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The Ultimate Guide to Prorated PTO

The Ultimate Guide to Prorated PTO

Summary

  • Prorated PTO gives employees the right amount of vacation based on how much of the year they’ve worked or how many hours they work.
  • You can calculate it by months for a quick estimate or by days for more precision, just stay consistent across your team.
  • Proration applies in more situations than just new hires, including part-time roles, temporary contracts, extended leave, or internal role changes.

Last updated on June 16, 2025

Frequently asked questions

Prorated PTO means giving an employee a portion of their annual paid time off based on how much of the year they’ve worked or how many hours they work. It’s commonly used for new hires, part-time employees, or those returning from extended leave to ensure vacation time is allocated fairly.

To calculate prorated PTO days, start with the full annual PTO entitlement. Then, determine what portion of the year the employee will work (in months or days), and multiply that percentage by the full entitlement. For example, if someone works 6 out of 12 months, they would receive 50% of the full PTO.

Vacation days are prorated by multiplying the total annual vacation by the fraction of the year or hours worked. For instance, if a full-time employee gets 15 days per year and a new hire joins with 8 months left in the year, you’d multiply 15 × (8 ÷ 12) = 10 vacation days.

A prorated leave balance is the adjusted amount of PTO an employee is entitled to, based on their actual time worked. It reflects the portion of leave they’ve earned rather than the full-year amount, which is especially important for part-time staff, new hires, or those who didn’t work the entire year.

While you can use spreadsheets or manual calculators, leave management software like Vacation Tracker make it much easier to manage prorated PTO. It automatically calculates prorated leave balances, supports custom accrual rules, and tracks everything in real time. It’s a reliable way to stay accurate, consistent, and compliant without the manual work.