Ultimate Guide: Common Leave Year & Calendar Year Basis

What is common leave year & calendar year basis

Common Leave Year, also known as calendar year basis, is defined in Employment Ordinance as: An employer may elect any period of 12 consecutive months as the common leave year for all of his employees.

Some companies regard common leave year as the annual leave period, and there are basically two types:

• Calendar year: January 1st.- December 31st.
• Financial year: April 1st. – March 31st.

Some even use July 1st. – June 30th. as a common leave year.

In fact, there is no big difference between the beginning date, because they all see 12 months as a period. But one advantage of choosing a common leave year is that all employees’ clear time will be on the same day, which will be easier to calculate annual leave days and the clear time.

Other companies set the beginning date of the common leave year based on the onboarding date of the employee. However, because of the different conditions of each employee, it will increase the difficulty of leave quota management. Generally, some companies with large scale or with expensive customised management systems adopt this preferred method.

Common leave year calculations

The differences between seeing the common leave year or the employee’s joining date as the beginning of the holiday year
Regardless of the onboarding date of the employee’s employment, it is a common practice to have the calculation of annual leave be based on the day specified by the employer (normally January 1st.), and the annual leave is calculated on a pro-rata basis. For example: From January 1st to December 31st, from March 1st to April 30th the next year.

Example:
Mr.Wang and Mr.Li can enjoy 12 days of annual leave in the first year of joining, but their joining dates are different. Mr.Wang joined on April 1st, 2022, while Mr.Li joined on June 1st, 2022.

1. Accumulated by month, the accumulated annual leave should be cleared at the end of the cycle year

Most of the companies adopt this rule, but it leads to a confusion of 【common leave year】 and 【leave year calculated by the joining date】. In fact, regardless of the leave year rule, the monthly accrual amount is the same, only the time to clear the leave varies.

Common leave year (Calendar year January 1st, 2022 – December 31st, 2022) :same clear time, different amount of accumulated leave

The joining date is the start date of the year: different clear time, same amount of received leave

2.The amount is paid yearly, and the accumulated annual leave should be cleared at the end of the cycle year

Common leave year (Calendar year January 1st, 2022 – December 31st, 2022): same clear time, different amount of accumulated leave

The leave year starts from the joining date: same accumulated amount, different clear time

Note: Choosing the leave year doesn’t affect an employee’s total annual leave or the number of days in increments each year.

In order to set the standard of annual leave, it is not only necessary to meet the requirements of the law, but also involves the employee’s joining date, whether he/she can take leave during the probationary period, and how it can be calculated correctly.

Workstem‘s leave management function is highly flexible, and can customise the company’s annual leave regulations, whether it is to give employees a full year leave in the beginning of the year or to give them monthly, or which calendar days the annual leave is calculated on and more. While Leave Year is a common leave year, companies can change the date according to their business models.

Of course, if you want to follow the employee’s joining date as the start date of the leave year, just select the switch, and the system can automatically calculate the annual leave balance of each employee for you.

Read More:
How to Calculate Annual Leave Payment on Termination of Employment Contract?
How Paid Annual Leave Should Be Calculated?
How to Set an Annual Leave Policy?