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Calculating Maximum Carry-Over

When you set up a vacation, sick, or compensatory/banked time accrual, you will see a check box, Calc Max. Carry-over Based On Remaining Balance on the Employee tab of the Earning/Deduction Codes window. This check box lets you specify how the maximum carry-over value should be used during carry-over calculation.

To illustrate the two methods, consider the following example.

Suppose your employees are paid biweekly (26 pay periods). Regardless of years of service, your employees accrue 80 hours of vacation per year, with no beginning flat amount. The maximum carry-over per year is 30 hours, up to a maximum accrual at any time of 400 hours. (Use the Employee tab of the Earning/Deduction Codes window to set these values for an accrual.)

Assume an employee starts year 1 without any accrued vacation time, and then:

In year 1, the employee accrues 80 hours of vacation, and uses 20 hours.
In year 2, the employee accrues another 80 hours, and uses 25 hours.
In year 3, the employee accrues another 80 hours, and uses 90 hours.
In year 4, the employee accrues another 80 hours, and does not use any of the hours.

If you select the “Calc Max. Carry-over Based On Remaining Balance” option

The employee’s starting balance for a new accrual year cannot exceed the Maximum Carry-Over field (unless a number is specified in the “Beginning” column of the Earning/Deduction Codes setup window).

To calculate the employee’s starting balance for the new year, the payroll program takes the lesser of these two amounts:

The remaining accrual balance at the end of the accrual year, which is calculated by: (Starting Balance) plus (Accrued During the Year) minus (Accrual Used)
The Maximum Carry-over value

In our example, the employee’s carry-over for each year cannot exceed 30 (the value specified in the Maximum Carry-Over field), regardless of the remaining end-of-year balance, as shown here:

Year	Starting Balance	Accrued During the Year	Vacation Accrual Used During Year	Remaining Balance (at Year-End)
(A)	(B)	(C)	(D)	(B) + (C) – (D)
1	0	80	20	60
2	30	80	25	85
3	30	80	90	20
4	20	80	0	100

In this method, the payroll program compares the remaining balance at Year-End with the maximum carry-over of 30 and will not carry over more than 30 hours. As illustrated in the preceding table:

At the end of year 1, the remaining balance is 60 but only 30 hours can be carried over to year 2.
At the end of year 2, the remaining balance is 85 but only 30 hours can be carried over to year 3.
At the end of year 3, the remaining balance is 20. Since 20 hours is less than 30, all 20 hours can be carried over to year 4.

Note: After the carry-over amount is calculated, any value specified in the Beginning column on the Earning/Deduction Codes window will be added to the starting balance. In the above example, suppose you had entered 10 in the Beginning column on the Earning/Deduction Codes window (in effect, the employee is actually accruing 90 hours per year). The 10 hours would be added to the starting balance of all years, so that the starting balance is 10 for year 1, 40 for years 2 and 3, and 30 for year 4.

If you do not select the Calc Max. Carry-over Based On Remaining Balance option

The employee is allowed to carry over unused vacation hours that were accrued during the current year (up to the maximum carry-over), plus any unused amount or hours carried over from the past year.

To calculate the employee’s starting balance for the new year, the payroll program adds the starting balance of the previous year (that is, the unused amount or hours from the previous year) to the lesser of:

Accrued During the Year minus Accrual Used
The Maximum Carry-over value

Using the same settings and scenario discussed earlier in this example (that is, a maximum carry-over of 30, and so on), the employee’s starting balance at each of 5 years would be calculated as follows:

Year	Starting Balance	Accrued During the Year	Vacation Accrual Used During Year	Hours subj to Maximum Carry-over	Remaining Balance (at Year-End)
(A)	(B)	(C)	(D)	(C) – (D)	(B) + (C) – (D)
1	0	80	20	60	60
2	30	80	25	55	85
3	60	80	90	-10	50
4	50	80	0	80	130
5	80	80	0	80	160

The preceding table shows the unused portion of the amount accrued during the current year in the Hours subj to Maximum Carry-over column.

In this method, the payroll program compares the unused portion of the amount accrued during the current year with the maximum carry-over of 30 (whereas in the other method, the payroll program compares the remaining balance at Year-End with the maximum carry-over.)

So for example, at the end of year 2, the payroll program compares the 55 hours (not the 85 hours) with the maximum carry-over of 30, and carries over only 30 of the 55 hours.

Furthermore, in this method, the payroll program also carries over any unused amounts carried over from the previous year (up to the maximum accrual).

In this example, where the maximum carry-over is 30 hours, this type of method encourages an employee to take at least 50 of the 80 vacation hours accrued during the year — otherwise, the employee forfeits any part of the 50 hours not taken during the year:

In year 1, the employee took only 20 of the 80 vacation hours accrued during the year. Of the remaining 60 hours accrued during the year, the employee is permitted to carry over only 30 hours, thus forfeiting 30 hours. The employee has nothing from the previous year to carry over, so the starting balance for year 2 is 30 hours.
In year 2, the employee took only 25 of the 80 vacation hours accrued during the year. Of the remaining 55 hours accrued during the year, the employee can carry over only 30 hours. In addition, the employee can carry over the unused 30 hours from the previous year, so the starting balance for year 3 is 60 hours. Because the employee used only 25 of the 50 mandatory hours, the employee forfeits 25 hours (in other words, of the 85 hours remaining balance, the employee can carry over only 60).
In year 3, the employee started with 60 vacation hours, accrued another 80, and took 90 hours of vacation. The result is that the number of accrued hours during the year becomes -10; that is, (80 minus 90). The employee took more than the 50 mandatory hours, so does not lose any accrued vacation. The employee carries over the remaining Year-End balance of 50.
In year 4, the employee did not take any vacation. Of the 80 hours accrued during year 4, the employee must forfeit all 50 unused hours, but can carry over the remaining 30 unused hours, plus the 50 hours from the previous year. Of the 130 total hours at the end of the year, the employee will carry over only 80 hours to year 5.

The employee can continue carrying over in this manner, up to the value specified in the Maximum Accrual field of the accrual’s setup record (Earning/Deduction Codes window).