PTO Accrual | Meaning and Definition

What is PTO?

PTO, or paid time off, is leave with pay. An employee gets time off their job, while still getting paid for it. Accrual of PTO is defined as its accumulation after certain factors. In addition to this, it can be used for many purposes. It can be used for sick leaves, personal time, vacation, and other purposes. Being able to work extra, and be able to use those hours for their own needs, is extremely beneficial. It can help an employee with their work. It helps efficiency, with employees working more effectively for a longer period to be able to get benefits. These benefits are as listed above, and comply with time-related regulations. These regulations give an employee time instead of money, while they still get paid. 

How to Accrue PTO?

There are multiple ways to accrue PTO. All of these ways differ from company to company, and comply with company regulations and policies. The ways to accrue are listed below:

• When it comes to time-based accrual, there are two ways of earning PTO. The first of these ways is time-based accrual. Time-based accrual determines PTO hours earned based on the time an employee has spent in a company. This time is not only being a part of the company but working as an employee in the company. It can be in the form of hours per day, or days accrued per month. The second of the ways of time-based accrual is hours worked accrual. This is directly correlated with the amount of hours an employee works, without a set period. This factor also comes with an hours per PTO hour accrued. This means there is a direct conversion rate and no set period.
• Tenure-based accrual is related to an employee’s tenure, or years of service at a specific company. Tenure-based accrual sees an increase in PTO accrual after intervals of service at an organization. This incentivizes an employee to stay in a company longer, to get more PTO.
• Flat accrual rates determine the amount of PTO hours an employee gets, at a flat rate. This states that an employee, depending on their position and status, gets a set amount of PTO hours per month. Regardless of work, effort, raises, or any other factor, these accrual rates don’t change. This means that every employee in the same position gets a set amount of PTO hours per month. This accrual is added to an employee’s portfolio monthly. As compared to a flat accrual rate, fractional accrual rates exist. Fractional accrual rates calculate flat accrual rates, daily. This means that every employee in the same position will get a set amount of PTO hours every day. Fractional PTO adds up daily.
• Frontloading is the final way to accrue PTO. It is a set amount of PTO hours every employee in standardized departments gets at the beginning of the year. This amount does not change and is awarded to an employee to use throughout the year.