How to Calculate Pro Rata Leave: Guide + Examples
Even if you apply the same time off accrual rates to all your part-time and full-time employees, their annual leave balances will drastically differ from each other. The same can be said about employees who joined you halfway through the year — they won’t receive just as much time off as those who worked for an entire business year.
So, how to figure out the amount of time off each of your team members is entitled to?
That’s when pro rata leave calculation comes into play. Learn what it is and how to use it in a few different employment scenarios.
What Is Pro Rata Leave?
The word “pro rata” is of Latin origin, and it can be literally translated as “in proportion,” “according to the calculated share.” In line with this definition, pro rata leave means a proportion of the annual time off balance given to full-time employees.
It is calculated based on the accrual rate adopted in your company and the number of days or hours a team member spends on their job (as compared to full-time employees). For instance, if a person works merely 20 hours a week instead of the standard 40, they will receive half as many days off as your full-time workers.
When Do You Need to Prorate Employee Vacation?
It’s essential to prorate employee vacation in the following instances:
- When you have part-time employees on the team — pro rata vacation applies to them no matter if they stick to a fixed schedule or work irregular hours.
- When you hire an employee part way through the leave year.
- When an employee quits their job in the midst of the year, and you have to compensate them for the earned time off.
How to Calculate Pro Rata Leave?
Before calculating any leave time, you should find out which statutory holiday entitlements you’re obliged to provide to workers.
In the United Kingdom, for instance, most of the employees are entitled to 5.6 weeks (or 28 days) of paid vacation a year. And in the United States, employers must grant their team members 12 weeks of unpaid time off, as per the Family and Medical Leave Act.
So, make sure to explore your local laws and figure out how much leave time you have to give to different types of employees. Then, use the mandatory minimum entitlement as the base point in the leave accrual process.
1. Pro rata leave for part-time employees
Your approach to calculating pro rata leave for part-time employees will depend on whether they adhere to a fixed schedule or work irregular hours.
Suppose your full-time employees receive 5.6 weeks off a year. In this case, if a part-time employee works 2.5 days (20 hours) every week, their annual pro rata leave will equate to 14 days (112 hours):
And what about those who work irregular hours?
Their annual time off entitlement can be calculated like this:
- Determine how many days / hours an employee spends on work each week.
- Sum up these figures and divide the result by 52 (the number of weeks in a year).
- Lastly, multiply the obtained average number by the annual time off rate of 5.6 weeks.
2. Pro rata leave for those hired part way through the year
There are three main things to take into account when calculating pro rata leave for someone who joins your team part time through the year:
- Their hire date
- The start of the leave year in your company
- The number of days / hours an employee works a week
For example, if a full-time employee joins the team on May 1, while the leave year in your company begins on January 1, they will be entitled to merely 8 months of time off instead of 12 (i.e., 2 / 3 of the entire year). And provided that all full-time employees in your organization are granted 28 days off a year, a person who was hired on May 1 will receive 18.6 days off:
3. Pro rata leave for those quitting their jobs in the midst of the year
The same proration principle applies to employees who want to leave your company part way through the year:
- You first need to define which portion of the year they were employed.
- And after that, you can proceed to calculate their earned pro rata vacation based on the relevant accrual rate for the full year of employment.
For example:
If a part-time employee quits their job on October 31, and the leave year in your company starts on January 1, you need to compensate them for 10 months of time off instead of 12 (i.e, 5 / 6 of the leave year).
If that employee always worked 2.5 days a week and was entitled to 14 days off for a full year, they will receive 11.7 days off for the 10 months of work:
Accurate Time Off Accrual Is Vital for Your Business
When performed correctly, the leave accrual process helps you better comply with local labor laws, reduce business costs and improve employee satisfaction. Hence, it’s very important to calculate employees’ time off balances without mistakes and monitor how everyone uses their earned vacations throughout the year.
A high-quality software tool like actiPLANS makes it easier for you to succeed with these tasks. It allows users to set bespoke leave accrual rules for every employee, calculate their time off balances automatically and manage leave requests in an effortless way.
Try out actiPLANS for free during a 30-day online trial and forget about manual leave calculations for good!
