How to Calculate Employee Leave

Written by dennis bortolus
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How to Calculate Employee Leave
Time Off (vacation! image by Rido from

Employee leave is defined as time off with pay for vacation, illness, holidays or other reasons. A commonly used term, PTO (for Paid Time Off) represents a combination of sick and vacation in a single amount of time to be used as the employee sees fit.

Another form is called personal leave, personal days or floating holidays. These are often used instead of paid holidays so employees can take days off even if they are not standard holidays.

Skill level:

Things you need

  • Employer benefits plan definition.

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  1. 1

    Define the leave plans for your organisation. Examples: Sick Plan, Vacation Plan, Personal Holidays.

  2. 2

    Define rules for each plan. Basic rules include:

    Accrual rate, how much time the employee is given.

    Seniority rules, how the accrual rate changes with employee longevity.

    Carryover rules, how much time the employee may carry over from one year to the next.

    Payout rules, how to handle unused leave time (some states require paying the employee).

    Maximum balance rules, some plans stop accruing time off when the employee reaches a certain balance.

  3. 3

    Define how often you accrue leave time. Some plans are based on actual work time, while others give employees a flat amount per year or per month.

    Example: An employer may have different accrual frequencies for each plan type.

    Employee earns one day of vacation for each month worked.

    Employee earns 10 days of sick time granted once per year on the anniversary of hire.

    Employee earns two personal holidays granted on January 1 each year.

  4. 4

    Determine eligibility for leave time. Not all employees have the same plans or rates of accrual. Define qualifying information to indicate which plans the employee falls under.

  5. 5

    Calculate leave accrual by using the rules defined in steps 2 and 3. For each leave plan the employee participates in, and for each accrual frequency, add the number of days or hours to their leave time earned balance. For each hour or day the employee uses for sick, vacation or personal days, add to their leave time taken balance. Their usable balance equals time earned minus time taken.

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