To calculate vacation and sick pay in Payroll

• Vacation and Sick accrue when you process payroll in Time Card Entry, and updates when printing checks 
• For terminated employees print the final check first, then print a separate check for the vacation hours accrued
• The formula is based on an (hourly rate) x (hours worked)

Variables

• Hours in a work week: defined in PR, Utilities, Maintain Payroll Parameters
• Rate employee earns per year: Defined in PR, Employees, Maintain Employees, Vacation…, Rate
• Hours worked during time card entry: hours entered during time card entry

Formulas 

This applies to sick and vacation hours

• (Hours in a work week) x (Number of weeks in a year) = Regular full-time hours in a year
• (Rate employee earns per year) / (Regular full-time hours in a year) = Rate earned per hour 
• (Rate earned per hour) x (Hours worked during time card entry) = Earned for hours worked on paycheck

Example

In this example, the number of hours in a work week is 40. Therefore Regular full-time hours in a year are 2080 (40 hours x 52 weeks).

• An employee works a 40-hour week and earns 80 hours of vacation a year
  • 80 / 2080 = .03846154 rate earned per hour
  • .03846154 x 40 = 1.53846154 vacation hours earned
  • Employee earned 1.53846154 hours of vacation after working 40 hours

The hours an employee works in a pay period is less than the full amount

• The rate per hour for vacation is multiplied by the actual hours worked. You earn all 40 vacation hours only by working enough overtime to cover any missed regular hours
• See PR, Utilities, Maintain Payroll Parameters to check box to accrue vacation on overtime

Maximum accrual

Setting Max accrual per year

1. Select PR, Utilities, Maintain Payroll Parameters.
2. Check Restrict accrual and enter a limit.

Additional information regarding Max accrual

• You can set this for vacation or sick
• Accrual will stop if one of the following conditions is met
  
  • Start hours + earned hours greater than Max accrual per year
  • Start hours + earned hours less than Max accrual per year. Plus earned hours greater than Max accrual per year

How to setup vacation or sick pay in Payroll
How to accrue vacation for commission employees

For non-standard work weeks, or other non-traditional calculations 

• Manually calculate vacation and sick pay in Payroll
• How to setup vacation or sick pay in Payroll or How to accrue vacation for commission employees