How should I track vacation in payroll?

            Note: Depending on how your organization was set up during implementations you may have a few of these instructions or a lot of them. If you see an instruction that you think you need but do not have, please contact our support team for assistance.

            First, we need to figure out if you are tracking your vacation in dollars or hours:

            Tracking Vacation in Dollars: When you track vacation in dollars, you are taking a percentage of the vacationable earnings and accruing it.  It always accrues in accordance to the pay each pay run.  For example if an employee earned $1000.00 for pay run 1 and they accrue vacation at 4%, they have accrued $40.00 in vacation. Then, for pay run 2, the employee got a raise and now earns $1500.00.  They are still accruing at 4% and for pay run 2, they have earned $60.00 in vacation.  Thus, the total vacation accrual balance for this employee will be $100.00.

            Tracking Vacation in Hours: When you track vacation in hours, you are taking a percentage of the vacationable hours the employee worked and accruing it.  Because it accrues in hours and not dollars, it doesn't convert into money until you actually pay it out.  For example, if an employee earned $1000.00 for 80 hours worked for pay run 1 accruing vacation at 4%, then the employee has accrued 3.2 hours of vacation. Then, for pay run 2, the employee got a raise and now earns $1500.00 for the same 80 hours worked.  They are still accruing at 4% and for pay run 2, they have still earned 3.2  hours of vacation.  Whenever the employee decides to take their vacation, the hours are calculated into dollars using the rate in effect at the time they are taking the vacation not the rate it was associated with when it was accrued.  

            If you track vacation in dollars


            Vacation Pay Earned (Paid): This instruction is used when employees do not accrue vacation and instead are paid out their vacation every pay run. This instruction will appear in the input sheet to show what percent of the vacationable earnings they will receive.  Although this field will be editable, I'd suggest making all lasting percentage changes in the employee's profile in the Payroll Instructions tab.

            Vacation Pay Earned (Accrued): This is our most common vacation instruction. It controls the percentage in which the employee accrues vacation.  For example, if an employee is entitled to two weeks vacation, they accrue at 4%.  If they are entitled to 3 weeks, they accrue at 6% and so on.  This instruction never appears on the input sheet and instead lives within each employee's profile under the Payroll Instructions tab where it can be edited to different percentages.

            Vacation Pay Paid: This instruction is used only when you are paying out an employee's final vacation accrual because they are leaving the company.  This instruction has two options, in the input sheet, it has a check box that when checked, pays out the employee's remaining vacation balance.  Otherwise, you can type in a dollar amount you would like to pay your employee.

            Vacation Pay Taken: This is the most common way to pay out taken vacation.  This instruction works by allowing you to type in a dollar value that you would like to pay the employee for their taken vacation.  This instruction gives you full control to the penny what the employee is getting.

            Vacation Pay Taken (Hourly): This is an alternate way of paying your hourly employees the vacation they are taking.  It works by allowing you to type in the number of hours they used of vacation and using their hourly rate to calculate what they should be paid.

            Vacation Pay Taken (Salary): This is an alternate way of paying your salaried employees the vacation they are taking.  It works by allowing you to type in the number of hours they used of vacation and using their salary rate (pay period salary rate/average hours) rate to calculate what they should be paid.

            If you track vacation in hours

            Vacation Pay Earned (Paid): This instruction is used when employees do not accrue vacation and instead are paid out their vacation every pay run. This instruction will appear in the input sheet to show what percent of the vacationable earnings they will receive.  Although this field will be editable, I'd suggest making all lasting percentage changes in the employee's profile in the Payroll Instructions tab.

            Vacation Hours Earned (Accrued): This controls the percentage in which the employee accrues vacation.  For example, if an employee is entitled to two weeks vacation, they accrue hours at 4%  If they are entitled to 3 weeks, they accrue hours at 6% and so on.  This instruction never appears on the input sheet and instead lives within each employee's profile under the Payroll Instructions tab where it can be edited to different percentages.

            Vacation Hours Paid (Hourly): This instruction is used only when you are paying out an hourly employee's final vacation accrual because they are leaving the company.  This instruction has two options, in the input sheet, it has a check box that when checked, pays out the employee's remaining vacation balance.  Otherwise, you can type in the hours you would like to pay your employee. It works by paying the the vacation to pay out at the current pay rate (regardless of it the employee originally accrued some hours at a lower rate).

            Vacation Hours Paid (Salary): This instruction is used only when you are paying out a salaried employee's final vacation accrual because they are leaving the company.  This instruction has two options, in the input sheet, it has a check box that when checked, pays out the employee's remaining vacation balance.  Otherwise, you can type in the hours you would like to pay your employee. It works by allowing you to type in the number of hours they used of vacation and using their current salary rate (pay period salary rate/average hours) rate to calculate what they should be paid (regardless of it the employee originally accrued some hours at a lower rate).

            Vacation Hours Taken (Hourly): This instruction is used to pay your hourly employee when they take vacation.  You enter hours on the input sheet and the system will calculate the vacation to pay out at the current pay rate (regardless of it the employee originally accrued some hours at a lower rate).

            Vacation Hours Taken (Salary): This instruction is used to pay your salaried employees the vacation they are taking.  It works by allowing you to type in the number of hours they used of vacation and using their current salary rate (pay period salary rate/average hours) rate to calculate what they should be paid (regardless of it the employee originally accrued some hours at a lower rate).


            Updated: 19 Jul 2017 03:07 PM
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