Transitioning from Anniversary based vacation to PTO accruals

Does anyone have any suggestions as to how a company can smoothly transition from giving vacation and sick hours (based on anniversary date) to a PTO accrual plan that has a max amount?  For example: An employee (Mary) is hired on 10/21/2018. Mary works one year before she receives any paid vacation. On 10/21/2019,  40 hours are dumped into her vacation bank.  Mary uses 10 hours of this 'already earned' vacation before Jan 1, 2020, which leaves her with 30 hours remaining as of 12/31/19.  On Jan1, 2020,  Mary will begin receiving 1.53 accrual hours per paycheck,  but she cannot take more than 40 PTO hours under the new plan beginning in 2020.  At the beginning of January 1, 2020, Mary already has 30 hrs (remaining from 2019) which means she will max out her PTO at 40 hours within 7 pay periods  in 2020. If she uses all of her vacation within 7-8 pay periods of 2020,  does this mean she cannot take any more days until Jan. 1, 2021?   What is the best way to handle this type of transition that is fair to both the employees and employer?

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  • Hi Becky, when we looked at transitioning from a bucket plan to an accrual plan we focused on a few things. 1) We didn't want to shortchange the employee so if the company spent a little more, we didn't sweat the costs. 2) We wanted to make sure that there was a clear date of change so administratively it wasn't difficult. For Mary, what we ended up doing during the year of the transition is that we allowed our employees to take as much PTO as they wanted. This was only for the year of transition. So any employees who were grandfathered in could take more than 40 hours in 2020. (Our reasoning was that they were employee who had been loyal to the Company and that PTO was considered earned wages) During 2021, the year after the plan was implemented, we went back to limiting how much PTO that person could take. Hope that helps!

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