Just about everyone has something to look forward to when contemplating vacation plans. But, many of us rely on prorated vacation time for the much-anticipated break from the work environment. So, what does prorated vacation mean, and how can one use it?
Prorated vacation reflects an employees’ earned time off, based on a percentage of the time worked at the company. The applicable prorated vacation time will be based on the total completed months, weeks, or hours worked at the company.
Calculating prorated vacation times can become stressful or complicated, but it can be fairly straightforward with the right approach. Join us as we discuss prorated vacation time and cover the key fundamentals for prorating vacation days.
What Does Prorated Vacation Mean?
Prorated vacation time reflects an earned time off from work, a creative approach to accruals. Employees would accrue vacation time for a fraction of the time they have worked at the company between scheduled accruals at the beginning and end of the policy.
Whenever new employees are hired, except when on the first day of the year, they must be provided with prorated vacation days. The term ‘prorated’ means that one can use all of the acquired vacation time upfront.
How Long is Prorated Vacation Time?
The amount of acquired prorated vacation time would vary, depending on the number of months, weeks, days, or hours worked at the company. In most cases, the calculated prorated vacation days are determined based on a full calendar year, provided that the company works off an annual accrual policy.
But, prorated vacation time can also be calculated for employees hired throughout the year by making the same calculation for the remainder of the company’s business year. In these cases, the employee will have less prorated vacation time but would theoretically work fewer hours.
Prorated vacation time is typically calculated on a broad scale, with assumed employee worktime for new hires. The appropriate amount of time is always based on the completed months worked, which applies during probation periods as well.
How is Prorated Vacation Time Calculated?
Prorated vacation can be deduced from a universal annual vacation allowance. This allowance is generally applicable to employees working within the first year until their final year of employment.
Notice periods should also be included in prorated vacation times if you are resigning from the position. Always exclude periods of approved unpaid leave within prorated vacation calculations.
When calculating prorated vacation times, always try to go out a few decimals for figures. Using too few decimals can lead to incorrect answers. If the company does not use universal cutoff dates, you will have to use the dates used by the company for total weeks and days.
There are a few ways to prorate vacation, but we have outlined the three most common methods:
Method 1
This method is generally useful when prorating accruals at the beginning of a policy. Accruals can be prorated at the end of policies in certain cases.
(Number of days from the policy’s effective date to the first scheduled accrual ÷ Date number of days between scheduled accruals) x the full scheduled accrual amount
Method 2
Prorated vacation time for part-time employees or staff with Flexi hours, average daily shifts, or weekly work time can become complicated. It’s best to work with the total number of completed hours for the year.
- Calculating Hours per Week
The first step would be to calculate the total hours worked for that year by multiplying the weeks per year by the days per week by the hours per day. This figure should be divided by the total number of weeks in the business year to acquire the total number of vacation hours per week.
- Calculate the Total Number of Weeks
For the next step, you will need to calculate the total number of weeks worked until the final pay cutoff date. If a few days remain, this figure should be divided by the weekly workdays (usually following a five business day week) to determine a decimal figure.
- Multiply the Two Values
To calculate the prorated vacation time, you will have to multiply the ‘hours per week’ value by the ‘total number of weeks’ value. The final figure should be rounded to the nearest decimal value.
Method 3
This method is quite broad and can be applied to people working for at least a few months for that year. For this calculation, day values can be rounded up or down to the nearest half.
(Number of completed months of service ÷ 12 months) × Number of days according to annual leave allowance
Example: Let’s say that an employee started work on March 14, 2014 and discontinued service on July 31, 2014, and was allowed 10 days of annual leave at the company. The total number of months worked would equate to 4 months, as the last month would not be considered a full month of employment.
(4 completed months ÷ 12 months) × 10 days of leave = 3.33 days of prorated vacation.
This value would be rounded down since the decimal is less than half, making the total prorated vacation time 3 days in this scenario.
- Calculating Your Own Prorated Vacation Time
You could go ahead and calculate your prorated vacation time with the given formulas. What matters most is that the prorated vacation time considers the total number of months, weeks, or hours worked at the company – excluding approved leave days.
However, if you’d prefer referring to a standard calculation, there are plenty of online resources to make use of. Assemble your figures as a base for the calculation, and compare these details with online charts. That being said, companies may differ drastically in accrual rates and annual leave allowances.
How to Use Prorated Vacation Time
Once you have identified the number of hours or days available as prorated vacation time, it should be fairly straightforward to use by communicating with the employer – provided that the time does not exceed the annual leave allowance. However, there may be specifics concerning when the prorated vacation time should be used, as there may be designated timeframes for the acquired off time.
Prorated vacation can be a fantastic way to acquire some leave time while you work throughout the year – whether part-time or full-time. Always make sure you’re aware of the policy’s terms and conditions for prorated accruals to makes sure you get the most out of your next vacation.