Accrued Time Off

What Is Accrued Time Off?

Accrued time off refers to the amount of paid time off that an employee has earned based on the length of employment but has not yet used. This system allows employees to earn time off based on the number of hours worked, providing a fair and measurable way to accumulate leave that can be used for vacations, personal time, or sickness.

Key Features of Accrued Time Off

  • Incremental Accumulation: Time off accrues incrementally, often per pay period, based on a set rate.
  • Policy-Driven: Governed by company policy, which defines accrual rates, caps, and other conditions.
  • Carryover Limits: Policies may or may not allow employees to carry over unused time into the next year.
  • Transparency: Employees typically have the ability to check their accrued time off balance through HR systems.

How Does Accrued Time Off Work?

  1. Policy Setup: Establish a clear policy outlining how time off is accrued, including rates, maximum accruals, and usage rules.
  2. Tracking: Use payroll or HR software to automatically track how much time off each employee accrues.
  3. Usage: Employees request to use their accrued time off, subject to approval based on business needs.
  4. Adjustments: Adjust accruals for any variances such as changes in employment status or work hours.

Best Practices for Accrued Time Off

  • Clear Communication: Ensure all employees understand how time off is accrued, the rate of accrual, and any conditions attached.
  • Regular Updates: Regularly update employees on their accrued time off balances to help them plan their leave.
  • Flexibility: Consider offering some flexibility in how accrued time off can be used to increase employee satisfaction.
  • Compliance: Make sure your accrued time off policies comply with local labor laws and regulations.


Depending on local laws and company policy, unused accrued time off may be paid out or forfeited upon termination.

Yes, many employers set a cap on accruals to encourage employees to take time off and prevent the accumulation of excessive leave balances.

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