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How To Calculate The Accrued Paid Time Off (PTO)

Accrued Paid Time Off (PTO) is like a special bank account where you store time you can use to take a break from work while still getting paid. To make sure you and your boss know how much PTO you have, you need to figure out something called the “PTO accrual rate.” This article will show you, in easy steps, how to calculate that rate, whether you’re an employer or an employee. And with the help of PTO tracking software, managing your time off becomes even simpler.

What Is PTO Accrual?

PTO accrual is how you earn and save paid time off over a set period, usually a year. This is important because it lets you take paid breaks when you need them, like for holidays or when you’re sick. Understanding how to calculate PTO accrual helps make sure everyone’s on the same page.

Why Is Calculating PTO Accrual Important?

Fair Pay:

Calculating PTO accrual helps ensure you get fairly paid when you take time off.

Following Rules:

It’s important to figure out PTO accrual to follow work rules and laws, which can change depending on where you live.

Happiness at Work:

When you know how much time off you earn, it makes you happier at your job because you can plan for time away.

Money Planning:

Employers need to know how much PTO they owe to make sure they have enough money set aside for it.

Legal Protection:

Having a clear PTO accrual system helps protect employers from legal problems related to pay.

Calculating the PTO Accrual Rate

Here’s how to figure out your PTO accrual rate:

Choose How Often You Get PTO: Decide how often you earn PTO. This could be every day, every week, every two weeks, or every month.

Pick a Way to Calculate It: There are different ways to calculate PTO. You can:

a. Based on Hours Worked:

You earn PTO for each hour you work. For example, you might earn 1 minute of PTO for every 20 minutes you work. This way is precise but can be a bit complicated.

b. Based on Pay Period:

You earn PTO based on how often you get paid. For example, if you get paid every two weeks, you might earn 4 hours of PTO each time you get paid. This way is simpler.

c. Annual PTO:

You get all your PTO at once at the start of the year. Your annual PTO is divided into each pay period. This way means you have all your time off for the year from the beginning.

Calculate the Rate:

Use the method you picked to figure out how much PTO you earn each time. Make sure everyone knows how this works.

Think About PTO Limits:

Some companies set limits on how much PTO you can earn. This helps make sure you don’t save up too much time off. If your company has limits, make sure to follow them.


Let’s say you pick the “Based on Hours Worked” method, and you earn 1 minute of PTO for every 20 minutes you work. If you work 80 minutes, your PTO for that time would be:

1 minute/20 minutes * 80 minutes = 4 minutes

So, you earn 4 minutes of PTO for that time you worked.

Companies often use PTO tracking software to do these calculations automatically, so there are no mistakes. These software tools keep track of how much PTO you’ve earned and used, making everything much simpler for both employers and employees.

Creating a PTO Policy

To keep things clear and fair, it’s a good idea to have a PTO policy. This is like a rulebook for PTO. Here’s what you should include:

How You Earn PTO:

Explain how you earn PTO, whether it’s based on hours, pay periods, or annual PTO.

Rate of Earning:

Tell everyone how much PTO they earn and give examples to help them understand.


Mention any rules about how much PTO you can have at once and if there’s a limit to how much you can save.

Who Can Earn PTO:

Specify who’s eligible to earn PTO and if they need to wait for a certain time before they can use it.

Requesting PTO:

Explain how you ask for time off and who needs to approve it.

Keeping Track:

Describe how you’ll keep track of how much PTO you earn and use, whether it’s with paper records, a computer system, or PTO tracking software.

Getting Paid for Unused PTO:

If you can get money for unused PTO, say when and how this can happen.

Laws and Rules:

Make sure your PTO policy follows the laws in your area and any special rules for your company.

Sharing Information:

Tell all employees about your PTO policy and give it to them in writing.

Changes and Updates:

Say how you’ll change the policy if needed and how you’ll let everyone know about any updates.


Calculating your PTO accrual rate is like counting how much money you have in your PTO balance. It helps you take time off when you need it and makes sure you’re paid fairly. A clear PTO policy, along with PTO tracking software, makes everything even simpler and keeps everyone on the same page. So, whether you’re the boss or the employee, knowing how PTO works is a win-win for everyone at work.