Have you finished step one?Before jumping into this article, if you haven't read Step 1 – Basic Information, we strongly recommend reading it first. |
In this step, you’ll need to decide how this policy functions over time. We’ll walk you through how to choose your settings and determine the best setup for your policy.
Accrues vs Unlimited
This option means that employees assigned to this policy will accrue a certain amount of this type of time off over a set period of time.
If this is the case, select Accrues to set up an accrual schedule and continue with the steps below.
This option means that employees assigned to this policy will be able to take as much of this type of time off as they’d like.
If this is the case, select Unlimited and proceed to Step 3 - Carryover & Balance Cap.
Amount Accrued Per Year
Enter how many total days/hours of time off employees will be eligible for under this policy per year. This number is static and will be used to calculate your accrual schedule.
How come I see hours instead of days?
This field will shift depending on the settings chosen in the selected Time Off Type. Some policies may show hours while others may show days.
Seniority Increase
If this policy includes a seniority increase, you can add it here.
- First, enter how many years must pass before the increase occurs.
This must be a whole number. Eg. 1, 2, or 3 years. - Then, enter how many total days/hours should be accrued under the employee’s yearly allowance, once they’re eligible for the increase.
- If there are multiple seniority increases available, you can add as many as you need by clicking + Add Level
Seniority Increases are always prorated
Seniority Increases are based on the employee’s hire date. When an employee is in a seniority increase year, the yearly balance will be prorated based on their hire date, regardless of your policy’s overall proration settings. It will also not factor in any interruptions to their employment, such as a leave of absence.
Want to avoid prorating seniority increases?
Some companies may want employees to get a non-prorated amount. This is especially common for policies with a seniority increase after each year. In this case, we recommend creating a new Time Off Policy for each increase.
Accrual Schedule
Next, you’ll need to decide how often employees will accrue this type of time off under this policy.
Accrual Frequency
- Select the option from the dropdown menu that applies to this policy:
- Daily
- Weekly
- Biweekly
- Semi-monthly
- Monthly
- Quarterly
- Annually
- Next, select when you’d like the accrual period to start. The options available will shift based on the accrual frequency chosen.
- Lastly, choose what day of the selected period you’d like the accrual to happen.
- First Day of Period
- Last Day of Period
- First Day of Next Period
Prorating the First Accrual Amount
Choose whether you’d like to prorate the first accrual based on the employee’s accrual start date.
For example, if an employee is hired and starts in the middle of the period, and you choose not to prorate, the employee will get the full accrual amount for the entire period, despite having only worked for a part of it.
If you select yes, Humi will prorate the first accrual based on the employee’s policy assignment date.
If you select no, the employee will be eligible for the full accrual amount for the period in which they were assigned to the policy, regardless of their accrual start date
Curious how Humi calculates this?
Humi prorates via the recommended method of the National Payroll Institute (NPI), (formerly the Canadian Payroll Association [CPA]), for Time Off and Payroll. Click here to learn more.
Accrual Schedule Preview
To help you understand what your schedule will be, Humi will generate a preview of what the settings you’ve chosen will look like for the next few accrual periods. You can use this table to preview your settings and ensure everything is configured correctly for your policy.
Time Off Requests
Next, you’ll decide how employees can request time off for this policy.
Waiting Period
This setting allows you to prevent newly hired employees from booking time off that would occur within a certain amount of time after their start date.
- New employees will still be accruing time off during the waiting period; however, this field limits when they can start taking time off.
- Admins & managers can still enter time off requests on behalf of the employee during the waiting period.
- To ensure things keep running smoothly, employees subject to a waiting period will still be able to request time off that would occur after the waiting period has ended.
Borrowing Time Off
This setting determines if employees are allowed to book more time off than they have available in the current accrual year, resulting in a lesser balance for the following year.
For example:
If an employee has 10 days available each year, they can request up to 10 days off at any time during that accrual year.
If they haven't accrued the full 10 days yet, this will result in a negative balance that they are "paying back" until the current year's end.
If an employee has 10 days available each year, they can request those 10 days off at any time during that accrual year plus the pre-determined limit of additional days allowed.
Any days requested beyond the initial 10 days will be subtracted from the following year's balance. This will result in a negative balance that they will be "paying back" until all the days taken are accrued.
Limit Request Length
This setting allows you to decide how short or long a time off request can be. You can set both a minimum amount and a maximum amount per request.
- Minimum Length is used to specify the smallest increment of time an employee can book on any day. For example: 0.5 days, 1 hour, 1 day, etc.
- Maximum Total Length is used to specify the maximum days/hours a single request may have. For example: If you don't want your employees to consecutively be away for longer than one work week, you could put "5 days” in this field.
When you’re happy with your settings, click Next to move on to Step 3 - Carryover & Balance Cap.
Accrual Calculation FAQs
Before checking the math, follow this checklist to identify why an employee's balance might not match your manual calculation:
1. Verify the Policy Category
- Daily, Quarterly, Semi-monthly, or Annual? Use the 365-day formula.
- Weekly, Bi-weekly, or Monthly? Use the CPA (21.66) formula.
2. Check the "Prorate First Accrual" Toggle
Navigate to Settings > Time Off > [Policy Name].
- If OFF: The employee receives the full amount for the period. No math is required.
- If ON: Proceed to step 3.
3. Audit the "Number of Days" Variable
Ensure you are counting days correctly based on the policy type:
- For Non-CPA: Count every calendar day (including weekends/holidays).
- For CPA: Count only Mon–Fri. Ignore custom employee schedules; the system defaults to a 5-day week for this calculation.
4. Confirm Seniority Milestones
If an employee hit a work anniversary mid-period, the system performs a "split" calculation between the old and new accrual rates.
- Check the Seniority Levels tab in policy settings.
5. Review the Transaction Log
Go to Employee Profile > Time Off > [Policy Name] > View Transaction Log.
- Look for the specific "Accrual" entry. Hover over it to see the effective dates. Proration is based on the Assigned Date, which may differ from their Start Date.
Humi categorizes policies into two groups based on their Accrual Frequency to determine the mathematical formula applied:
- Non-CPA Policies: Daily, Quarterly, Semi-monthly, or Annually.
- CPA Policies: Weekly, Bi-weekly, or Monthly.
Non-CPA policies calculate accruals based on the total number of calendar days:
Formula: (Days Accrued Per Year / 365) * Number of Days
In this calculation, "working days" includes every day of the week, regardless of your company’s specific work schedule or weekends.
CPA policies use a standardized month/work-day conversion factor:
Formula: (Days Accrued Per Year / 12 / 21.66) * Number of Days
The 21.66 represents the government-standard average working days in a month. This formula assumes a 5-day work week (Mon–Fri) and excludes Saturdays and Sundays from the "Number of Days" count.
There are two main reasons for slight discrepancies:
- Decimal Precision: Humi displays 2 decimal places for readability but uses many more in the backend calculations.
- Code Complexity: The Time Off engine is highly complex; while the formulas provided cover most scenarios, specific edge cases may result in minor variations.
- Non-CPA Policies: Both weekends and holidays are included in the "Number of Days" count.
- CPA Policies: Weekends (Saturdays and Sundays) are excluded, but holidays are included in the "Number of Days" count.
If this setting is disabled, the system bypasses the proration formulas for the initial period. The employee will simply receive the full accrual amount for that period, regardless of their start date or the date the policy was assigned.
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