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Vacation Policy Change to Accrual

We currently do not have an accrual procedure in place, but the GM in our Maryland office wants to change to an accrual basis for vacation time. Here is my question–Most of the employees have been with the company for quite some time and are earning 4 weeks at the beginning of each year. – For accrual do I give them the 160 hours on Jan 1 2015 and then accrue an amount biweekly for the 2015? I am not sure how to do this.

By giving employees both a lump sum and starting the accrual on January 1, 2015, the employees would receive double the amount of vacation time. Thus, it’s best to start the accrual on January 1, 2015.

Many accrual plans often include a maximum accrual amount or a cap. Meaning, employees can only accrue up to a specified number of PTO hours. A common accrual maximum is two times the amount of PTO time an employee will accrue in one year. Once an employee reaches the maximum he won’t earn anymore vacation time until he uses some of his accrued time. Adopting an accrual maximum encourages employees to use their vacation time instead of “banking” it.

Remember to update the company’s vacation policy. Now is the time to review the policy in its entirety and make any appropriate changes. Inform staff of the changes in a timely manner.

This entry was posted on Wednesday, October 22nd, 2014 at 7:31 pm and is filed under
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