Paid Time Off: General Information

Many companies permit employees to accrue hours or days of paid time off (PTO) as they work, to use for sick or vacation leave. In MYOB Advanced, you can define various PTO accrual plans (PTO banks) for your employees.

Learning Objectives

In this chapter, you will learn how to create PTO banks and link them with individual employees.

Applicable Scenarios

You configure PTO banks if you want to be able to accrue hours that employees may use for paid time off and to keep track of these hours.

You may need to create new PTO banks or edit existing banks if the company policy regarding paid time off changes over time.

Setting Up PTO Banks

On the PTO Banks (PR204000) form, you can create PTO banks, which then can be assigned to individual employees through the Employee Payroll Class (PR202000) and Employee Payroll Settings (PR203000) forms. If you want the same PTO bank to have different accrual rates over the course of time, you can specify this PTO bank on the Paid Time Off tab of the Employee Payroll Settings form multiple times, but each entry must have a different effective date. The effective date of a PTO bank may differ from the start date of a pay period.

In the Start Date box on the PTO Banks form, you enter the date on which the system will add the front loading number of hours to the PTO bank. You specify the number of hours in the Front Loading Amount box on the General Settings tab. Also, the system uses the start date of the PTO bank when carrying the unused PTO hours over to the following year. The carryover rules are determined by the option selected in the Carryover Type box, which may be one of the following:

  • None: The system starts over to accrue hours every year and resets unused hours.
  • Partial: The system carries over a number of hours accrued from the previous year. You specify how many hours to keep in the Carryover Amount box.
  • Total: The system carries over all accrued hours from the previous year.
  • Paid After a Period of Time: All the hours not taken from a year will be carried over to the next year, and after the period of time specified in the Pay Carryover After (Months) box, the remainder of the carryover amount will be paid to the employee.

If the start date of a PTO bank falls between the start date and the end date of the pay period, the system includes the carryover and the front loading amount in the payroll payment calculation. If a PTO bank is paid after a period, the system compares the start date of the PTO bank and the earning date to determine on which day the remainder is to be paid. For example, if the PTO bank's start date is the 15th of January and the carryover is paid after two months, the system will disburse the PTO bank on the 15th of March.

For each PTO bank, you need to specify an accrual method that defines the way how PTO hours are accrued for an employee. The accrual rate can be calculated as a percentage (if you select the Percentage accrual method), or a specific number of hours can be added to the PTO bank every pay period (if you select the Total Hours per Year accrual method).

For the Total Hours per Year accrual method, the number of hours per year that you specify for the PTO bank is divided by the number of pay periods, which is specified in the Number of Periods box on the Pay Periods (PR201000) form, to determine the number of hours included in a paycheck. If the number of periods for a particular year is different from the usual number (for example, 53 against 52 for a weekly pay group), you can select the Override check box on the Pay Periods form and specify the usual number of periods (that would be 52 in our example) that will be used in the calculation of PTO hours accrued within one pay period; as a result, there will be no fluctuations in the numbers of accrued hours from period to period and year to year.

Also, you can specify a unique disbursing earning type and establish a balance limit for a PTO bank, which is the maximum number of hours that are available for that bank.

You can decide whether you want to allow negative balances in paychecks, choose how you want to use carryover hours, and specify the effective date individually for each PTO bank used by an employee in the employee payroll settings. Also, if you decide that a PTO bank should be loaded for employees at the beginning of the year, you can specify the number of front loading hours for this PTO bank.

You can mark a PTO bank as active or inactive. Inactive PTO banks stop accruing hours, but you still can use hours from those banks.

PTO banks accrue hours from earnings that have the Accrue Time Off check box selected on the Earning Type Codes (PR102000) form.

Accrual of PTO Hours

The system accrues PTO hours based on the date of an earning detail line in a paycheck.

If a PTO bank has the Percentage accrual method and if the PTO bank becomes effective in the middle of a pay period, the system will apply the accrual rate based on the date specified in the earning detail line of the payroll document for that pay period. If a PTO bank has the Total Hours per Year accrual method and if the PTO bank becomes effective in the middle of a pay period, the system will prorate the hours according to the number of days to which the rate applies during the pay period.

If the accrual settings of a PTO bank change within the pay period, the system displays one detail line for each accrual rate in the payroll document. Only the line with the latest effective rate will have values displayed in the Total Accrued Hours, Total Used Hours, and Total Available Hours columns on the Paid Time Off tab of the Paychecks and Adjustments (PR302000) form.

Settlement Rules

In the On Settlement box of the Settlement Rules section on the PTO Banks (PR204000) form, you select the rule that will be applied to the PTO bank when a final paycheck is calculated for an employee who is assigned this PTO bank. You can select one of the following options:

  • Pay Balance: The PTO bank will be automatically disbursed. This option is selected by default for a new PTO bank.
  • Keep Balance: The system will preserve the balance of the PTO bank associated with the employee profile.
  • Discard Balance: The system will empty the balance of the PTO bank but not disburse it to the employee.

Paid Time Off in Employee Payroll Settings

On the Paid Time Off tab of the Employee Payroll Settings form, you can review information about an employee’s paid time off and modify the settings if needed.

If the Use PTO Banks from Employee Class check box is selected in the Selection area of the tab, the PTO banks specified on the Employee Payroll Class form for the related employee class are loaded by the system to the table on this tab and the Use Class Default Values check box is automatically selected for the added PTO banks.

Even if the Use PTO Banks from Employee Class check box is selected, you can add a PTO bank that is not assigned to the employee class. In this case, the system will select the Active check box and clear and make non-editable the Use Class Default Values check box for the added PTO bank.

If a PTO bank from the employee class has been in use for an employee and then the Use PTO Banks from Employee Class check box has been cleared, the Active check box remains selected for the PTO bank, but the Use Class Default Values check box becomes cleared.

If the Use PTO Banks from Employee Class check box has been cleared and then you select it, the system adds PTO banks from the employee class to the table and selects the Active and Use Class Default Values check boxes for these PTO banks. If a PTO bank that is not assigned to the employee class was previously assigned to the employee, this PTO bank remains in the table and the Active check box remains selected and the Use Class Default Values check box becomes cleared for this PTO bank.

If a PTO bank with the Active and Use Class Default Values check boxes selected is removed from the employee class, the system clears these check boxes for the PTO bank in the employee payroll settings. If you remove from the employee class a PTO bank with the Active check box selected and the Use Class Default Values check box cleared, the system does not change the state of the check boxes in the employee payroll settings.

You cannot clear the Active check box for a PTO bank that is assigned to the employee class if the Use PTO Banks from Employee Class check box is selected for the employee.