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. For 12 months, each full-time employee has 11 paid vacation days. This is also the best option if you have full-time employees who have passed the tenure year. The math is easy: when they take time off, you deduce the number of days off from the total PTO.

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 becomes difficult when dealing with temporary workers. Shorter accrual rates are a better fit for such situations.

*Important*: For employees who are not hired on the first day of the year, their vacation must be prorated. This means that the employee will not benefit from 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. The calculation will be the following:

A. **for a new full-time employee** hired on 1 July 2024, hired in a company offering 11 paid vacation days yearly.

- 2024 has 251 working days (and 115 weekends) within the 12 months.

From 1 January to 1 July, there are 84 working days. - Let's calculate the employee's prorated number of working days:

251 working days - 84 working days = 167. - Divide the number of days worked by the total number of days in the period:

167/366 = 0.456. - Multiply this quotient by the number of days off granted per year.

0.456 x 11 days = 5.01 days. - The employee shall be offered 5.01 days of PTO in 2024.

B. **for a part-time employee** working 10 hours per week, the steps to calculate the vacation days would be the following:

- Divide the number of hours worked by the number of hours of a full-time employee weekly:

10/40 = ¼ = 0.25 - Multiply the result by the amount of PTO hours provided to full-time employees per year:

0.25 × 88 hours = 22 hours. - The employee will benefit from 22 hours of time off per year.

If the employee had been hired on 1 July, the prorated value would be calculated as follows:

- Start by dividing the number of hours eligible per year (22) by the number of weeks (52) 22/52 = 0.423
- Calculate the number of weeks between two dates: between 1 July 2024 and 1 January 2025 - there are 26 weeks and 2 days.
- Multiply the number of hours the employee should receive every week by the number of weeks until the end of the year.

0.423 × 26.2 = 11.08 - The result is 11.08 hours to be offered to a part-time employee.

Tip: Small business managers enjoy our free PTO tracker templates.

If you choose the monthly accrual within your company, this is a great option. It is easy to calculate and appreciated by employees.

- The monthly PTO calculation would be as follows: the number of total PTO hours per year divided by 12 months.
- Let’s check one concrete example: Josh has 80 hours of PTO yearly.
- 80 hours / 12 months per year= 6.66 hours per month.

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.

Again, this type is easy to handle, and employees will have the same accrual amount on each payday. The calculation of the number of hours that employees can accrue for their holidays, in this case, is the following:

- The semi-monthly PTO calculation would be as follows: the total PTO hours per year divided by 24 periods. Where 24 = 12 months x 2, as the name says - bi-monthly - twice per month.
- 80 accrued PTO hours/24=3.33 hours earned twice every month.

Calculating the once-every-two-week accrual is a bit different from the semi-monthly accrual.

- Since it's every two weeks, you will have to divide the yearly number of PTO hours by 26, not 24 (like in the semi-monthly case). Where did we get 26 from?
- This is the simple math result of this equation: 52 weeks in a year / every 2 weeks.
- 80 accrued PTO Hours/26 = 3.07 hours earned every two weeks.

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.

- Let’s see the formula for the daily PTO accrual type for a full-time employee working 40 hours a week: 80 accrued hours/ (5 working days x 52 weeks) = .307
- The result (quotient) needs to be multiplied by the number of days worked. 0.307 x 22 days worked = 6.75 hours earned for 22 days (the number of working days in July).

In this case, paid time off is calculated by dividing the yearly accrued vacation hours by the total number of hours worked in a year.

- For 2024, we are talking about 2000 hours. This type of PTO rate is good for employees who work variable schedules.
- 80 accrued hours /2000 = 0.04 hours earned per hour worked.

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 who 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, the weekly earnings are $1,000 and $25 the hourly ones.

*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.

**Track not only one type of time-off but several ones.**You must track not only the vacation days but also the sick days. Other types of leaves can exist; however, these should not affect these balances.**Handling time off in lieu or overwork bonus**. We have encountered companies that provide extra PTO hours or days to the PTO balance of long-hour workers (compensatory).**Different allowances by contract type.**The allowances should differ according to the contract types and the role (i.e., between managers and staff or between full-time personnel and part-time workers).**PTO rollover**: What happens at the end of the year? Will the unused days/hours will be carried to the next year? If yes, how many days? In some countries, employees must use the carried days in a specified number of months (i.e., in the first 4 months of the year, or else they will lose them).**Agree on how much PTO your employees can earn**. The PTO calculation requires you to agree on how many hours a full-time employee can accrue yearly. The US government doesn’t require employers to offer paid vacation. However, employees benefit from an average of 11 paid vacation days (88 hours).**Tenure bonus.**Reflect on the fact that senior employees will accrue more PTO days per year than the junior ones. For example, some companies give +1 PTO day for every year in service until employees reach 15 PTO days annually.**Define the accrual period.**The next step would be to decide on what type of accrual rates your employees will choose:- yearly
- monthly
- twice per month
- weekly
- twice per week
- daily
- by hours worked.

**Probation periods**: Consider if there will be a waiting period before the vacation accrual starts for newcomers. Reflect on the fact that new employees. Will they become eligible after the first 90 days of employment or after 12 months of continuous service?**Holidays**: Does your organization offer paid public holidays? If yes, are they all the 11 federal holidays, or only a few? US businesses usually follow these holidays: New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas.**Proration for new hires**: Depending on the contractual start date of the employee and if the company has an annual policy, that allowance might be prorated. If the employee is entitled to 10 days of PTO per year but is hired on April 1, they should get only 3/4 of that entitlement.**Annual start date**: For most organizations, the business start date is January 1, and on that date, the yearly reset happens, yet for some sectors, such as education, it starts on September 1. Other countries might also have other start dates yearly.**Have a balance cap:**Employees should be encouraged to spend their PTO. Such policies encourage reluctant staff to spend their time off and should comply with the legislation.

88 hours / 8 hours per day = 11 days of PTO.

28 hours / 8 hours per day = 3.5 days of PTO.

200 hours / 8 hours per day = 25 days of PTO.

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.