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We are looking to understand how other companies handle their employee vacation accrual buckets from a financial perspective. When an employee accrues vacation, the liability is defined as their hours accrued * their hourly rate. When an employee’s hourly rate changes, the liability goes up (or down) depending on the change. We are sending the liability to our accounting system as the vacation accrues. When the employee takes the vacation, we reduce the liability. We need to deal with the fact that the buckets get out of sync.
Employee A's hourly rate is $20. He has accrued 10 hours vacation. The liability on this is $200.
Employee A receives a rate increase. His hourly rate is now $22. His vacation bucket is now worth $220.
This puts us at a difference of $20.
We do not use absence management.
Any insight into how other companies accommodate this would be appreciated.