How to Manage Monthly Vacation Accrual

Vacation Accrual Calculation

In the Folks HRIS, an employee's vacation balance is calculated using the standard annual "Vacation" accrual rate. This rate is adjusted by adding any carry-over from the previous year and subtracting any taken vacation days. The formula used is: Standard Rate + Previous Year's Carryover - Vacation Taken = Current Balance.

Options for Early Use of Accrued Vacation

This calculation is tailored for companies following standard labor practices for annual vacation accrual. However, many companies allow employees to use their accrued vacation immediately. If this applies to your company, here are three solutions to manage this:

1. Allow Negative Balances in the Vacation Norm:
   This method requires less manual intervention but shows employees when they are using anticipated vacation time. It's crucial to ensure that the requested amount does not exceed what is available (accrued in the current year) in the payroll software. This method illustrates that the balance reflects last year's accrual, but the company still allows the use of vacation time accrued in the current year (anticipated vacation). In this case, verify that the employee has enough vacation dollars in their anticipated vacation account before approving the request.
   
   
2. Adjust Employee Norms at Required Intervals and Add the Amount Accrued During the Period:
   For example, if Daniel has 8 vacation days at the beginning of the year, this is the amount to be set in his norm. If he accrues 1.25 days in the first month, modify his norm to reflect 9.25 days. This method requires ongoing adjustments at each interval, which can be burdensome depending on the size of your company.
   
   
3. Set the Expected Yearly Accrual Amount at the Beginning of the Year:
   This method gives employees insight into the total vacation time they will accrue throughout the year, allowing them to plan their vacation weeks accordingly. However, if a request is made at the beginning of the year or depletes the employee's vacation bank, this method may require a check on the available amount if negative balances are not allowed. For example, if you offer 3 weeks of vacation per year, an employee starts the year with no available days but will accrue these 3 weeks over the year. You can set 15 days as the norm at the beginning of the year to manage their vacation bank. Typically, by the end of the year, they would have used their 15 days, bringing their balance back to zero.

These solutions don't provide an exact vacation bank balance but offer a clear view of the available quantity for the employee, aiding in the decision to approve or deny vacation requests.