Accruals

What are accruals?

In the HR world, accruals generally refer to time off, sick leave and vacation time that ‘accrues’ as an employee works for the organization. For example, a company may offer four days of paid leave per quarter. When the employee has worked for six months, the have accrued eight days of paid leave. If an organization front-loads time off at the first of the year, it wouldn’t technically be an accruals system.

Accruals can also refer to unpaid leave that accrues according to FMLA or state family leave laws.

Why offer time off accruals?

How do you manage accruals?

  1. Create and document your accruals policy in your employee handbook
  2. Train managers on your accruals and PTO approval system
  3. Track employee time with automated timekeeping software
  4. Calculate employee balances
  5. Allow for year-end rollover if applicable
  6. Adjust for tenure if applicable
  7. Answer employee questions about their accruals
  8. Notify employees of soon-to-expire earned leave

If you are using spreadsheets, everything is manual. You have to enter employee hours. You have to set up the formula. You have to make sure it works like it should. Any accruals tracking error can lead to a payroll mistake that costs money.

What is the best way to track accruals?

Spreadsheets don’t make sense when there is accruals tracking software. Cloud-based HRMS and PTO tracker solutions are basically plug-and-play.

A Human Resources Management System (HRMS) simplifies accruals

An HRMS is a unified system for managing HR processes. Features include:

  • Family Medical Leave Act (FMLA) compliance
  • Timekeeping for salaried, hourly, remote, mobile, and contract workers
  • Employee vacation requests
  • Manager approvals
  • Time off policy documentation and training
  • Employee scheduling

Accruals synced to scheduling

Accruals tracking apps and HRMS sync accruals tracking to scheduling. This is very important. When an employee vacation request is approved, the accruals tracker sends the dates to the schedule builder. If the managers tries to schedule the employee during approved time off, it will alert them. Consider all the connections between timekeeping, scheduling, and accruals. The level of efficiency and accuracy with HR software as compared to spreadsheets is profound.

Accruals Compliance

When creating a policy, make sure it’s compliant with any applicable laws. There are currently no federal laws that mandate paid vacation time for small businesses. If you are working on a government contract, however, you might be subject to a federal law regarding paid time off. The two provisions are the McNamara O’Hara Service Contract and the Davis-Bacon and Related Acts. There are also some states that regulate accruals. For example, some require employers to compensate workers for unused accruals when leaving the company. Workforce management software has your back when it comes to accruals compliance. You customize the compliance settings for the laws you are subject to.

Tracking accruals for remote workers

As long as you have employees who work outside a manager’s workspace for some fraction of their hours, you need to consider how you track their accruals. If your company qualifies for government assistance, you may also need to track sick leave and emergency family leave as separate accruals categories to get your benefit. Employee timekeeping/accruals apps allow employees to clock in from a mobile device. The app tracks shift clocking, work hours, accruals, and shift schedules. They allow employees to request time off in the app. Managers have all time off requests in the same place and can treat them equitably.

See also

Additional resources