Is it acceptable to prorate PTO promised in an Offer Letter?

Question

I received an informal offer from a software company which included 0 hours of PTO. I countered the offer and was promised 10 days (80 hours) of PTO. With this apparent "signing bonus" as the deciding factor I accepted the offer.

Here is the verbatim verbiage of the contract with regard to PTO:

The following benefits are offered after 30+ days of employment:
 - (several list items)
 - up to 9 paid Holidays
 - 10 days paid vacation/personal time

Several months into the employment I'm now being told, of the 80 hours I was promised, I have only accrued ~28. I understand that accrual of PTO is a common practice, but having received a formal offer of 80 hours (with no stipulations on how that time could be used) I am quite upset and considering suing for breach of contract. HR admitted via email that the only place I could have seen their accrual policy was in the Employee Handbook which they are aware that I did not have access to.

Is this an acceptable business practice?

Answer 1

Legalities aside, as I don't think you want to go that route to solve this anyway.

I understand that you are surprised by the fact that PTO accrues, they probably are as surprised by your surprise, as this is fairly normal thing in tech in many modern countries (US, UK, and Australia from my own experience). But is that actually a problem for you?

What I mean by that is that as long as by end of the year you will get the number of holidays you thought you will get (meaning 10 more than they initially offered) then it's a non-issue for you right now.

It can become one if you want to take a larger holiday than your currently accrued cap. But I have been in this spot myself few times, and so did my friends, and this was never a big deal, and a chat with your manager and HR always allowed taking the holiday which took you into PTO deficit.

This, of course, comes with the caveat that if you were to leave the company before you re-earn the PTO, you will be liable to repay the company money for the deficit.

Answer 2

You've tagged your location as United States.

PTO accrual is typical in the US. PTO is typically quoted annually (X hours or X days per year), but you start with a zero or a near-zero amount, and it is "earned" either every paycheck or every month (or some other schedule of a similar scale). In effect, your X days of PTO is never available all at once; you are allowed to take it per policy only after it is earned. PTO earnings are typically shown on paystubs, so you have a reference for how quickly you're accruing it. The HR people you were working with are probably so used to people being aware of this approach that they hadn't thought to call it out explicitly - in my experience as a hiring manager, it's not typically explained in an offer (unless a candidate specifically asks about the policy).

That said, it is also somewhat typical for employers to allow a small amount PTO to be taken before it is earned, or through some exception process with approval from management - this allows for handling of exceptional circumstances (i.e. an employee is just starting a new job, but needs a week off next month for their wedding). So if you do have an exceptional need, it may be worth raising that with your manager.

Answer 3

I've known a lot of people who have negotiated some PTO from the outset* when switching to companies that do PTO accrual instead of a flat number of eligible days per year. I have never known someone who was then told that they had to accrue the promised days, because it defeats the purpose of the negotiation. The only way what they're saying makes sense is if you didn't get PTO at all under the original offer, which can't be real.

I would let them know that you expect to have 108 hours of PTO available: the 28 you have accrued plus the 80 you negotiated as part of starting. (Edit: perhaps minus whatever has accrued during the first 30 days.) I would bring the matter up with whomever it is that you negotiated with, provide appropriate proof, and treat it as a mistake that they have to fix.

*In fact, basically everyone I've known who has taken a job at one of these companies has done so. (While time accrual is common, it's hardly universal.)

Answer 4

It sounds like a very normal business practice. Vacation is usually quoted in terms of days per year. Vacation usually accrues over time, generally with each paycheck. It would be very unusual to have an 80 hour vacation balance on day 1 with no restrictions on how you use it. The wording in the offer letter doesn't seem to make any such promise and appears to follow normal conventions.

Often, employers are willing to let new employees take a bit more vacation time than they've accrued, taking their balance into the negative territory for a while. If you are looking to take some time off around Christmas, for example, and that you'll have ~4 days accrued by then, there is a good chance that your employer would let you take 6 or 7 days off and work off the negative balance over the first few months of the next year. Of course, that likely means that you'd be taking less time off in 2020 to make up for it.

Answer 5

Several months into the employment I'm now being told, of the 80 hours I was promised, I have only accrued ~28.

Well you had several months to read and understand the Employee Handbook containing the accrual policy. So it really shouldn't be a surprise now.

I understand that accrual of PTO is a common practice, but having received a formal offer of 80 hours (with no stipulations on how that time could be used) I am quite upset and considering suing for breach of contract.

Talk to your lawyer. I'm confident any good lawyer would explain that you are mistaken and why.

As you said, it's common practice. Frankly, I don't know any company that works the way you seem to have assumed. Imagine if someone was hired with 10 work days remaining in the year - would you expect them to get the rest of the year off?

HR admitted via email that the only place I could have seen their accrual policy was in the Employee Handbook which they are aware that I did not have access to.

Is this an acceptable business practice?

Yes.

You are trying to catch them on a technicality. That's simply not going to work out for you.

(And technically, the offer letter says only "10 days paid vacation/personal time", yet I would assume this means you'll get it annually. Certainly you wouldn't expect the company to stick to exactly what was written in that respect?)

If it bothers you this much, don't sue. Find a new job and leave instead. You won't win a lawsuit over something like this and you will permanently poison your relationship with the company.

If you do leave, don't make assumptions about the offer letter - ask about the details so you won't get upset again. Ask for the Employee Handbook so you can read all the details before accepting their offer, if that's what it will take.

Answer 6

This is how it usually works. You earn a certain amount of holidays over a year. During half a year you earn half that. If you leave the company, they have to pay you for the accrued leave that you haven't taken yet, or you have to pay back the money for leave that you have taken that wasn't accrued yet. (In the USA, you need to be careful because some companies refuse to pay for untaken holiday, so you need to take holiday before you give notice).

The only open question is whether you can go on holiday when the time isn't accrued yet. You accrued 28 hours of holiday; some employers will allow you to take 40 or 80 hours even if they were not accrued yet, meaning that you now have a negative balance. ("We owe you minus 12 or minus 52 hours of holiday"), and some won't. Some will allow you to take unpaid time off, say you want to start in June but booked two weeks holiday in July.

Answer 7

Check yourself. You may be getting a better deal than you thought you were.

You thought you were negotiating for a one-time sum of 80 hours of leave. The company appears to be granting you 80 hours of leave per year. If you wind up working there for more than a year, is this not better? Best not to make too big a deal of it, lest they decide to give you what you ask for.