How Do You Calculate Vacation Accrual Based on Hours Worked?

By Robert Palmer

Calculating vacation accrual based on hours worked can be a bit confusing for both employers and employees. But with a little bit of understanding and the right tools, it can be a breeze.

What is vacation accrual?

Vacation accrual is the amount of time off an employee earns based on their length of service and hours worked. This time off is usually paid and can be taken by the employee at their discretion.

How is vacation accrual calculated?

The first step in calculating vacation accrual is to determine the amount of time off an employee will receive. This can vary depending on company policy, but typically employees earn one or two weeks of vacation per year based on their length of service.

Once you know how much time an employee will receive, you need to determine how many hours they will need to work to earn that time off. For example, if an employee earns two weeks of vacation per year, they would need to work 80 hours per week to earn that time off.

  • For example:
    • An employee works 40 hours per week
    • They earn two weeks of vacation per year
    • This means they will need to work 80 hours (40 x 2) to earn their two weeks of vacation

Calculating Accrued Vacation Time

Now that you know how much time an employee earns and how many hours they need to work to earn it, you can calculate how much accrued vacation time they have at any given point.

For example, let’s say an employee has worked for six months and has worked a total of 520 hours during that time. If they earn two weeks (80 hours) of vacation per year, they would have accrued four days (32 hours) of vacation time.

The formula for calculating accrued vacation time is:

Accrued Vacation Time = (Total Hours Worked / Hours Required for One Week of Vacation) x Number of Weeks of Vacation Earned

Using the example above, the calculation would be:

(520 / 80) x 2 = 13

This means the employee has accrued 13 days (104 hours) of vacation time.

Tracking Accrued Vacation Time

Now that you know how to calculate accrued vacation time, it’s important to have a system in place to track it. This can be done manually or through automated software.

If you’re tracking vacation accrual manually, it’s important to keep accurate records of the number of hours worked by each employee and how much vacation time they have earned and used. You can use a spreadsheet or other tracking tool to do this.

Automated software can make tracking vacation accrual much easier. Many HR and payroll software solutions include tools for tracking vacation accrual and can automatically update an employee’s accrued vacation time based on their hours worked.

Conclusion

Calculating vacation accrual based on hours worked may seem complicated at first, but with a little bit of understanding and the right tools, it can be a breeze. By following the steps outlined above and using a reliable tracking system, you can ensure your employees are receiving the appropriate amount of time off they’ve earned.