What is accrual leave?
Accrual leave is the amount of leave time that employees earned per month or per year up to the company’s HR policy and the HK labour law which had not been used or paid. This time can be used toward vacations, personal time, or even sick days.
On the other hand, when the employee leaves the company, you may need to cash out his or her unused accrual leave and include that part in the final pay.
How do you calculate annual leave accrual?
Even though there is no set “norm” of accrual policy from company to company, annual leave is normally spelled out for most companies. Here is the example of how annual leave accrual is calculated per month and per year.
Annually: All annual leaves are given to the employee at once in the beginning of the cycle or at the cycle end date depending on the specific leave policies in different companies. When the employee takes the time off, HR could simply subtract it from the total amount of leaves they accrued.
Monthly: In this way, the total annual leave days are divided that can be accrued in 12 months. However, it is a bit tricky when actually calculating. According to the HK labour law, if the relevant paid time off is less than 1 day, employees are able to enjoy a full day leave instead. For example, employees in company A have 8 days of annual leave per year, and they will receive around 0.7 day of available accrued annual leave per month. In this case, when the employee wants to have a full day rest but there is only a 0.7 on his annual leave balance, the HR or employer needs to manually adjust that number to -0.3 first before the employee earned the new annual leave accrual next month.
Other factors of accrual leaves
Tenure- Employee’s tenure often is a factor. Most employers increase the leave time based on how long a person has worked for the company. For example: for those employees who just get in the company with one year of service are entitled to 8 days of annual leave, but employees who worked over two years are entitled to 10 days and etc.
Caps- Same as the carry-forward policy, that allows employees to have a certain amount of time offs be remained and rolled over to the next year while encouraging employees to take their unused accrual leaves.
At Workstem, we fully believe the strength of companies is in people. Our HRM system has a number of selectable set up leave policies options that you can cater to your unique leave policy.
Through our Workstem One App, employees can also check their leave balance and apply for it themselves without back and forth with managers, while managers can also approve applications easily on the go!