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How does unpaid time off reduce regular earnings?
How does unpaid time off reduce regular earnings?

Learn how unpaid time off automatically reduces regular payroll earnings

Updated over a week ago

Regular earnings for employees and contractors on payroll are automatically reduced when their unpaid time-off requests are approved.

Here’s an example where a contractor has two days of unpaid time off.

Once the time-off request is approved, regular earnings for the applicable pay periods are reduced automatically.

Calculating hours and reduced earnings

Time-off requests are made in whole days, and days are converted to hours based on the person’s pay schedule assignment.

In the example above:

  • The contractor is assigned to a twice-per-month pay schedule or 24 pay periods per year.

  • There are 11 working days between May 1 and May 15, 2024.

  • A compensation rate of 10,000 USD per month equals 57.69 USD per hour

With this information, we calculate time-off hours and reduced earnings as follows:

Total number of hours in the pay period

40 hours per week x 52 weeks per year / 24 pay periods per year = 86.67 hours per pay period.

Hours of time off in the pay period

2 days off / 11 working days x 86.67 hours = 15.76 hours

Earnings reduction

15.76 hours x 57.69 USD per hour = 909.10 USD

Note: One day of time off always equals 8 hours when the person is assigned to a weekly or every-other-week pay schedule.

Other things to note

  • Unprocessed payroll is updated immediately if the time-off request is canceled or modified. Manual corrections are required if there are mistakes with processed payroll.

  • When unpaid time off spans more than one pay period, regular earnings are reduced appropriately in each pay period.

  • When unpaid time off spans multiple compensation rates in the same pay period, the earnings reduction is displayed using a blended rate.

  • Plane assumes a Monday to Friday work week, so unpaid time off that falls on a weekend doesn't reduce earnings.

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