Time Off Policies: Monthly Accrual Schedule

Learn how to implement and manage time off policies with a monthly accrual schedule

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Article written by Melissa Spillett
Written by Melissa Spillett
Last modified on

October 18th 2024

With Jibble’s PTO tracking software, you can create a paid time off policy with monthly accruals to define how time off is earned on a monthly basis. This article will explain how monthly accrual schedules work and the options available for customizing these schedules.

This article covers:

Creating a New Time Off Policy

  1. Log into your Jibble account.
  2. Navigate to the Time Off & Holidays section from the main menu.
  3. Click on Time Off Policies to create or manage your time off policies.
  4. Click on Add Time Off Policy to start a new time off policy.Adding time off policies on web
  5. Name your policy (e.g., “Annual Leave”, “Sick Leave”).
  6. Assign members and/or groups to the policy.
  7. Under the Schedule of Accrual field, select Monthly.Selecting monthly schedule of accrual
  8. Select an accrual date based on the monthly accrual settings, i.e. Custom Date or Join Date.
  9. Enter the amount of leave employees are entitled to each month (e.g., 2 days or 16 hours).
  10. Select whether entitlements should be accrued at the Start or at the End. Read more on monthly accrual settings below. Entering an entitlement amount and selecting settings
  11. If you do not want public holidays to be included as a day of leave, select the checkbox for Exclude public holidays.
  12. If you do not want rest days to be included as a day of leave, select the checkbox for Exclude non-working days.Excluding policies from public holidays and rest days
  13. Select the checkbox for Leave balances can be carried forward to the next cycle if you wish to allow leave balances to be carried over to the next year.
  14. Input the total number of days or hours allowed to be carried forward together with the expiry time (1-12 months).Selecting carry forward rules
  15. Click Save to implement the new accrual schedule.

Setting Up Monthly Accruals

You have two types of monthly accrual schedules to choose from:

  • Custom Date: This accrual schedule grants leave based on a specific date each month. For example, you can choose “Day 1 to Day 28, or the last day of the month.”
  • Join Date: Accruals are based on each employee’s join date. If your employees are required to go through a waiting period before earning leave entitlements, you’ll be able to input the number of waiting days.

Once you’ve chosen your Accrual Date, you’ll define the amount of leave each employee earns per month. You can specify this amount in days or hours. Additionally, you can choose whether this entitlement is accrued:

  • At the Start: Employees will receive their monthly entitlement on the set date (e.g., the 1st of each month).
  • At the End: Employees will accrue their leave throughout the month and receive it one day before the accrual date of the following month.

Example 1: Custom Date – Accrual at Start

Accrual Schedule: Custom Date (Day 1)
Entitlement: 1 day per month
Accrual: At the Start

Let’s say today is March 15th. On April 1st (Day 1 of the month), each employee’s leave balance increases by 1 day. When May 1st arrives, another 1 day will be added to the employee’s leave entitlement.

Example 2: Join Date – Accrual at End

Accrual Schedule: Join Date
Entitlement: 2 hours per month
Accrual: At the End

An employee who joined on July 1st will start accruing 2 hours of leave on July 31st (one day before the next accrual date) since the accrual schedule is based on join date and accrual happens “At the End”. When August 31st arrives, another 2 hours will be added to the employee’s leave entitlement.

Example 3: Join Date – Accrual at Start (with Waiting Period)

Accrual Schedule: Join Date
Entitlement: 2 days per month
Accrual: At the Start
Waiting Period: 90 days

Let’s say an employee joins on April 1st. The policy has a 90-days waiting period for accruals with a “Join Date” schedule and accrual “At the Start.”

During the waiting period from April to June, the employee will not accrue any leave. However, on June 30th (90 days after joining), the employee will receive the total accrued leave for the waiting period (6 days) then, the leave accrued for July (2 days) will be added on July 1st, totaling 8 days. When August 1st arrives, an additional 2 days will be added to the employee’s leave entitlement.

Proration

Proration adjusts the leave entitlement for employees who join partway through the monthly accrual cycle. This ensures fairness by giving new employees a proportionate amount of leave based on the time remaining in the cycle. The proration formula is as below:

If entitlement is accrued “At the Start”:

Prorated Leave = (Number of Days Employed from Join Date to the end of the month / Total Days in the Month) × Monthly Entitlement

Note: Calculations include the Join Date.

Example:

If an employee joins on July 15th (with 31 days in July) and the monthly leave entitlement is 2 days, your prorated leave for July would be:

Prorated Leave = (17 days worked) / (31 days in July) × 2 days = 1.10 days

The employee will see a balance of 1.10 days under the time off overview on July 15th.

If entitlement is accrued “At the End”:

Prorated Leave = Monthly Entitlement – [(Number of Days Employed from the beginning of the month to Join Date / Total Days in the Month) × Monthly Entitlement]

Note: Calculations exclude the Join Date.

Example:

If an employee joins on July 10th (with 31 days in July) and the monthly leave entitlement is 16 hours, your prorated leave for July would be:

Prorated Leave = 16 – [(9 days missed) / (31 days in July) × 16 hours] = 11.35 hours

The employee will see a balance of 11.35 hours under the time off overview on July 10th.

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