How to calculate unpaid leave
Unpaid leave is rarely tracked against a bank. Unlike sick time or vacation, there usually isn't a maximum cap you need to run a tally against. Rather, an employer needs to track unpaid leave in order to figure out how much pay to dock a salaried employee. Hourly employees almost never need to track unpaid leave, as the time off is evident on their punch cards.
Divide the employee's monthly salary by 173.33 (the assumed number of monthly hours for a full-time employee). You may want to check this number against employment law in your state in case of variance.
Multiply the result from Step 1 by the number of hours of unpaid leave. Assume eight hours of unpaid leave for every full day of work the employee missed.
Deduct the result of Step 2 from the employee's gross salary. Be sure this change is reflected in their withheld taxes and other proportional adjustments. In most cases, your payroll software will do this automatically.
Calculate other factors the unpaid leave might affect. Some examples include accumulated sick leave or vacation time, seniority by hours on the job and pension contributions.
Note the total amount of unpaid leave taken during the pay period. Although few companies have exact policies regarding maximum unpaid leave, this does start a record if the employee's attendance becomes a problem.
Double-check state employment laws to see if there are any further repercussions of unpaid leave in your area.
- Employment law is very complex and can carry hefty penalties for making a mistake. Check with your accountant, book-keeper or lawyer when putting together any kind of payroll policy.