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How to record and manage/keep track of Vacation and Sick time

Brad Bergkamp's Profile

I am new to accounting and have recently filled a position which was, before me, unoccupied. As a result, the company I now work for does not manage Vacation or Sick time. My question: How should I keep track of available/earned vacation and sick time as it accumulates (on a monthly basis)? My company is fairly small; should I just create an excel file that keeps track of and add to vacation times? Then, as employees take vacation, I would lower their available times and add those hours as 'worked' hours to their time cards? If I did this it would force the employees to come to me to request vacation time or to find out how much time they have accumulated. Also, should there be a cap on vacation? It might roll forward from year to year but will cap at xx hours.


Peter Peters
Title: Consultant
Company: Peter Peters Accounting Consulting
(Consultant, Peter Peters Accounting Consulting) |

go to softonic....

Richard Baikie
Title: Director of Finance
Company: Super King Markets
(Director of Finance, Super King Markets) |

You may need to consult a labor attorney or benefits specialist, depending on your state, as well as any employee handbook you may have.
In some jurisdictions, sick is a use it or lose it situation during the year, while others allow it to be carried over year vs. year, up to certain limits. In many cases, it is not payable to the employee upon termination (though there are exceptions).
Earned vacation often is payable upon termination and can be capped.
Failure to abide by your local regulations can cause headaches and penalties.

Erin Palmer
Title: CFO
Company: Leppo Group, Inc
LinkedIn Profile
(CFO, Leppo Group, Inc) |

I echo what Richard says. Employment law is a heavily litigated area now, so you need to make sure that the way you treat vacation and sick time is allowable in your jurisdiction. You also need to make sure that you are following your company's written policy (if you have one - and I suggest consulting with a labor attorney or HR consultant to write on if you do not have one already). Whether you roll over, cap, and pay out upon separation will come from a combination of what is allowable where you are, as well as what your company decides it wants to have as a policy.

After establishing what is allowable, and how your company wants to handle that time, you probably can maintain it in Excel. If you're doing an accrual formula, it might be a little more complicated, but still manageable for a small office. Just be careful to treat overtime correctly for non-exempt employees.

I know that labor attorneys and benefits specialists can be expensive, but dealing with the aftermath of a poorly written (or non-written) policy that is contrary to the laws of your jurisdiction can be even more expensive. And once you speak to someone, you should be able to manage it on your own moving forward. Many outside payroll companies (especially the smaller, local ones) will also help manage and often have decent benefits specialists, so that might be worth looking into.

Good luck!

Topic Expert
Keith Perry
Title: Director of Global Accounting
Company: Agrinos, Inc.
(Director of Global Accounting, Agrinos, Inc.) |


There is lots of stuff, but an hour or two invested should give you the insights on the approach you need to take.
1) State. Research first commentary on your own State regs. They vary widely, and can affect vacation, PTO, sick days, etc. Note also the new sick day regs that start in July. They aren't a big deal, but you do need to adhere to them.
2) Check out postings like this one. . It will give you some perspective on what gets done. Linked in also has some good inputs:
3) Have an "official" policy. That, along with the actual process, will create your liability structure. For example you could have a 2-week vacation policy, plus 5 sick days...but if you have a process of not tracking it, you may have a de-facto unlimited plan.
4) What is your payroll provider / system? Very often they will track use / accruals and the like. If so, use this as a foundation.
5) I have used excel frequently to track vacation, but be cautious about making people check in with you. What if they want to go to Disney and think they have two weeks, when really they have two days? You could be setting it up to have disgruntled employees. Instead, push out the data on a periodic basis so that they are informed (as well as their managers). Vacation might not need to be secret, so you could push it out through an internal website as well.
6) Be cautious about trendy plans like the Netflix (et al) infinite vacation approach. Note that one is driven in part by California regulations, in part by the company culture, and requires a lawyer to make sure it is set up properly. If you're not investing huge amounts of time in it, KISS. Keep It Simple, Silly!
7) Depending on your state, I strongly suggest some sort of cap on the accrual. I especially like informing managers along with the employees when an employee cap has been reached. It puts the manager on notice that they haven't been making sure that the employee gets the vacation time which I believe everyone needs to get refreshed.

Good luck, and when you distill down your plan, tracking, etc., post it up here for feedback!



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