If you are not math savvy, calculating paid time off is not an easy task to deal with. Things are getting a bit more complicated when most of your employees are off for summer or winter vacation and new employees are having short term contracts.
Going for the yearly accrual rate is most commonly the option, however, some companies would like to have different accrual rates for vacation such as hourly pay. We will go through such cases and present the ways on how to calculate vacation accrual.
If you go for the yearly approach, it is the easiest to calculate. Ie: for 12 months each full-time employee has 11 paid vacation days. This is also the best option if in your company you have full-time employees, that have passed the tenure year. The math is easy: when they take time off, you deduce from the total PTO the number of days off.
Additionally, to benefit of the entire 11 days you will have to work for one year. This is why employees would not like to wait so much, so other accrual types come handier.
The situation gets difficult when you are dealing with temporary workers. Shorter accrual rates are a better fit for such situations.
Important: For employees that are not hired on the first day of the year, their vacation must be prorated. This means that the employee will not benefit for the full amount of vacation days, for one year but for the rest of the year.
Two PTO calculation examples: a. for a full time employee in days, and b. for a part time employee in hours.
A. for a new full-time employee hired on 1 July 2024, hired in a company offering 11 paid vacation days yearly, the calculation will be the following.
B. for a part-time employee working 10 hours per week the steps to calculate the vacation days would be the following:
If the employee had been hired on 1 July, the prorated value would be calculated as follows:
Tip: Small business managers enjoy our free PTO tracker templates.
If you go for the monthly accrual within your company. This is a great option, easy to calculate and appreciated by employees.
To calculate the available balance on a particular day, lets say end of April (after 4 months of work starting January 1), then multiply the monthly accrual with the number of months worked: 6.66 hours x 4 months = 26,64 PTO hours. Tip if you divide 26.64 by 8 hours the default number of hours per day you get the value in days 26.64/8=3.33 days.
This type is again easy to handle and employees will have the same amount of accrual at each payday. The calculation of the number of hours that employees can accrue for their holidays, in this case, is the following:
To calculate theonce every two-week accrual is a bit more different from the semi-monthly.
Tip: Learn what are the differences between bi-weekly and semi-monthly pay periods.
This is another good accrual type. The daily PTO accrual works well with full-time employees. When it comes to people dealing with shifts this is not a good option. Moreover, part-time employees must work full time for a good calculation. In companies with high-turnover, this type of accrual is often the norm.
The calculation of paid time off, in this case, is the following: divide the yearly accrued vacation hours by the total number of hours worked in a year.
Related: How to calculate salary per hour?
To calculate the hourly rate of vacation time, or PTO pay follow these 3 simple steps:
1. Identify the hourly pay based on your salary
For a full-time employee that works 40 hours a week (5 days per week x 8 hours ) for a full year - 52 weeks and has a salary of $52,000, it will earn per week $1,000 and $25 hourly.
Hourly rate formula = [$52, 000 / 52 weeks per year ] / 40 hours per week = $1,000 /40 = $25.
2. Identify how many hours of vacation you tool
If you took 3.5 days of vacation, the calculation would be:
PTO days from hours =3.5 x 8 hours per day = 28 hours of vacation.
3. Identify how much you need to pay
The hourly work pay is equal to the vacation pay.
Vacation pay = hourly work pay of 28 hours of vacation x $25 per hour = $700 before taxes.
If you are looking to convert easily hours of PTO to days, depending on the number of hours you work per day, here you can find the conversion:
If you earn this many hours of PTO | Then you have this many days of PTO |
8 | 1 |
16 | 2 |
24 | 3 |
32 | 4 |
40 | 5 |
48 | 6 |
56 | 7 |
64 | 8 |
72 | 9 |
80 | 10 |
88 | 11 |
96 | 12 |
104 | 13 |
112 | 14 |
120 | 15 |
128 | 16 |
136 | 17 |
144 | 18 |
152 | 19 |
160 | 20 |
168 | 21 |
176 | 22 |
184 | 23 |
192 | 24 |
200 | 25 |
PTO and Vacation accruals is a topic with several variables that HR managers need to consider in their policy.
88 hours / 8 hours per day = 11 days of PTO.
How many days is 28 hours of PTO?28 hours / 8 hours per day = 3.5 days of PTO.
How many days is 200 hours PTO?200 hours / 8 hours per day = 25 days of PTO.
How to calculate PTO hours to days?To calculate the PTO hours in days, divide the number of hours of PTO by 8, or the number of hours you work per day.
For example if you have 80 hours of PTO yearly then 80h / 8h per day = 10 days of PTO.