What happens to unused leave
Not every employee uses all their leave in a given year. Busy periods, personal preferences, or simply forgetting to take time off can result in unused days when the year ends. Leave carry over determines what happens to those remaining days, whether they transfer to the next year or expire.
How Carry Over Works
When carry over is enabled, unused leave days roll forward into the next leave period. An employee who ends the year with 5 unused annual leave days would start the new year with those 5 days plus their fresh entitlement.
For example:
- Employee has 14 days entitled for 2025.
- Employee uses 10 days during 2025.
- 4 days remain unused at year end.
- With carry over enabled, those 4 days transfer to 2026.
- Employee starts 2026 with 14 (new entitlement) + 4 (carried over) = 18 days.
With and Without Limits
Companies can configure carry over in different ways:
- No carry over means unused days expire at the end of the period. Employees start fresh each year.
- Unlimited carry over allows all unused days to transfer forward without restriction.
- Limited carry over permits only a certain number of days to roll over. Any excess expires.
Limited carry over is a common approach. It encourages employees to take regular breaks while still providing flexibility for those who cannot use all their leave in a given year.
Why Companies Set Limits
While generous carry over policies seem employee-friendly, unlimited accumulation can create challenges:
- Employees may accumulate large balances that become difficult to use.
- Extended absences to clear backlogs can disrupt team operations.
- Financial liabilities increase if unused leave must be paid out upon departure.
- Employees may burn out if they consistently skip taking time off.
Setting reasonable limits balances flexibility with sustainable workforce management.
Leave Types and Carry Over
Carry over policies can be configured differently for each leave type. Annual leave might allow carry over while sick leave does not, since sick leave is intended for actual illness rather than accumulation. Each leave type can have its own rules based on company policy.
Frequently Asked Questions
Carry over typically occurs at the start of a new leave period, often aligned with the calendar year. The specific timing depends on how your company configures leave cycles.
This depends on your policy. Some companies require carried over days to be used within a certain timeframe, such as the first quarter of the new year. Others allow them to remain until used.
Yes, carry over settings apply based on the leave type configuration. All employees with access to that leave type follow the same carry over rules.
What's Next?
Learn how to configure carry over in Officaid:
- Understanding Leave Types explains system and custom leave categories.
- Configuring Leave Type Settings walks through entitlement and carry over options.
- Adding a Custom Leave Type shows how to create leave types with your preferred rules.