Vacation and Sick Accruals

Overview

ProPay's vacation and sick accrual system automatically tracks how employees earn and use paid time off. You can configure company-wide default values and customize accrual rules for individual employees based on your policies.

Company Default Values

Setting company defaults

When setting up a new employer, configure company default values for vacation and sick accruals in Employer Setup > Page 3. These defaults:

Represent the most common accrual settings for most employees
Speed up setup when adding new employees
Can be overridden for individual employees as needed

Recalculating accrued hours

Click the Recalculate all Vacation and Sick accrued hours button in Employer Setup > Page 3 to recalculate accruals for all employees.

Use this feature when:

You change accrual rates
You need to recalculate from the beginning of the year through the last payroll
You're correcting accrual calculation errors

The recalculation processes all pay periods from January 1st through the most recent payroll.

Accrual Methods

ProPay offers four accrual methods to match your company's time-off policies:

Never

Use case: Prevent vacation and sick time from accruing

What happens: ProPay does not calculate any accruals for the employee

Use this method for:

Independent contractors
Temporary employees
Employees not eligible for paid time off

Hours earned per hour worked

Use case: Grant time off based on hours actually worked

What happens: Employees accrue time based on their work hours. For salaried employees, ProPay uses a standard 40-hour work week.

Example: If set to accrue 0.04 hours per hour worked:

Employee works 40 hours → Earns 1.6 hours of vacation time
Employee works 30 hours → Earns 1.2 hours of vacation time

Annual hours available

Use case: Grant a lump sum amount at the start of each year

What happens: At the beginning of the year, ProPay immediately credits the employee with the full annual allotment of hours.

Example: Employee receives 80 hours on January 1st and can use it throughout the year.

This method works well for:

Professional environments
Salaried employees with fixed vacation allocations
"Use it or lose it" policies

Per paycheck

Use case: Grant a fixed amount with each paycheck

What happens: ProPay adds the specified number of hours (or fraction of an hour) to the employee's accrual balance every time you process payroll for them.

Example: Employee accrues 3.08 hours per paycheck

Weekly payroll → 3.08 hours × 52 weeks = 160 hours per year
Bi-weekly payroll → 3.08 hours × 26 paychecks = 80 hours per year

Employee Setup Fields

Maximum vacation/sick hours allowed

Enter the maximum number of hours the employee can earn in a year.

This limit prevents unlimited accrual unless you check Allow accruing over maximum hours per year.

Prior year accrued vacation/sick hours

Use this field to enter:

Accrued hours carried over from the previous year
Accrued hours from a prior payroll system when starting ProPay mid-year

How it affects the maximum:

The Reset the number of hours each year checkbox determines how prior year hours affect the maximum:

Box checked: Prior year hours do NOT reduce the current year maximum
Box unchecked: Prior year hours are deducted from the current year maximum

Example:

Employee setup:

Maximum vacation hours allowed: 80 hours
Prior year accrued vacation hours: 20 hours

If "Reset the number of hours each year" is checked:

Employee can accrue up to 80 hours in the current year
Total available: 100 hours (20 + 80)

If "Reset the number of hours each year" is NOT checked:

Employee can accrue up to 60 hours in the current year
Total available: 80 hours (20 + 60)

Current year accrued vacation/sick hours

Read-only field

Displays the total vacation or sick hours the employee has accrued in the current calendar year. This value is calculated automatically by ProPay based on the accrual method and cannot be manually changed.

Current year vacation/sick hours taken

Read-only field

Displays the total vacation or sick hours the employee has used in the current calendar year. This value updates automatically when you process payroll with vacation or sick pay and cannot be manually changed.

Start accruing vacation/sick after this date

Enter a date when the employee should begin accruing time off.

Use case: Implementing waiting periods

Example: Employee starts on January 1st, but company policy requires 90 days of employment before earning vacation time. Enter April 1st in this field.

You can set a default value in Employer Setup > Page 3 that applies to all new employees.

Hours accrued per hour paid

Automatically calculated field

This accrual rate is used when the accrual method is Hours earned per hour worked.

Calculation formula:

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Example: Employee earns 80 hours of vacation per year:

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This formula excludes the vacation time itself from the calculation, ensuring the employee reaches the target hours after working 50 weeks (2000 hours) instead of requiring work during vacation weeks.

Applies to: Regular hours, overtime, and pay rates 3-8. Vacation hours paid are excluded from the calculation.

You can manually adjust this rate if needed.

Hours accrued per paycheck

Automatically calculated field

This accrual rate is used when the accrual method is Per paycheck.

Calculation formula:

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Example: Employee paid weekly earns 80 hours of vacation per year:

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This formula excludes the two weeks of vacation from the 52 pay periods, ensuring the employee reaches the target hours without working during vacation time.

You can manually adjust this rate if needed.

Additional Settings

Allow accruing over maximum hours per year

Check this box to let employees accrue beyond the annual maximum.

Unchecked: Accrual stops when the employee reaches the maximum hours allowed

Checked: Accrual continues even after reaching the maximum

Reset hours each year

Check this box to implement a "use it or lose it" policy.

Checked: ProPay zeros out all accrued hours on January 1st. Unused hours are lost.

Unchecked: Unused hours carry over to the new year as Prior year accrued vacation/sick hours.

This setting also affects how prior year hours impact the maximum hours allowed (see Prior year accrued vacation/sick hours above).

Add hours used to maximum hours allowed

Check this box to increase the accrual limit based on hours already taken.

Unchecked example:

Maximum hours allowed: 80
Current year accrued: 80
Current year taken: 30
Result: Accrual stops (employee has reached the 80-hour limit)

Checked example:

Maximum hours allowed: 80
Current year accrued: 80
Current year taken: 30
Effective maximum: 80 + 30 = 110 hours
Result: Accrual continues until employee reaches 110 hours

This setting allows employees to "refill" their time-off bank when they use hours.

Print vac/sick accruals on pay stub

Check this box to include accrued vacation and sick hours on employee pay stubs.

Checked: Accrual balances print on pay stubs

Unchecked: Accruals are tracked internally for reports only

Printing accruals on pay stubs increases transparency and helps employees plan time off.

Frequently Asked Questions

How do salaried employees accrue vacation or sick pay?

Both hourly and salaried employees accrue vacation and sick hours using the same accrual method you select. The only difference is how hours are calculated:

Hourly employees: Accruals based on actual hours worked

Salaried employees: ProPay uses a standard 40-hour work week for accrual calculations

Example: Salaried employee with weekly paychecks earns 40 hours of vacation per year (one week):

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Each week, the salaried employee accrues 0.77 hours of vacation time, regardless of whether they actually worked exactly 40 hours.

What happens if an employee works during vacation time?

When employees work during scheduled vacation time, you have two options:

Option 1: Reduce the accrual rate

Modify the accrual formulas to not exclude vacation weeks:

Per hour rate: Maximum vacation hours ÷ 2080
Per paycheck rate: Maximum vacation hours ÷ Pay periods per year

This prevents employees from "double-earning" by working during vacation time.

Option 2: Prevent over-accrual

Uncheck Allow to accrue over maximum number of hours to prevent employees from exceeding the annual limit, even if they work extra hours.