What is accrued leave?

Employers must understand the concept of accrued leave and make a policy that is fair and compliant with local labor laws.

  • What is accrued leave?

  • Managing leave accrual

What is accrued leave?

Accrued leave refers to the amount of leave — such as vacation, sick, and personal days — that an employee has earned for the current year, but has not yet taken.

Leave accrual is important for both the employee and the employer. For employees, it represents the amount of time they can take off to rest or attend to personal affairs.

For employers, it is an essential part of the total compensation package that can help attract and retain top talent. It allows you to implement a healthier work-life balance for your people, resulting in a more content and productive workforce.

As an employer, you also need to track leave accrual for payroll reasons. If an employee leaves your company, you may need to pay out the remaining accrued leave (depending on the employment laws of their country).

This is why it’s crucial to understand accrued leave and create a policy that is competitive, fair, and compliant with local labor laws.

Managing leave accrual

With a global team, leave accrual can get a bit complex. This is because employment laws vary greatly from country to country. For example, employees are entitled to a minimum of 28 days’ paid annual leave in the UK, but only 10 in China. In the US, there's no minimum legal requirement at all (although most companies do offer paid leave as part of their compensation packages).

As such, a leave accrual policy that works well in one country might not work — or even be legal — in another. If you're an HR leader in a multinational company, it's important to be aware of these differences and to tailor your leave accrual policies to the local legal requirements and cultural expectations of each country you hire in.

Ensure that you communicate your leave accrual policy effectively to your employees, and consider their feedback when making any changes.

Expert advice

Key actions for HR:

  • Understand local laws: Tailor policies to each country's requirements.

  • Track accrual and pay out: Be accurate and compliant.

  • Communicate clearly: Explain the policy to your global team.