Accrue PTO based on hours worked

Automatically calculate and grant paid time off (PTO) based on the hours employees work and track in Leapsome. This feature enables fair and transparent PTO accrual for part-time workers, contract employees, and flexible work arrangements, while ensuring compliance with regional laws that mandate hour-based accrual methods.

When to use this feature

Use this feature to:

• Comply with regional labor laws that require hour-based PTO accrual (e.g., California, Washington state)
• Provide fair PTO allocation for part-time employees based on actual hours worked
• Support flexible work arrangements where employees work variable hours
• Automatically calculate PTO for working students, contract workers, or hourly employees
• Eliminate manual PTO calculations and reduce administrative burden
• Ensure transparency in how PTO accrues based on time worked

Legal requirements:

• California: 1 hour of paid sick leave for every 30 hours worked
• Washington State: 1 hour of paid sick leave for every 40 hours worked
• Germany: Working students typically receive 9% of hours worked as PTO
• Other regions may have similar requirements for hour-based accrual

How to set up hour-based PTO accrual

Prerequisites

Before setting up hour-based PTO accrual, ensure:

• Time Tracking module is enabled for your organization
• Employees have an active Time Tracking policy assigned
• The absence policy unit is set to hours (not days)

Create an absence policy with ratio of hours worked

1. Navigate to 'Settings' > 'Absences' > 'Absence policies'
2. Click 'Create absence policy' or edit an existing policy
3. Configure the basic settings:
   • Policy name (e.g., "PTO for Working Students" or "Hourly Worker PTO")
   • Absence type
   • Unit: Select 'Hours' (required for this feature)
   • Visibility settings
4. Go to the 'Entitlement' tab
5. In the entitlement type dropdown, select 'Ratio of hours worked'
6. Configure the accrual ratio:
   • Based on: Choose between 'Hours worked' or 'Compensable hours' (default)
     • 'Hours worked': Includes all tracked time
     • 'Compensable hours': Excludes break time from the calculation
   • Hours worked per 1 hour of allowance: Enter the ratio (e.g., 16 for 1 hour of PTO per 16 hours worked, or 11.11 for 9% accrual)
     • Accepts decimals in 0.25 steps (e.g., 16, 16.25, 9.5, 11.11)
7. Configure optional settings:
   • Block employees from exceeding entitlement: Enable to prevent negative balances
   • Enforce a maximum balance: Enable to cap the maximum PTO balance

Please note: When 'Ratio of hours worked' is selected, the following settings are preset and cannot be changed:

• Entitlement year starts on: January 1st
• Granting rhythm: Yearly

Settings not available for hour-based accrual

The following tabs are disabled when 'Ratio of hours worked' is selected:

• Proration tab
• Carry-over tab
• Tenure adjustments tab

These settings are not required because PTO accrues continuously based on hours worked rather than being granted annually.

How PTO accrual works

Automatic accrual upon timesheet approval

PTO accrues automatically when timesheets are submitted and approved for the first time:

1. Employee tracks their work hours using the Time Tracking widget
2. Employee submits their timesheet
3. Manager or admin approves the timesheet
4. System calculates PTO based on the configured ratio
5. PTO is automatically added to the employee's balance

Accrual examples

Example 1: Simple monthly accrual

Configuration:

• Ratio: 1 hour of PTO per 10 hours worked
• Based on: Compensable hours

Scenario:

• Employee logs 160 compensable hours in Month 1
• Timesheet is approved
• PTO accrued: 160 ÷ 10 = 16 hours of PTO

Example 2: Accrual across multiple cycles

Configuration:

• Ratio: 1 hour of PTO per 10 hours worked
• Based on: Compensable hours

Scenario:

• Month 1: Employee logs 95 compensable hours
  • PTO accrued: 90 ÷ 10 = 9 hours
  • Leftover hours: 5 hours (carried forward to next calculation)
• Month 2: Employee logs 105 compensable hours
  • Total hours for calculation: 105 + 5 (leftover) = 110 hours
  • PTO accrued: 110 ÷ 10 = 11 hours
  • Leftover hours: 0

Please note: Leftover hours from previous cycles automatically carry forward to ensure employees receive fair PTO accrual even when hours don't divide evenly by the ratio.

Example 3: California sick leave compliance

Configuration:

• Ratio: 1 hour of PTO per 30 hours worked (California requirement)
• Based on: Hours worked

Scenario:

• Employee logs 120 hours in a month
• PTO accrued: 120 ÷ 30 = 4 hours of sick leave

Example 4: Working students (9% accrual)

Configuration:

• Ratio: 11.11 hours worked per 1 hour of PTO (approximately 9%)
• Based on: Compensable hours

Scenario:

• Working student logs 80 compensable hours in a month
• PTO accrued: 80 ÷ 11.11 = 7.2 hours of PTO

Grant details

When PTO accrues based on hours worked:

• Grant type: Active grant
• Grant account: Main account
• Grant timing: Created when timesheet is approved for the first time
• No pre-calculated grants: Unlike annual entitlement policies, grants are created dynamically based on actual hours worked

Important: If a timesheet is reopened and edited after initial approval, the original grant remains unchanged. Manual adjustments may be required if hours are significantly modified after approval.

Viewing PTO balances

Employee view

Employees can view their accrued PTO balance:

1. Navigate to 'Your Profile' > 'Absences' tab
2. View current balance for each absence policy
3. See accrual history showing when PTO was granted based on approved timesheets

Admin and manager view

Admins and managers can view employee PTO balances:

1. Navigate to 'Absences' > 'Calendar'
2. Use filters to view specific employees or teams
3. Export absence balances to see detailed accrual information

Important information

Time Tracking dependency: This feature only works when Time Tracking is enabled and employees have an active Time Tracking policy assigned.

Unit requirement: The absence policy unit must be set to 'Hours' (not days) to use ratio of hours worked.

Timesheet approval: PTO accrues only when timesheets are approved. Pending or unapproved timesheets do not trigger PTO accrual.

First approval only: Grants are created when a timesheet is approved for the first time. If a timesheet is reopened and re-approved, no additional grant is created.

Leftover hours: Hours that don't divide evenly by the accrual ratio are automatically carried forward to the next calculation, ensuring fair and accurate accrual over time.

Annual vs. hour-based: Unlike traditional annual entitlement policies, hour-based accrual does not support proration, carry-over, or tenure adjustments, as PTO accrues continuously based on actual work.

Compliance: This feature helps organizations comply with regional labor laws requiring hour-based PTO accrual, particularly in the United States and for specific employee categories in Germany.