Lump sum PTO to accrual
What is the best way to transition from a lump sum on anniversary PTO to an accrual system. On each employee’s next anniversary would they receive their 120 hours of PTO and then immediately start accruing their next 120 hours? This way they could stil use the 120 hours they receive on their anniversary AND have accrued their next 120 hours over their next year. I really appreciate your thoughts!
It’s best to end one program (lump sum) as you convert to the new program (accrual). Inform employees that on their next anniversary, they’ll start to accrue PTO instead of receiving it on their anniversary date. Then consider allowing them to keep some portion of the prior year’s unused balance. For example, some companies allow employees to roll over 40 hours of unused PTO to the next year. Here’s an example.
On 2/28, the day before Mary’s 3/1 anniversary date, she has 60 hours of unused PTO. Since you’re moving to an accrual basis, on her anniversary date, you can allow her to retain some of that (or not, it’s your choice. I recommend you allow some rollover amount during the transition year, such as 40 hours).
Starting on 3/1 she begins to accrue vacation (perhaps she earns 1 PTO for every 30 hours worked) in addition to the 40 hours she rolled over. So by the end of April, she has an accrual balance of 4 hours, in addition to the one-time rollover of 40 hours. 44 hours in total.