02 Dec Paid time off examples
PTO, short for paid time off is a company-level policy for vacation time and sick days. The purpose of a PTO policy is to tell the employers how much paid time off employees are allowed to take. In addition to that, employees can also learn to book their paid time off through brief rules, regulations, and instructions mentioned in the policy.
In most organizations, employees are granted a few paid days off or a limited amount of paid time off. The paid time off increases as the employees get promoted and take responsibilities of a higher position.
What is PTO accrual?
Accrual is an increase or accumulation in something over a specific period. When we relate it to paid time off, it is the accumulation of paid time off hours over years.
PTO accrual rate
The paid time off accrual rate is, by definition, the rate of paid time off hours that the employees can earn. However, this term only seems relevant to the employers who use an accrued PTO policy for their employees.
When an employer decides on an accrual rate, they also plan how much PTO each employee will get at the end of the period. This policy seems beneficial for the workers as it encourages them to take short PTO stretches throughout the year.
This way, big companies, and organizations won’t need to plan everything about employees being gone for a long time. An accrual PTO policy is beneficial for the organization as well as the employees.
Paid time off examples
Companies take time to make and implement a paid time off policy at their workplaces. Most of the company owners are confused about how to implement a paid time off policy.
Here are some examples to guide you throughout the process so you can select the right type and implement thoughtfully:
Annual PTO Accrual examples
Annual PTO is great for full-time and long-term employees who are ready to accrue their paid time off hours every year. The calculations for annual PTO accrual are pretty simple and basic. Whenever an employee takes some time off, subtract it from the PTO running total.
At the start of the year on a worker’s anniversary date, add their time to whatever is left for them to accrue. To calculate the annual PTO accrual, you would first have to decide on the accrual rate.
Draw your attention to these examples to understand annual PTO accrual better:
When calculating annual PTO, there are some levels: F to M, D & E, A to C, and level X. Karen is a full-time employee at a well-reputed firm. She has been working for the chief executive for 3 years now. She is a level E worker.
Karen works for 28 hours per week. She has not taken a vacation or a sick leave. Thus, we will calculate for 52 weeks.
28 worked hours per week multiplied by 52 weeks equals 1456 hours per year.
If the number of weeks or the number of worked hours is changed, the number of vacation hours per year varies too. let’s take 2 more examples using different level workers.
Johanne is a full-time employee handling logistics at a well-reputed multinational firm. As of 2020, she has spent 7 years improving the logistics management team of the company. She is a level F worker. Unlike Karen, she does not work for 52 weeks. Instead, she works for 39 weeks of the year. Let’s calculate the number of vacation hours per year using Johanne’s worked hours:
32 hours of service per week multiplied by 39 working weeks of the year = 1248 vacation hours per year.
By using the above information, you can also calculate Johanne’s monthly, weekly, and bi-weekly vacation hours.
Mateo is a certified translator working in an English language firm for 15 years. He is a full-time employee and completes 36 hours per week in a year. He is a level H worker. Thus, his yearly PTO will be calculated using the number of hours he has worked per week.
Simply, multiply 36 worked hours per week by 52 weeks (for annual). The result equals 1872 vacation hours per year.
The hourly accrual rate varies from level to level and is also dependent on the years of service.
Weekly PTO Accrual Examples
Daily and hourly PTO accrual calculations work for both, part-time and full-time employees. However, we will focus on full-time employees when giving weekly PTO accrual examples. The formula for calculating the weekly PTO rate is:
Annual PTO hours/total weeks worked per year
Let’s see the examples to understand weekly PTO accrual better:
Mr. Reeves is a full-time employee working in the automation industry for 15 years. He has been working in the same automation company for 15 years and has received numerous promotions. He is not a salaried employee and received a paycheck after every week. He works for 40 hours per week and does not miss a week in the whole year. Let’s calculate Mr. Reeve’s weekly PTO accrual:
Weekly PTO Accrual = 40/52 = 0.769 vacation hours. Therefore, he can only take 0.769 vacation hours per week.
Miss. Scarlet is a full-time employee who is servicing in the same company for 7 years. She does not believe in working after every week. However, she spends more hours working than any other employee in the firm. Although she only works for 36 weeks per year, she works for 80 hours per week. Let’s calculate her weekly PTO Accrual:
Weekly PTO accrual = 80/36 = 2.22 vacation hours per week.
Mr. Robert works for 52 hours per week and has never missed a week without working. While this explains his passion for working, it will be easier for us to calculate his weekly PTO accrual.
Weekly PTO accrual = 52 worked hours per week divided by 52 working weeks in a year = 1 vacation hour per week.
Biweekly PTO Accrual examples
All employees, paid hourly accrue sick and vacation leave based on the hours worked during 5-7 consecutive days. This simply means that the PTO accrual per weekly or biweekly salary check might change, depending on the hours worked vary after 2 weeks.
The formula to calculate biweekly PTO accrual is:
Hours worked (in relation to pay period) multiplied by accrual rate (which is dependent on the years of service in the company).
Here are 3 examples of biweekly PTO accrual to understand it better:
Let’s take one employee, Scott who has been working for you since April 2000 and is a full-time employee at your firm. Let’s say he works for 80 hours per 14 days and the hourly accrual rate for an employee who has served for more than 20 and less than 24 years is 0.0846.
All you have to do is multiple the above-mentioned accrual formula and you will get the vacation hours per paycheck. Let’s give it a try and calculate the biweekly PTO accrual rate for Scott:
80 hours worked multiplied by 0.0846 = 6.768 vacation hours per paycheck.
Now, multiply the calculated vacation hours by pay periods.
6.768 vacation hours multiplied by 26 pay periods= 176.436 hours of vacation each year.
Let’s say a junior marketing executive, Erika has worked for your firm since September 2010 and is a full-time employee. She has spent 10 years handling your firm’s marketing campaigns. She works for a maximum number of hours per week, that is 40. It means that she works for 80 hours per 14 days. Given her years of service, the hourly accrual rate that will be used in Erika’s case is 0.0769. Let’s calculate her vacation hours per year and paycheck.
80 hours worked multiplied by 0.0796 (hourly accrual rate) = 6.152 vacation hours per paycheck or 14 days. Now that we know the exact vacation hours per 14 days, let’s calculate the PTO per year by using the accrual rate formula:
6.152 vacation hours multiplied by 26 pay periods = 159.952 hours of vacation per year.
The senior secretary, Mr. John of chief executive of a firm has been serving since August 1995 and is a full-time employee. However, he receives his pay after every 14 weeks. Suppose he worked for 80 hours per 14 days. As he has offered his services for more than 25 years in the firm, the hourly accrual rate will be 0.0962. let’s calculate his vacation hours per paycheck and per year:
80 hours worked multiplied by 0.0962 = 7.696 vacation hours per 14 days. Now let’s calculate how much PTO will he get annually:
7.696 vacation hours multiplied by 26 pay periods= 200 hours of vacation per year.
As he is a senior employee of the firm and has served for 25+ years, his vacation hours or PTO is more than Erika and Scott. Hence, the Paid time off depends on how long have you been serving the firm or an organization.
Monthly PTO Accrual examples
All salaried employees get paid time off defined by the monthly PTO accrual rate. It means that all the salaried employees (that receive their paychecks at the start of the new month) accrue sick leave and vacation on a monthly basis. The paid time off or the number of accruals does not vary from paycheck to paycheck.
Let’s see 3 examples to understand monthly PTO accrual better:
Sherly has worked for your firm since January 2008 and is a full-time employee. She is a salaried employee. As she has been serving the firm for 13 years, the salaried accrual rate for a full-time employee who has worked for 0-14 years is 13.33.
As there’s no formula to calculate the monthly PRO accrual rate, we will deduce the vacation hours directly from the rate.
She will receive 13.33 vacation hours per paycheck, that is, 13.33 vacation hours per month. Let’s calculate for her vacation hours per year:
13.33 vacation hours multiplied by 12 pay periods (start of each month) = 159.96 hours of vacation annually.
Mr. Maslow, chief of janitorial staff and management has been serving the organization for 26 years. Like Sheryl, he is a salaried, full-time employee. Therefore, to know his PTO vacation hours, we will use the same technique used in Sheryl’s case. As he started in May 1994, his monthly PTO will be:
16.66 vacation hours per paycheck. Let’s calculate the monthly PTO accrual rate for the whole year:
16.66 vacation hours multiplied by 12 pay periods (start of each month) = 199.92 vacation hours per year.
Betty Cooper, assistant manager has been serving your firm for 15 good years. She started in June 2005. She is handling everything, from your first product management team to marketing management staff. She helps out the senior manager and is never takes off unless it’s sick leave. She is a full-time employee and is very close to a promotion. As she has completed 15 years of service, her monthly or salaried accrual rate is 14.00. Let’s calculate her monthly PTO per paycheck.
14.00 is basically the number of vacation hours that she gets per paycheck. To calculate yearly vacation hours, we will multiply the salaried accrual rate by the number of pay periods:
14.00 vacation hours per paycheck multiplied by 12 pay periods = 168 vacation hours annually.
Accruals based on work hours
If employees work a variable number of hours, an employee must create a PTO policy that strongly supports accruals based on worked hours. By using the worked hours accrual rate, you can determine the paid time off that should be given to each employee accurately.
Let’s see the examples to understand worked hours accrual better:
Let’s say your employee works for 2000 hours per year (52 weeks per year), minus the paid holidays.
To get the worked hours accrual, divide the number of worked hours by 2000, that is, the total number of worked hours per year. Let’s say your employee works for 80 hours per week. By calculation, you will get 0.04 hours of paid time off.
One employee works for 240 hours per year (52 weeks per year). Let’s say the employee works for 20 hours per week. By calculating, you will obtain 0.0833 vacation hours.
Another employee of the same firm works for 700 hours per year (52 weeks per year). He works for 80 hours per week. By calculating, you will obtain 0.11 vacation hours.
Regardless of how small or big, the company is, one must create a PTO policy to give earned time off to the employees. Whether you have salaried employees or bi-weekly paid employees, paid time off can vary on the years of service and the number of worked hours. To make the process easier, a laid-out PTO policy can make your calculations accurate.