How Do You Calculate Accrued Vacation?

By Robert Palmer

Accrued vacation is the amount of time off that an employee earns over a period of time. Employers typically provide vacation time as part of their benefits package, and it is important for both employees and employers to understand how to calculate accrued vacation.

How Does Accrued Vacation Work?

When an employee starts working for a company, they typically earn a set amount of vacation time per year, which is usually based on their length of service. For example, an employee who has been with a company for one year may earn two weeks of vacation time per year, while an employee who has been with the company for five years may earn four weeks of vacation time per year.

Calculating Accrued Vacation Time

To calculate accrued vacation time, you first need to determine how much vacation time an employee earns per pay period. This can be done by dividing the total number of vacation hours by the number of pay periods in a year.

For example, if an employee earns 80 hours of vacation time per year and is paid bi-weekly (26 pay periods in a year), they would earn 3.08 hours of vacation time per pay period (80/26).

Once you know how much vacation time an employee earns per pay period, you can calculate how much they have accrued by multiplying that amount by the number of pay periods that have elapsed since their last anniversary date.

For example, if an employee’s anniversary date is January 1st and they are paid bi-weekly, you would need to determine how many pay periods have elapsed between January 1st and the current date. If today’s date is August 1st (which means there have been 16 pay periods so far this year), the calculation would be as follows:

Accrued Vacation Time = Number of Pay Periods x Vacation Time Earned Per Pay Period
Accrued Vacation Time = 16 x 3.08
Accrued Vacation Time = 49.28 hours

This means that as of August 1st, the employee has accrued 49.28 hours of vacation time.

Tracking Accrued Vacation Time

It is important for both employees and employers to track accrued vacation time to ensure that employees are taking their earned time off and not exceeding their allotted amount.

Employees can track their accrued vacation time by reviewing their pay stubs or by asking their employer for a report that shows how much vacation time they have earned and how much they have used.

Employers can use payroll software or spreadsheets to track employee vacation time and ensure that employees are not taking more time off than they have earned.

Conclusion

Calculating accrued vacation time may seem complicated, but it is an important part of managing employee benefits. By understanding how to calculate accrued vacation time, both employees and employers can ensure that employees are taking the appropriate amount of time off and not exceeding their allotted amount.