Take the Guesswork Out of Calculating PTO for Hourly Employees

How to Calculate PTO

There are two ways for employees to earn PTO: as a lump sum or accrued per pay period. When calculating PTO when it is awarded as a lump sum, simply subtract the amount used from the entire amount. If your employee receives 120 hours of PTO each January and he or she has taken two days and two hours, you subtract 18 hours from 120.

The calculations are a little different for accrued PTO by pay period. According to Indeed:

1. Determine how many PTO hours are accrued per year. Some employers give PTO hourly so employees can take an hour or two at a time for appointments, doctor visits or to attend school events. Others award it by days. If your employee receives three weeks of PTO per year, you need to convert those days to hours: three weeks is 15 days or 120 hours.
2. Divide PTO hours by pay period. Pay periods are either weekly, biweekly, semimonthly or monthly. Weekly pay periods comprise 52 pay periods per year, biweekly is 26 pay periods per year, semimonthly is 24 pay periods and monthly is 12. If an employee receives 120 hours per year and is paid weekly, divide 120 by 52 equaling roughly 2.3 hours of PTO per period. Biweekly is roughly 4.6, semimonthly is 5 and monthly is 10.
3. Multiply pay period PTO by time worked. Multiply the amount accrued each pay period by the number of pay periods worked. If an employee has worked two months without taking any time off and is paid semi-monthly, the employee has accrued 20 hours (5 PTO hours per pay period times 4 pay periods equals 20). If the employee is paid weekly, 2.3 PTO hours times 9 pay periods equals 20.7 PTO hours. Keep in mind there are four months with five weekly pay periods.

These calculations show accrued PTO isn’t as simple to calculate, for both employers and employees, when employees are paid weekly or biweekly.

Developing a Successful PTO Policy

A good PTO policy is both needed and appreciated by your employees and clears up any guesswork when calculating PTO. PTO gives employees the time to relax, recharge and come back to work refreshed and ready to go. Follow these tips to make sure your PTO policy is best in class.

Communicate Your PTO Plans. Make sure your employees know exactly how the PTO policy works and when they can take time off. Construction companies may encourage taking more PTO during winter months when it’s not as busy. Communicate with employees about preferred PTO plans from the beginning so there are no surprises. Have policies in place about how many team members can be gone at the same time and if preference is given based on tenure or who puts the time-off request in first.

Incentivize Off-Season PTO. Go a step further with your PTO priority plans by offering employees a little extra for taking time off during less busy times. You can mitigate multiple requests during holidays, like the week between Christmas and New Year’s, by offering extra PTO to employees who take off less popular holidays or during slow times.

Share PTO Requests with the Team. A team with one person down can really throw off the working day. No one likes to be surprised to find out they are working a person down on the jobsite. Let crews know when one member will be out and make arrangements to cover their workload. 

Allow Employees to Track Their Own PTO. Create a time off tracking system that’s available to all employees so they know how much PTO they can take and when. Some companies rely on simple time tracking with a Google Sheet, shared calendars or a whiteboard. However, a good HR system and time tracking app can give you more visibility and help employees stay on top of hours worked and PTO accrued. These HR tools can also send automated alerts to employees who could lose PTO if they don’t use it. If you use a rolling PTO system, make sure employees are aware if they are near the maximum hours.

A good PTO plan can keep both your employees and payroll department happy. Using tools like Arcoro Time's (formerly ExakTime) time clock app lets you track when your employees work including the number of hours accrued. Scheduling features are also available, allowing you to assign shifts to crews and alert site managers as to who is out.