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Jun10

Change from Anniversary Date to Calendar Year

Our company currently has a policy of vacation time based on anniversary date. The employee receives 80 hours on his/her anniversary date. The company wants to change it to a calendar year in 2015 and use PTO accrual. Does anyone have this policy change and can shed some light on how to do it?

Transitioning vacation time from anniversary to calendar year accruals is fairly common. It may seem burdensome at first but with a proactive approach and proper planning it will be less of an administrative burden in the long run.

The first step is to write a clear, easily understood policy. The policy should include employee eligibility, amount of time provided, additional time awarded for seniority or certain job categories, accrual maximums, if applicable, and payout guidelines. Be as clear as possible to avoid any confusion by employees.
The current policy is for employees to receive 80 vacation hours in one lump sum on their anniversary date. In order to be fair to all employees, it must be determined how each employee will be affected by the transition and prorate employee accrual rates for the first year. The effective date of the transition is January 1, 2015.

Here are a few examples:

Jane has an anniversary date of January 6th. She was awarded 80 hours PTO vacation time on her anniversary date in 2014. As of January 1, 2015, Jane would be able to transition into the new PTO accrual system and receive her full 80 hours with no prorated accruals needed.

Bill has an anniversary date of April 25th. He was awarded 80 hours of PTO on his anniversary date in 2014. It wouldn’t be fair for him to receive another full 80 hours on January 1st. Thus, the accrual amount must be prorated. An employee receiving 80 vacation hours per year accrues 1.54 hours per week. Since he’s received 80 hours to cover the April 2014 to April 2015 year it must be determined how much more PTO he should receive for the remainder of the year (May – December 2015). The employee would only be eligible for 36 weeks worth of accruals or 55.44 hours to be awarded on January 1st. (36 weeks x 1.54 hours accrued per week = 55.44 hours).

Tom has an anniversary date of October 25th. He will be awarded 80 hours of PTO on his anniversary date in 2014. As of Jan. 1, 2015, it would be only two months since his last award. It wouldn’t be fair to give him another full 80 hours PTO. So, the accrual amount must be prorated. Since he’s received 80 hours to cover October 2014 – October 2015 it must be determined how much more PTO he should receive for the remainder of the year (November and December 2015). The employee would only be eligible for 10 weeks worth of accruals or 15.40 hours to be awarded on January 1st. (10 weeks x 1.54 hours accrued per week = 15.40 hours).

A notice should be sent to all staff as soon as possible informing them of the new policy, effective date, summary of how the transition will be managed and highlighting the major changes. Some employers also offer question/answer meetings so employee concerns can be addressed. Be prepared for employees to question the calculations. Vacation time is considered a top benefit to many employees so expect some moans and groans. However, communicating essential information to employees well in advance and hearing their concerns will help alleviate the tension.

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This entry was posted on Tuesday, June 10th, 2014 at 3:53 pm and is filed under
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3 Responses to “Change from Anniversary Date to Calendar Year”

  1. Robert B Pula Says:

    I think I understand this formula but how does this affect employees’ ability to take vacation time after they have been paid PTO on their anniversary date? For example in 2018 we want to go to a calendar year method. Sally’s anniversary date is May 25th. I pay her vacation but what happens when she wants days off sometime before years end 2017?

  2. hrlady Says:

    Employees would continue to receive their vacation time as normal for all of 2017. Then, on January 1, 2018 they would receive a prorated amount for the 2018 cy. So, Sally would receive her normal vacation allotment on May 25, 2017. Since that allotment covers her from May 25, 2017 to May 24, 2018, on January 1, 2018 she is only due enough vacation time to cover her from May 25, 2018 to December 31, 2018. HTH!

  3. Robert B Pula Says:

    thank you. so if Sally has three weeks (15 days) beginning May 25, 2017 she gets paid for that but then still takes her vacation days over the next 12 months with out pay because i paid her May 25th, 2017. Jan 2018 she gets pro-rated for her vacation from May 25 till end of 2018. she can take those days offs between May 25 and then end of year with pay (as normal). am i correct so far? if so when does the accrual for the pro-rated portion begin? ps) thanks.

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