Accruals 101

Hat, sunglasses, and camera for employee PTO benefit accruals

Benefit accruals may seem simple… But if not set up properly, they can easily result in numerous errors and a huge headache for your HR team. Working with a wide range of companies, we know how many different ways accruals can be set up. However, the basics of benefit accruals remain the same. Read on for our tips to get your accruals set up quickly and correctly!

1. Communicating Your Policy

Before you can implement a new accrual policy in payroll, it’s important to first clarify all the details of your accrual. (Hint: these should be added to your employee handbook!) At a minimum, your basic PTO policy should cover:

  • How much paid time off employees accrue, based on years of service.
  • Who qualifies for PTO and when they start accruing (if there is a probationary period).
  • How employees earn PTO: per hour (if so, does that include overtime?), at a specific frequency (if so, do employees on leave of absences still accrue?), etc.
  • Procedures for scheduling time out of the office and how accrued PTO is paid out when an employee leaves their job.
  • Any required state or local sick leaves, if applicable.
  • If your plan will be a rollover or “use-it-or-lose-it” plan (some states require a rollover plan for PTO!) and if there will be a cap on accrued hours or separate “accrual bank” for rolled-over balances.
  • Whether PTO will be dispersed at the start of each year (and if so, each calendar year or on the employee’s anniversary), or accrue each pay period.

Top Tip: You can find sample Paid Time Off (PTO) and Sick Leave policies in the HR Support Center to help you get started. Or, reach out to a member of our team for more hands-on HR help crafting these policies.

2. Submit Your Request

Next, reach out to your payroll provider to set up your new accrual policy. If you are an SDP client, you can do this by emailing [email protected]. Once our team receives your request, we will send you a Company Accrual Setup Form to complete.

After completing the form, all you need to do is send it back to us with:

  • A copy of your written accrual policy from your company handbook
  • The current available accrual balance for each of your employees

Then, our team will review your submitted policy, set up the accruals, and schedule a call to review the setup. During the call, we’ll also provide you with an Accrual Explanation and Illustration for your approval.

Typically, new accrual policies take about 2 weeks to program and test. However, we encourage clients not to display accrual balances for at least 2 payrolls to ensure the system is functioning as intended.

3. Check & Review

We want your accruals to run smoothly from the get-go. But that doesn’t mean we won’t keep an eye on them to make sure the accrual rules we set up match your expectations!

After setting up a new policy, our team will monitor your accruals for your next two payrolls. After each payroll run, we’ll follow up with you to confirm the accruals are accurate. Then, once everything is in order, we can update your paycheck settings to display the accrual balances on employee paychecks.

What do you think?

Does your business already have a Paid Time Off policy in place? Let us know your tips for crafting the perfect policy for your business in the comments below!

Looking for more HR help? Ask about our suite of HR Solutions to learn how SDP can help your business with free online access to our HR Support Center, 24/7 live assistance to licensed HR pros, and even an on-site HR audit to ensure your business is on-track and compliant.

Photo by Pixabay from Pexels

, , , , , ,

Related Posts

Menu