Learn how to configure custom PTO accrual rules to automate paid time off calculations across multiple employee groups, departments, and seniority tiers. This guide walks through creating and assigning accrual rules after first setting up a Time Off Type, including options for annual, per-pay-period, or hours-worked accrual methods. You can define anniversary dates, prorate rules, negative balance permissions, carryover limits, balance caps, and “use-it-or-lose-it” resets to match your company’s PTO policy requirements.
Designed for organizations managing both simple and complex workforce structures, accrual rules can be highly customized to support multiple rule sets across locations, roles, or employment tiers. Add seniority-based rates that automatically adjust based on hire date milestones, apply job-based exemptions, configure time-type multipliers, and tailor accrual logic to enterprise-level payroll and compliance needs. The article also explains how to assign rules to employees, manage non-retroactive accrual behavior, and apply starting balances using import/export tools for seamless PTO tracking and policy enforcement at scale.
Before creating or assigning an accrual rule, you will need to complete step 1) How to Create a Time Off Type.
Step 2 - Setup Any Accrual Rules Needed (skip to step 3 if your employees don't accrue time)
To the right of your PTO type, click the Accrual Rules button to create an accrual rule. Multiple accrual rules can be created for each PTO type, so different groups of employees can have their own rule.
Each rule can be set with its' own accrual rule period and settings. Period and setting options include:
- Name (Required) - When using more than one accrual rule, the name can be used to differentiate between multiple rules.
- Description - This is an admin-only field for notes on each accrual rule.
- Accrual Method -this sets when each rule will accrue. Method options are Annually, Per Pay Period, or Based On Hours Worked.
- Accrual Anniversary date - The anniversary be set to a specific date or every year on the employee hire date.
- Prorate - This option can be used to prorate an accrual based on an employee's hire date within the assigned accrual period. Options include: Do not prorate, Calendar Days, Weekdays Only. Prorate is only available when accruing annually or per pay period.
- Allow Negative Balance - Allows employees to continue to request time off, even when the balance has been used up.
- + Add Seniority Based Rate - This can be used if you need to add multiple seniority rules based on the employee's hire date. As assigned employees reach their next employment tier, they are assigned to the next tier rule that corresponds with the length of time employed with your company.
- Accrual Rate - This is the number of hours accrued per accrual method. If using seniority rules an accrual rate will need to be applied to each seniority rule.
- Reset balance on Anniversary Date (Use it or lose it) - This resets the balance on a set date each year.
- Maximum Carry Over - Sets a limit on the number of hours that can be carried over into the next year.
- Balance Limit - Sets a maximum balance limit that can accrue for this PTO type, or leave 0 for no limit.
Accruing based on hours worked options
- + Add a Job Based Exemption - Job exemptions can be added to exempt a specified job from accruing time, or to accrue time at an increased rate for specified jobs. Individual jobs can also be set as PTO exempt within each job. See Adding and Editing Jobs. *This option is available only when accruing based on hours worked*
- + Add a Time Type Adjustment - Time type adjustments can be added to set a multiplier for each time type, or to exclude a time type from accruing time. See Overtime Rules & Creating Payroll Items. *This option is available when accruing based on hours worked*
Click Save to save an accrual rule.
Step 3 - Assign an Accrual Rule - Each group/employee will need to be assigned to their designated accrual rule before they will be able to request time off from that time off type.
**NOTE: When assigning a PTO accrual rule, this feature does not retroactively calculate PTO. See step 4 if a starting balance is needed.** For example:
- Enable feature on 7/7/2020
- Accrual rule set to accrue 40 hours annually - on each anniversary of the employee's start date
- If employee's start date is 4/4/2015, then on 4/4/2021, 40 hours will be added to the employee's PTO balance - to set the starting balance for any hours earned before the next accrual date
Step 4 - Add a Starting Balance - Balances can be updated in batch using the import/export option
A balance adjustment is used to:
- add a starting balance with any time earned from before the next accrual date.
- add a balance when using a manual rule.
- make balance adjustments as needed.
See other Time Off Tracking Guides:
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