Accrued Leave

Definition and Meaning:

Accrued Leave is the paid leave an employee typically accrues over a period of time to earn. Accrued leave is typically calculated on a monthly basis, in accordance with company policy, allowing employees to add to their leave balance each month. Under HR Policy and applicable law, the employee may be able to use, carry over, or cash out their accrued leave.

Key HR Highlights

• Provides a way to track the accrual and balance of leave in a transparent manner
• Facilitates the maintenance of payroll liability for unused leave
• Allows for accurate payment of leave when the employee exits or retires
• Creates a higher level of confidence in the employee due to clearly defined leave policies
• Gives HRMS the ability to automate the process of managing leave.

Legal Compliance

Accrued Leave does not have a common national law. Rather, the rules for accrued leave are usually governed by:

• The Shops and Establishments Act (with differing provisions on a state basis).
• The Factories Act of 1948 (it allows for earned leave for factory employees).
• The specific policies adopted by Companies for Leave and Attendance.

In addition to the above, Employers should maintain clear documentation regarding the Accrual Rates, the allowable carry-forward limits, and the Encashment Policies for Accrued Leave to help prevent any potential future disputes with Employees.