Table of Contents

Vacation/Sick Leave Overview

Greg Hatfield Updated by Greg Hatfield

Two separate categories of Paid Time Off (PTO) can be accrued and usage can be tracked in Live Payroll only. The categories are Vacation and Sick Leave. This requires the user to create policies describing how PTO is accrued and to assign a policy to each employee for whom PTO is to be accrued. The necessary steps are described below.

Note: Users should review policy setups each year to determine if changes are needed, for example to the Accrual Start date or the Reset Usage date.

We recommend that you start by watching our instructional video on the web to become familiar with the PTO procedure. See the video in the Payroll System section.

Vacation/Sick Leave Policy Setup

Step 1. Create and Save Vacation and/or Sick Leave Policies. Multiple policies can be created for each of the two PTO categories: Vacation and Sick Leave. A policy describes when and at what rate PTO is accrued, if any accrual limits apply, and if any usage limits apply. Policies can be created on the Client screen, Vacation/Sick Leave tab. See Typical Examples of Sick Leave and Vacation Policies for Hourly and Salaried Employees.

Many policies accrue sick leave or vacation based on hours worked. Be sure that your payroll grid income items allow entry of hours worked in order for the program to calculate the accrued sick leave or vacation. In order to track sick leave and vacation hours used, the employer must have Sick Pay and Vacation income items already on the Payroll Items setup screen. If the employer does not have Vacation or Sick Pay income items, be sure to add them on the Client screen Payroll Items tab before creating the policy.

Vacation/Sick Leave Employee Setup

Step 2. Determine when accrual will begin and assign a policy to each employee so that PTO will begin accrual with the appropriate paycheck. One policy from each category can be assigned to each employee. Different policies can be assigned to different employees. For example, one employee may be assigned a vacation policy earning two weeks per year, and a different employee may be assigned a policy earning three weeks per year.

Step 3. Enter paychecks to accrue and use PTO. If the policy earns a certain amount of PTO per hour worked, then the paycheck entries must include the hours worked. If the PTO policy earns PTO on a certain date or per pay period, then hours worked do not need to be entered. However, usage tracking of PTO always requires entering the hours for vacation or sick pay. The initial checks for each employee may require manual adjustments to establish the correct starting balance.

Step 4. Provide employees with a record of their available Paid Time Off. There are two ways to provide this information to employees. Printed paychecks are set by default to show the vacation and sick leave available to the employee. Alternatively, the option to print vacation and sick leave on the paychecks can be turned off and a report can be printed from the Vacation/Sick Leave Employee Setup screen.

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Vacation/Sick Leave Employee Setup

Vacation/Sick Leave Policy Setup