made, the system might think that the accruals for the year have already been completed, which can prevent further accruals for that employee within the same year.

Important Tip:

Avoid Manual Changes: Don’t manually adjust accruals for time in lieu or other reasons. This can confuse the system and cause errors.
Consult Support: If adjustments are needed, consult with the support team to ensure proper handling without disrupting the accrual calculations.

Examples

Example 1: Weekly Accrual with Calendar Year Reset and Maximum Hours

Employee Details:

Annual Hours: 80 hours
Accrual Period: Weekly
Reset Date: January 1st
Maximum Hours: 100 hours

Accrual Calculation:

Employees earn about 1.54 hours each week (80 hours / 52 weeks).
They can save up to 100 hours in a year.

Scenario:

Employees start the year with 0 hours.
They earn 1.54 hours each week.
When they reach 100 hours, they stop earning more until the next year starts.

Example 2: Monthly Accrual with Hire Date Reset and Unlimited Carry-Over