How benefits are calculated based on employee hire date?

Benefit accrual is a critical part of employee compensation, and understanding how it is calculated ensures that employees receive accurate benefits. In BQE CORE, the accrual process is based on the employee’s hire date or benefit start date, with benefits accruing based on their length of service.

Let’s understand the benefit accrual settings with the help of an example where the employee Hire Date is March 15, 2023 and  the benefit Start Date is June 1, 2023.

Example Benefit Settings:

• Accrual Method: Calendar
• Benefit Period: Semi-month
• Earning Units: Hour
• Realization Date: At Beginning of Period
• Reset Date: Recurring Date (January 1st)
• Max Accrued: 120 hours
• Max Carry Over Hours: Fixed carry over (40 hours)

Example Accrual Rules:

• 0–1 year of service: 5 hours per semi-monthly period (10 hours per month)
• 1–2 years of service: 10 hours per semi-monthly period (20 hours per month)

Important Notes

• Accrual start date: Benefit accrual begins on the later of the employee's Hire Date or benefit Start Date.
• Tenure-based calculation: Rules for benefit accrual are always based on the hire date of the employee, not the benefit assignment date.
• Annual Reset: The employee's benefit accrual resets on January 1st of each year, and any excess hours beyond the carryover limit are forfeited.

Calculating Accruals

Determine accrual start:

• The hire date is March 15, 2023, but benefits start accruing on June 1, 2023 (the later date).
• Accrual begins in June 2023, and no benefits are earned for March, April, or May.

Apply rules and accrue semi-monthly:

• The rule for 0–1 year of service applies until March 15, 2024, based on the hire date.
• For each semi-monthly period from June 1 to December 31, 2023, the employee earns 5 hours (two periods per month = 10 hours per month).

Reset and carry over at year-end:

• By December 31, 2023, the employee has accrued benefits for 14 semi-monthly periods (June to December): 14 periods × 5 hours = 70 hours.
• Assuming the employee uses 20 hours during the year, their remaining balance on December 31 is:
  70 hours accrued – 20 hours used = 50 hours.
• At the reset date, the max carry over setting of 40 hours applies. The earned accrual resets to zero for the new cycle.

Accrue benefits for the remaining part of the employee's first year:

• From January 1 to March 14, 2024, there are 5 semi-monthly periods: 5 periods × 5 hours = 25 hours.
• Added to the 40 hours carried over, the total balance on March 14, 2024, is: 40 hours (carryover) + 25 hours (new accrual) = 65 hours.

After March 15, 2024:

• The employee moves to the 1–2 years of service rule, earning 10 hours per semi-monthly period (20 hours per month). However, due to the max accrual cap of 120 hours, the total accrual for 2024 is capped at 120 hours.
• There are 19 semi-monthly periods from March 15 to December 31, 2024, but the max accrual limit prevents the total from exceeding 120 hours.

Timeline Summary