This leave type setup is one of the most common ways to manage Annual Leave for contract-based employees:
Entitlement Calculation: Based on the employee’s Hire Date
Leave Earning Method: None – full leave entitlement is granted upfront at the start of the contract
It’s a simple and contract-based setup, where total leave is calculated according to the contract duration and made available immediately.
For step-by-step guide to set up a leave type, refer here: Setting up Leave TypeEntitlement Policy
When setting up a Leave Type, you’ll come across the Entitlement Policy section. This includes two important settings:
- Entitlement Calculation: Calculates the number of leave days an employee is entitled to.
- Leave Earning Method: Determines when the employee earns the leave.
These two settings work together to ensure leave is calculated and released correctly, based on your company’s policy.
| Entitlement Policy | What It Means |
| Entitlement Calculation is Based On: Employee Hire Date | Leave is calculated based on the employee’s hire date, using a 12-month cycle unique to each person. This ensures the leave entitlement aligns with the actual contract period, making it suitable for fixed-term or short-term employees. |
| Leave Earning Method: None | Full leave entitlement is given at the start of the entitlement period. There is no monthly accrual or progressive earning. |
Entitlement Table
Leave Entitlement | ||
From Year | To Year (before) | Entitled Day(s) |
0 | 1 | 8 |
1 | 2 | 12 |
2 | 3 | 16 |
Employee A
- Contract Period: 15 April 2025 – 14 October 2025
Generate Entitlement
To ensure correct proration of entitlement:
Update the employee's official resignation date under Employee > Progression > Resignation.
You can verify the update in the Employee Directory > Timeline tab.
Checking Result
After generating leave entitlement, you can review the details for the employee:
Click on the leave type you just generated.
Click the "Explanation" button to view how the entitlement was calculated.
| Contract Duration | Applicable Leave Entitlement | Calculation | Leave Earned |
| 15 April 2025 – 14 October 2025 (6 months) | 0~1 year = 8 days | 15-04-2025 - 14-10-2025 (183 days) | 183 / 365 x 8.00 = 4.01 days |
Important: To ensure the proration works as intended, make sure to add the resignation date in the Employee Progression section. The system will use that date, not the contract start-end date in the Employee profile, to determine how much leave the employee is entitled to.
If no resignation date is added, the system will assume the employee is working a full 12-month cycle and will grant the full 8 days entitlement.
Refer to this guide to add resignation date: Resigning an EmployeeYou can skip this step if the contract is expected to be extended or renewed.
Summary
When Entitlement Calculation is based on Employee Hire Date:
Each employee follows their own 12-month leave cycle starting from their hire date.
If Leave Earning Method is set to None, the full prorated leave is available immediately at the start of the contract.
HR must add the resignation date in Employee Progression for proration to work correctly. You can skip this step if the contract is expected to be extended or renewed.
Looking for specific example?
These scenario-based guides can help you understand how other Entitlement Calculation works
We hope this explanation clarifies the matter. If you require additional assistance, do not hesitate to contact our support team.
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