Calculating leave budgets can be a complicated process. There are several ways to approach this, and this can lead to differences between leave applications. At HoorayHR, we have our own method for calculating leave budgets. In this article, we explain how we do this and why we have chosen this approach.
Why are there differences between leave tools?
At a detailed level, there is no legal regulation specifying how leave should be calculated. This means that leave applications can use different methods to calculate leave budgets. This can result in small differences between the calculated budgets. However, these differences are generally no greater than 15 to 30 minutes per year (which amounts to a maximum deviation of 0.25%).
The HoorayHR method
At HoorayHR, we calculate leave budgets based on the actual number of days in the year. We believe that our method is fair and transparent, ensuring that employees always have an appropriate leave budget.
We calculate it in three steps:
Calculate the annual ratio for each work schedule.
Calculate the FTE ratio for each work schedule.
Calculate the accumulated budget for each work schedule and then sum them up to determine the total budget.
1. Calculating the annual ratio
We look at the start and end dates of each work schedule and calculate what percentage of a full year this work schedule represents based on the number of days.
Example of annual ratio calculation:
The year 2025 has 365 days.
Work schedule A (January 1st to June 30th) has 181 days (49.6% of the year).
Work schedule B (July 1st to December 31st) has 184 days (50.4% of the year).
2. Calculating the FTE ratio
Next, we calculate the FTE ratio based on the number of hours set in the work schedule compared to the full-time hours setting (1 FTE). This gives us the percentage of FTE for that work schedule.
Example of FTE ratio calculation:
Full-time is 40 hours.
Work schedule A (32 hours) is 80% FTE.
Work schedule B (40 hours) is 100% FTE.
3. Calculating the budget
Finally, we multiply the annual ratio by the FTE ratio and the full-time FTE budget. This gives us the accumulated budget for each work schedule. We then add these up to get the total budget for the year. The result is rounded to two decimal places if necessary.
Example of budget calculation:
Assigned budget is 200 hours for full-time employment per year.
Work schedule A: 49.6% x 80% x 200 hours = 79.36 hours.
Work schedule B: 50.4% x 100% x 200 hours = 108 hours.
Total budget = 79.36 + 108 = 187.36 hours.
Note: In the calculation example, we have rounded intermediate calculations for readability. In the application, we only round after summing all the budgets.
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