Time Off Overview

Time off is a period of time where employees are not working. Employers offer time off as a type of perk that allows employees to take a break from work to travel, rest, take care of personal tasks, etc. Employers can offer a combination of paid or unpaid time off and set different policies/rules for different groups of employees. Common examples of time off are Vacation, Sick, Holiday, and Bereavement.

Paid time off

As the name implies, employees that are on a paid time off policy will receive compensation for time they take off. Employers track the hours of time off taken and input that information during the run payroll flow. The paid time off compensation is calculated and added as earnings to the employee’s pay stub. Paid time off is taxed like any other regular compensation received by the employee and is reported as part of the gross earnings on the employee’s W-2 at year end.

Unpaid time off

Employees that are on unpaid time off do not receive any compensation for the days off they take. Employers might still set policies and rules to track how much time off an employee is allowed, how much has been used, and how much is remaining. Time off hours are recorded during the payroll run and are reflected on the paystub for record keeping only. No additional compensations are added to the employee’s wages in this case.

Adding employer time off

To add an employer time off, follow these steps:

1. Navigate to the employer profile
2. Locate the Time off card and click Edit
3. Click on Add new time off
4. Select the desired time off type
5. Next, indicate that you want to set company default values (most common)
6. Indicate how the time off hours are accrued – you can choose one of the following:
   1. Based on hours worked – using this accrual method, an employee earns time off hours based on how many hours they work
   2. Fixed amount each year – using this accrual method, an employee earns all their time off on a specific date like at the beginning of the year or on their hire date
   3. Manual – this is not common, but allows an employer that has a very custom method or is tracking accruals using a different tool to manually enter the accrued hours for each employee manually by adding their time off balance
   4. No accrual – this is used for employers that have an unlimited time off policy. No hours of time off are accrued.
7. Based on which accrual method chosen above, there might be some additional configuration settings
8. Once done, click Save

Adding a policy to an employer time off

When adding an employer time off for the first time, you are effectively also adding a default time off policy. Employers sometimes have a need for more than one policy. As an example, they might have one time off policy for new employees where they earn 2 weeks of time off a year and another policy for tenured employees where they earn 4 weeks of time off a year. Here are the steps to add a policy:

1. Navigate to the employer profile
2. Locate the Time off card and click Edit
3. Locate the appropriate time off to add a policy to and click Edit
4. If there are any policies added, they will appear there. To add a new policy, click “Add a policy”
5. Enter a display name to help you recognize it later. This name is only visible to the company admins and will not be shown on worker pay stubs.
6. Select the accrual method and any other configuration settings
7. Click Save

Assigning time off to an employee

To assign an employee a time off policy, you can do so from the worker profile following these steps:

1. Navigate to the employer profile
2. Locate the Time off card and click Edit
3. Click “Add new time off”
4. Select the time off type that was added earlier
5. Select the appropriate time off policy if there are more than one policy
   1. Note: if there are no policies created, make sure to create a time off policy first.
6. Enter a starting balance if applicable
7. Click Save

Running payroll with time off

Once time off has been set up for an employee, running payroll with time off is straightforward. Here’s an overview.

1. On the first page or run payroll (the Hours and Earnings screen), click the ⋮ icon at the end of the row for the employee with time off
2. Click Manage time off
3. Click Add a new time off
4. Select the time off type
5. Enter the hours of time off taken
6. Add or modify the rate used for calculating the time off pay – this is only applicable for paid time off
   1. Note: we try to compute the rate based on the employees salary or hourly pay. You can override it as needed.
7. Click Save
8. The time off hours will be added to the run payroll
9. Continue the rest of the payroll run as usual