How to Calculate Prorated PTO

Proration answers one question. How much of a full year's allowance has somebody earned when they were not there for the full year. It comes up when somebody joins, when somebody leaves, and when somebody moves between full time and part time hours. The arithmetic is easy. Almost every argument about it turns out to be an argument about the rule rather than the sum.

Before calculating anything, write down three things. The full year allowance, in days or in hours. The boundaries of your leave year, which may not run from January to December. And the rule you use for counting a partial month. Once those three are fixed, every case below is a division.

The leave year catches people out most often. A company running April to March has a July joiner with nine months ahead of them, not six, and prorating against the calendar year instead is a common way a first allowance ends up wrong. The accrual methods guide covers how the year interacts with each method.

The most widely used rule is complete months. Take the full year allowance, multiply by the number of complete months left in the leave year, and divide by twelve.

What counts as a complete month is the part you have to decide. The strict version counts a month only when somebody is there for all of it, so a start on the first counts and a start on any later day does not, with counting beginning the following month. A softer version counts the month whenever somebody starts on or before the fifteenth. Both are defensible. Only one of them can be in your policy.

Take the 10 August row. The first complete month is September, which leaves September, October, November and December, so four months. Twenty days times four, divided by twelve, is 6.67 days, which becomes 6.5 once it is rounded to the nearest half day. That is the figure the tracker on this site produces when you enter a 10 August start date against a 20 day annual allowance.

The last row is the one people find uncomfortable. Under a strict rule, somebody starting on 5 December has no complete month left and earns nothing for that stub, then starts January with the full allowance. Plenty of companies grant a day or two anyway. That is a policy decision, and it belongs in the policy rather than in whoever happens to be doing the sum.

Under monthly accrual there is no separate proration step. A 20 day allowance earns 1.67 days a month, so somebody joining partway through the year earns from their first eligible month to the end of it.

Which month is the first eligible one is the same decision as before. Under a rule of on or before the fifteenth, somebody starting on 10 August earns across five months, August to December, which is 8.33 days by 31 December. Somebody starting on 20 August begins in September, so four months and 6.67 days.

Notice that the same 10 August joiner has 6.5 days under an annual grant and 8.33 days under monthly accrual. Neither number is wrong. They are answers to two different policies, which is exactly why the method belongs in writing before anybody's first day.

Hourly accrual prorates itself, because hours worked is already the measure. Divide the annual allowance in hours by the annual working hours to get the rate. An allowance of 80 hours across a 2,080 hour working year is 0.0385 hours of paid time off per hour worked, so somebody who has worked 1,000 hours has earned about 38.5 hours whatever date they started.

Part time work is a different kind of proration and the one most often done wrongly. Somebody working three days a week where full time is five gets three fifths of the full time allowance, so 20 days becomes 12. Count that allowance in their own working days rather than in full time days, because a week off costs them three days, not five. Public holidays need the same care, since a part timer who never works Mondays would otherwise gain or lose purely on where the holidays fall.

The calculation on the way out is the same one, run to the leaving date. Earned to date minus taken to date. A negative result is normal for anybody who books a long holiday early in the year and resigns in the spring.

What happens to that balance on the final payslip is a legal question rather than a calendar one. Whether unused time has to be paid out, and whether an overdrawn balance can be deducted, depends on where you employ people, and in the United States it varies between states. Confirm the position for your location before you put a number on a final payslip.

Round once, at the end, to a unit your policy actually administers in. Most policies work in half days, so 6.67 becomes 6.5 and 18.33 becomes 18.5. Rounding up at the exact midpoint is the convention worth adopting, because the alternative is explaining why the company kept a quarter of a day.

Do not round an already rounded number. Prorating 20 days to 6.5, deducting bookings, then rounding again produces drift nobody can trace later. Keep the full year figure beside the prorated one, so a smaller allowance can be explained rather than defended.

• Prorating the balance rather than the grant. Prorate the allowance once, then deduct bookings from it. Prorating what is left is a different and wrong sum.
• Prorating again at the year end. The reduction applies to the first, partial leave year only. Every complete year after it gets the full allowance.
• Counting calendar days on the deduction side. A week off is five working days for most people, not seven, and fewer when a public holiday lands inside it.
• Prorating against the calendar year when the policy runs on a fiscal one.
• Leaving the rule out of the policy. Every figure above depends on a rule somebody chose, so write it down rather than deciding it again per hire.

Every calculation on this page is one the tracker on this site performs for you. Enter a start date, set the allowance and the method once, and the first year is prorated automatically. Open the tracker, or see how the same figures behave across several years in the carryover guide.