Human Resource Blog

Accured Vacation

	Attendance Management
Vacation Request / Response Form Weekly Time Sheets Attendance Calendar for 2008, 2009, or 2010 Annual Attendance Tracker Vacation Request Form for 2008, 2009, 2010 (Calendar) Detailed Absence Report

	Benefits
Total Compensation Summary Performance Improvement Plan Performance Appraisal and Review Employee Payroll Status/Change Form Employee Change Form

	Compensation
Employee Payroll Action Form W-4 Employee Withholding Allowance Cert. Employee Payroll Status/Change Form Direct Deposit Form Total Compensation Summary

What is the formula to determine accured vacation when someone is terminated?

Most employers use payroll software to automatically track accrued vacation time, which is printed on each paycheck stub. This same software can be used to figure accrued vacation and pay due at termination.

Different employers use different formulas to calculate the vacation time due. If an employer is not using payroll software, the most accurate way to figure accrued vacation is to create a spreadsheet.

However, here are some general guidelines.

An employee who has 1 week of vacation per year earns about .01923 hours of vacation for each hour worked. This works out to about 0.7692 hours of vacation time per week, or 39.9984 hours of vacation time per year, which is rounded to 40 hours.

You can figure the vacation accrual multiplier this way:

40 hours of vacation/40 hours per week/ 52 weeks = 0.01923 = the vacation accrual multiplier for 1 week of vacation per year

To find the vacation accrual multiplier for employees with more than 1 week of vacation, multiply 0.01923 x the number of weeks of vacation.

If employees with 2 years seniority are entitled to 2 weeks of vacation, the vacation accrual multiplier would be 0.03846 for them. That’s 0.01923 x 2. They would earn about 1.5284 hours of vacation in a 40-hour week, and 79.9968 hours (rounded to 80 hours) in 52 weeks.

Employees at the same company are entitled to 3 weeks of vacation after 5 years of service.

Using this same formula, the accrual multiplier for these employees would be 0.01923 x 3 = 0.05769. In 40 hours, this employee would earn 2.3076 hours of vacation and 119.9952 hours in 52 weeks, rounded to 120 hours.

Two important features of figuring vacation accrual in this way:

1) Employees accrue vacation time only for the first 40 hours of work each week. An employee who works overtime does not accrue vacation on that time. However, an employee who works less than 40 hours in a week accrues less vacation time.

2) Using this “quick and dirty” formula, the employee continues to accrue vacation time while on paid sick leave or vacation. (If they didn’t, it would take 53 or more weeks for the employee to accrue a “year” of vacation time.) A more sophisticated formula based on each employee’s length of service can be used to avoid this, but that is far beyond the scope of this article.

When an employee is terminated, the employer would figure the additional vacation time accrued this way:

Hours worked in the current pay period (not including overtime) + paid sick time or holidays x 0.01923 x number of weeks vacation based on seniority = X =hours of vacation accrued in the current pay period.

X + accrued vacation from payroll records of previous pay period = Total accrued vacation owed to the employee.