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⏱️ Set up time: 5 min. Reading time: 2 min.

ℹ️ Important read: Get to know Planday's leave management to find out which leave set-up fits your needs.

✅ Required steps: How to create and edit employees ; How to create or edit an employee group ; How to create or edit employee types.

Are you an employee? See How to apply for leave.

It is your responsibility to ensure compliance with the relevant rules for leave and to configure Planday to be suitable for the particular circumstances of your organisation and employees. If you are unsure, please obtain professional legal advice.

In Planday's leave setup, you can manage your employees' time off by setting up leave policies. A policy is a set of rules that determines accrual, pay, duration of leave etc. Apply these policies to your employees by creating individual leave accounts for them, enabling you to record their leave accurately.

What is an accrued leave (holiday) policy?

An accrued leave policy allows employees to earn leave over time, based on the hours they work or by accumulating a balance periodically, such as monthly. Unlike a fixed leave balance, accrued leave builds up gradually. Some policies may start with an opening balance of days or hours, and employees deduct their leave from the accrued total.

Most accrued leave builds up leave based on an earning rate the local government regulates following labour laws. The account is reset after a period with options to carry over unused time.

Create an accrued leave (holiday) policy

Go to Settings > Leave & Overtime (or Absence, Overtime, Vacation) > Policies > press the Create policy button.

If Planday offers leave suggestions for your region, you'll see a selection of predefined policies based on common scenarios and recommendations based on local labour rules.

Choose from one of the suggested policies (if available) or click "Create a custom policy".

Choose Leave policy (or Absence policy).

Step 1 of 3 — Set name and period

You'll be guided through three steps to establish a set of rules for your custom leave policy.

1. Policy details

Name: Choose a name for your leave policy, such as "Accrued Leave" or "Holidays" It's recommended to use names without years for reusability.
Description: This is an optional field where you can add a description for the policy.

2. Accruing period

Accruing period: Start Date: This is the date when the leave starts accruing. Choose a date for the account to begin accruing leave.
Accruing period: Duration: Set the duration for how many months the accruing period should typically last, usually 12 months.
Renew automatically: It's recommended that you select this option. If unchecked, the account won't renew automatically, and you'll need to manually create new accounts each year.

3. Spending period

Spending period - Start date: The spending period is when the employee is eligible to spend their earned leave. This can be set as the same date the accruing period starts.
Spending period - Duration: Set a deadline for how many months the employees should be able to spend their leave (1-52 months).

Once you've configured your desired settings, click Next.

Step 2 of 3 — Set opening balance, accrual rate, requirements for accrual and applicable Shift types

1. Accrual policy

Accruing in: Select either days or hours as the opening balance. This can't be changed once the policy is created.
Opening balance: Enter the number of days or hours per year. You can adjust this value for each employee by editing their leave account. The initial balance will be visible at the start of a new leave period.
Accruing rate:
- For Days choose between “Percentage”, “Days per month” or “Days per year”.
- For Hours, choose between “Percentage”, “Hours per day”, “Hours per month”, “Hours per year” or “Do not use”.
- Percentage (UK 2024 Reform): for irregular workers or part-year workers with irregular shift patterns. Read more in How to set up the UK 2024 accrual method.
- For Percentage, here are some commonly used rates:
  - 12,07 % rate calculated based on days/hours worked and amounts to 28 days per year.
  - 12,55 % rate calculated based on days/hours worked and amounts to 29 days per year.
  - 13,04 % rate calculated based on days/hours worked and amounts to 30 days per year.
  - 13,54 % rate calculated based on days/hours worked and amounts to 31 days per year.
  - 14,04 % rate calculated based on days/hours worked and amounts to 32 days per year.
  - 14,54 % rate calculated based on days/hours worked and amounts to 33 days per year.
- UK Customers: Use this handy tool from Gov.UK to calculate various holiday entitlements.
Max allowance / CAP: Select “Days per Month”, “Days per Year”, “Hours per Day”, or “Hours per Month”, and enter the maximum allowed earnings for the chosen period. Leave blank for no limit.

2. Monetary payout

If the accruing rate is set to “Per cent”, “Hours per day”, “Hours per month”, “Hours per year” or “Do not use”, choose if the payout of holiday should be based on an average of 12, 13 or 52 weeks, or set a fixed rate. Select Do not use if this does not apply to your policy.
If the accruing rate is set to Percentage (UK 2024 Reform), choose if the payout of holiday should be based on a 52-week reference period, employees’ hourly wage or set a fixed rate. Select Do not use if this does not apply to your policy.

3. Shift types

Select the applicable shift types that should count towards the accrual. These can be normal shifts, overtime and may exclude sick days or no-shows depending on your company’s policies.

For “Annual leave (hourly - 12,07%)” and “Annual leave (hourly rolled-up)”, annual leave and statutory leave (sick leave, maternity leave, paternity leave, etc.) are not to be selected.

4. Work hours per day (if the policy unit is in hours)

The option selected here determines how many hours will be deducted for a day's holiday. You can choose from the following options:

Employee settings: The deduction is calculated by dividing the Hours per month (set in the employee’s profile) by the number of business days in the month if the "Business days" option is enabled, or by the shift duration if the "Timesheet hours" option is enabled.
Previous X weeks: Planday will calculate the average of hours worked per day over the previous X weeks.
A fixed rate: Manually set a fixed number of hours to be deducted for each day of leave in the leave policy.

The number of hours deducted for a day's holiday may also depend on other settings:

If a bank holiday calendar is attached to the policy, no hours will be deducted on a bank holiday.
Settings that only Planday Support can change:
- Business days: Hours will only be deducted if the requested day is a business day.
- Timesheet hours: Hours will only be deducted if the employee has scheduled shifts on the days they request leave.

Learn more about this here.

Requirements for accrual: (only available if the account has an accrual rate per day/month/year.)

Choose if the requirements for accrual should always accrue, or depend on approved shifts in the schedule.

Once you've configured your desired settings, click Next.

Step 3 of 3 — Additional policy rules

1. Employee types, Departments, and Employee groups

Use these options to control which employees can use the specific leave policy you're creating. For instance, if you only want leave available for a specific department, you can limit access with this option.

2. Create automatically

When selected, the system automatically applies this leave policy to all new and existing employees matching the selected options and creates leave accounts for them.

⬆️ Note: Be mindful of the allocations you set up here. The accruing rate, accruing period, and spending period will automatically apply to matching employees.

3. Negative balance

Check this box if employees should be able to request more days/hours than their existing balance. If unchecked, the account won't allow a negative value. For example, if an employee has a balance of 5 days and requests 7 days off, the policy won't allow it.

4. Consecutive leave days (or Consecutive absence days)

Set a restriction on the number of consecutive days off. You can choose Unlimited or set a fixed limit. If unlimited is selected, you can still approve or reject extended leave as a manager for each request.

5. Carry over

Allows you to transfer unused days to the next period. The policy creates a new leave account called “Carry over” at the end of the consumption period. If Allow carry-over for the next period is selected, specify the maximum days/hours that can be transferred and if they must have a different/fixed holding period.

This point closely relates to the Spending period (see step 1 of 3).
For example, If your Spending period starts in 1 April and lasts 12 months, employees will be able to use their 2023 leave entitlement from 1/4/2023 until 31/3/2024. With carryover set to max 5 days and limited till 30 June, employees will carryover their leftover balance (at most 5 days) on 31/3/2024 to their carryover account and will be able to use it until 30/6/2024.

Learn more in How to set up and manage carry-over leave.

6. Payroll

Set up a Salary code for this leave policy based on your payroll reports to display detailed information on leaves and help Payroll integrations understand the reported leave type.

7. Account priority

Adjust if you have multiple leave accounts and want employees to use one before another.

8. Advanced details

Bank holiday calendar (or Public holiday calendar): Link a bank holiday calendar to the leave policy so public holidays don't count towards leave balances. For example, if an employee requests time off from Monday to Friday (5 days) and Tuesday is a bank holiday, the suggested cost will be 4 days instead of 5 days.
Default Shift type for overlapping shifts: Choose a shift type you would like to apply to existing shifts scheduled during the employee's requested time off. Typically a shift type used to mark employee's absence.

Remember to press Save to create your leave policy.

Create leave accounts for your employees

See related articles:

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