Managing employee paid time off is a critical human resources function. FastFund Payroll automatically calculates and tracks all employee vacation and sick time accruals, as well as the time taken, reducing administrative burden and ensuring accuracy.
Because accrual policies vary widely among nonprofit organizations, FastFund provides two distinct calculation methods to match your specific employee handbook: the Accrual Factor method and the Fixed Amount method.
Important System Rule: FastFund tracks cumulative year-to-date vacation and sick time earned and automatically carries forward the cumulative balances to the next calendar year. Accrual balances do not automatically reset to zero at the beginning of the calendar year.
[INSERT SCREENSHOT: The ‘Vacation and Sick Time’ section within the Employee Payroll tab, showing the drop-down menus for Accrual Method and the fields for Accrual Factor/Fixed Amount]
Method 1: Accrual Factor Using the Accrual Factor method, employees earn time strictly based on the exact amount of hours they work in a pay period. When a payroll is processed, FastFund multiplies the number of hours worked by the assigned Accrual Factor to determine the hours earned.
To determine your organization’s custom factor, use this formula: (Number of hours accrued a year) ÷ (number of pay periods a year) ÷ (number of hours worked per pay period).
Alternatively, FastFund provides standard default factors based on a 40-hour work week:
Method 2: Fixed Amount Using the Fixed Amount method, an employee accrues a set, fixed number of hours every single pay period, regardless of the exact number of hours they worked.
The fixed amount is determined by dividing the total hours accrued during the year by the number of pay periods in a year. (Example: If an employee earns 80 hours a year and is paid bi-weekly [26 pay periods], the fixed amount accrued each pay period is 80 ÷ 26 = 3.08).
Tracking a Single PTO Policy Many nonprofits have moved away from separating vacation and sick time, opting instead for a single Paid Time Off (PTO) bank. If your organization combines these benefits, the system setup is simple: simply use the Vacation Accrual fields to accumulate and track all paid time off, and leave the Sick Time fields blank (or set to zero).
Applying Accruals to Employees As discussed in Lesson 3.2, you can establish company-wide defaults in your Payroll Setup screen. However, you can also assign custom accrual rates on an individual basis (e.g., if a senior director earns 4 weeks of vacation while a new hire earns 2 weeks). You will configure these individual rates in the Payroll tab of the Employee Setup window.
[INSERT SCREENSHOT: The ‘Payroll Batch Details’ window highlighting the ‘Override’ checkbox next to the calculated Vacation and Sick Time Accrual amounts]
Taking Time Off When an employee takes time off, you will use the specific Vacation or Sick pay types when entering their time in the payroll batch. FastFund will automatically reduce their available accrued balance by the hours taken and display the updated year-to-date balance on their printed pay stub.