How to calculate unpaid leave

Written by jason brick
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Unpaid leave is rarely tracked against a bank. Unlike sick time or vacation, there usually isn't a maximum cap you need to run a tally against. Rather, an employer needs to track unpaid leave in order to figure out how much pay to dock a salaried employee. Hourly employees almost never need to track unpaid leave, as the time off is evident on their punch cards.

Skill level:


  1. 1

    Divide the employee's monthly salary by 173.33 (the assumed number of monthly hours for a full-time employee). You may want to check this number against employment law in your state in case of variance.

  2. 2

    Multiply the result from Step 1 by the number of hours of unpaid leave. Assume eight hours of unpaid leave for every full day of work the employee missed.

  3. 3

    Deduct the result of Step 2 from the employee's gross salary. Be sure this change is reflected in their withheld taxes and other proportional adjustments. In most cases, your payroll software will do this automatically.

  4. 4

    Calculate other factors the unpaid leave might affect. Some examples include accumulated sick leave or vacation time, seniority by hours on the job and pension contributions.

  5. 5

    Note the total amount of unpaid leave taken during the pay period. Although few companies have exact policies regarding maximum unpaid leave, this does start a record if the employee's attendance becomes a problem.

  6. 6

    Double-check state employment laws to see if there are any further repercussions of unpaid leave in your area.

Tips and warnings

  • Employment law is very complex and can carry hefty penalties for making a mistake. Check with your accountant, book-keeper or lawyer when putting together any kind of payroll policy.

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