How leave balances work
When an employee joins your company, they receive a certain number of leave days they can use throughout the year. This allocation is their leave entitlement. Understanding how entitlements work helps both employees plan their time off and managers ensure fair, consistent policies across the team.
The Three Key Numbers
Every leave type has three numbers that tell the story of an employee's leave:
- Entitled is the total number of days allocated for the year.
- Taken is the number of days already used.
- Balance is the remaining days available to take.
The formula is simple: Balance = Entitled - Taken. When an employee takes leave, their balance decreases. If their entitlement is adjusted, both figures update accordingly.
What Determines Entitlements
Leave entitlements can vary based on several factors:
- Company policy sets the baseline for each leave type.
- Employment type may affect entitlements for part-time or contract staff.
- Tenure often increases annual leave as employees stay longer.
- Individual agreements may grant additional days based on negotiations.
- Local regulations may mandate minimum entitlements for certain leave types.
Company-Wide vs Individual Entitlements
Most businesses set default entitlements that apply to everyone. For example, all employees might receive 14 days of annual leave and 14 days of sick leave per year. These defaults are configured at the company level.
However, some employees may have different arrangements. A senior hire might negotiate additional annual leave, or a part-time employee might receive pro-rated entitlements. These individual adjustments override the company default for that specific person.
Paid vs Unpaid Leave
Most leave entitlements are for paid leave, meaning employees receive their regular salary while away. Unpaid leave, on the other hand, does not include salary payment. Employees might use unpaid leave when they have exhausted their paid entitlements or for extended absences not covered by other leave types.
How Entitlements Reset
Entitlements typically reset at a specific point each year, often aligned with the calendar year or the employee's work anniversary. When the reset occurs, balances return to the entitled amount, and the cycle begins again.
Some companies allow unused leave to carry over into the next period rather than resetting to zero. See What is Leave Carry Over for more on this.
Frequently Asked Questions
Yes. Entitlements can be adjusted at any time. For example, if company policy changes or an employee's contract is updated, their entitled days can be modified accordingly.
This depends on your company policy. Some businesses allow negative balances, while others require employees to use unpaid leave once paid entitlements are exhausted.
Most do, but some leave types like unpaid leave may not have a set entitlement since they are not limited by a specific number of days.
What's Next?
Continue building your understanding of leave management:
- What is Leave Carry Over explains how unused leave can roll into the next year.
- Understanding Leave Types covers the different categories of leave.
- Managing Employee Leaves shows how to customize entitlements for individuals in Officaid.