When to jump from 5 to 10 Vac days when on Calendar Year?

O.K. - I'm renegotiating our current Vacation Policy with my Management Team next week. I am proposing that during an employee's 1st year of employment they should receive a prorated amnt of Paid Vacation days (5 Days per year = 0.417 days per month worked) from their start date through Dec. 31st each year. Then they will be placed on a calendar year basis so their Vacation time will renew to 5 Days from Jan. 01 - Dec. 31 each year (no roll-over allowed). They want the policy to state that after 3 years of employment they will then receive 10 Paid Vacation Days & after 7 years they will receive 15 Paid Vacation Days. So my question is WHEN to actually bump them up? If their anniversary date is (for example) in April.....when do they move to the 10 Days of Vaca from 5? If they started in April 2007 they'll have the prorated amnt from April thru Dec'07 & restart on Jan.01, 2008 with 5 whole days. So should they be moved to 10 days on Jan.01, 2010?? I think I'm overthinking this & confusing myself.

 Help??? [:S]


  • 5 Comments sorted by Votes Date Added
  • There are about as many ways to accrue PTO/Vacation/Sick time/Holiday as there are companies.

    However, with a calendar year system (as compared to a benefit year system (typically based on anniversary of hire), no adjustments are made mid-year.  The primary benefit of the calendar year system is that it is really easy to administer.  The down side is that it is not particularly fair, especially to people who hit important break points in the first quarter who still have to wait for the following year to realize the benefits.

    There are ways you can mitigate that a little bit by adding complexity to the system but those fixed are either a) more expensive or b) incompatible with the whole point of doing a calendar year system in the first place.  For example, you could award people prospectively based on the seniority they WILL have say, in the first half of the award year.  Aside from the added complexity, there's more risk of loss to the company, depending on your turnover profile.  Alternatively, you could bump their time on their anniversary of hire but if you are going to do that, why not switch to a benefit year system?

    Based on my own experiences, I would either respect the value of the calendar year system and make no adjustments or switch to a benefit year system.  Hopefully, someone else has a more elegant solution for you that will work within your existing calendar year system.

  • I agree with TXHRGuy that if you are on a calendar system then you should not make any changes mid year.  All changes should be made at the beginning of the calendar year.  This is why, although more work for HR, I have stayed with the annniversary year system.  It is much easier for me to explain to a new emplyee that on their anniversary date you will have X number of days of vacation.  I don't have to prorate at the beginning, etc.



  • At hire, the employee gets a prorated amount through December 31st. 

    At the beginning of the calendar year, I look for employees who hit their 5th anniversary date that year.  I then calculate (prorata)* how much vacation time the employee should get based on where their anniversary falls in that anniversary year. They would be given an amount between the 1 week amount and the 2 week amount (actually for us it is the difference between 2-3 weeks).  I communicate to them the amount they will have for the year. 

    *It is actually a calculation I have in one of my main employee information files, so it tells me at any point how much they get in that anniversary/change year based on hire date.  It is a calculation I only really have to do once at hire and it is there year to year to pick up and use when they actually hit that year.


  • I am the Business Manager for a non-profit organization. We accrue vacation days bi-weekly based on hours paid. i.e. 10 days * 7.5 hours (hours in a workday) divided by 1950 hours (# of hours paid in a year). The last time sheet before the hire date is used to adjust any fraction adjustments. When the employee moves to 12 days the biweekly calculation begins with the timesheet that includes the hire date. This makes the system fair to all. Hope this is helpful.

  • We accrue in a similar fashion, which is easy since we are a small company.  At the beginning of the anniversary month for which the benefit raises, they start accruing the new number of hours.  For example, an employee who has been with us for 4 years will accrue 3.33 hours per pay period.  At the beginning of the month of their 5 year anniversary, they begin to accrue 5.0 hours per pay period.  I realize this isn't calendar year calculating, but it's simple if you don't have a large number of employees.

    However, at my previous company, which was quite large, after the first year of service, vacation is earned based on the calendar year.  So, regardless of hire month, they accrue whatever amount applies beginning on January 1. (On January 1, 2008, someone would begin accruing the 2 year benefit amount, even if they only started in December, 2006.)

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