Add vacation or sick leave policies

To set up company policies:

Click your company name in the top-right corner, and then click Payroll Settings.
Under Payroll and Services, click Vacation/Sick/PTO.
In the Vacation and Sick Leave Policies box, click Create.
Add a policy:
Vacation policy
1. Click the Category drop-down arrow, and select Vacation.
2. Enter a description. This is especially useful if you have more than one policy. (For example, "Two weeks" or "Three weeks.")
3. Select whether vacation pay is retained until employees take time off or is paid out each pay period.
4. Click the Annual Frequency drop-down arrow, and then select how often vacation hours accrue.
  - Beginning of year — we'll credit the total hours you entered for the employee on the first pay cheque of the following year (typically in January). Enter your employees' current balances as part of their setup.
  - Each pay period — we'll automatically calculate accruals each time you create a pay cheque, based on the number of pay periods in the year.
  - On anniversary date — we'll automatically calculate accruals on the anniversary of the employee's hire date. We'll credit the total hours that you entered for the employee on the first pay cheque after the anniversary date.
5. Enter the hours earned per year.
6. Enter the maximum number of hours that an employee can have available at any time.
  Here's how it works — if you set up a vacation or sick policy that includes a maximum number of available hours and the employee reaches the limit, QuickBooks Online Payroll stops accruing hours until the employee takes vacation or sick time and the available balance falls below the limit.
  The Maximum available field is optional — leave it empty if you don't want to set a limit on the number of available hours.
Sick policy
1. Click the Category drop-down arrow, and select Sick.
2. Enter a description. This is especially useful if you have multiple sick policies for your company.
3. Select how often sick hours are accrued.
  - Beginning of year — we'll credit the total hours you entered for the employee on the first pay cheque of the following year (typically in January). Enter your employees' current balances as part of their setup.
  - Each pay period — we'll automatically calculate accruals each time you create a pay cheque, based on the number of pay periods in the year.
  - On anniversary date — we'll automatically calculate accruals on the anniversary of the employee's hire date. We'll credit the total hours that you entered for the employee on the first pay cheque after the anniversary date.
4. Enter the hours earned per year.
Click OK.
Repeat these steps to create as many policies as your company needs for different categories (vacation or sick leave) and for different circumstances (for example, different rates for earning vacation or sick leave).
After you set up these policies for the company, assign them to individual employees.

Vacation and sick time hours accrue only when you enter hours for pay cheques.

If you look at an employee's vacation or sick time accrual before you've created a pay cheque for the employee in January, you'll see that the employee record doesn't include any hours accrued in the new year. This is true even if you've defined the policy so that the hours are all earned at the beginning of the year. Create the first pay cheque and the accrual will be accurate and current.

Add vacation or sick leave policies

See also