Leave Entitlement Calculation Method

In this article, we'll help you to understand how Worksy calculates leave according to the selected entitlement calculation method.

When setting up a Leave Type, you’ll come across the Entitlement Policy section. This includes two important settings:

1. Entitlement Calculation: Calculates the number of leave days an employee is entitled to.
2. 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. 

For step-by-step guide to set up a leave type, refer here: Setting up Leave Type

In this article, we will explain how each entitlement calculation method works:

1. Calendar Month
2. Calendar Year
3. Employee Anniversary Year
4. Employee Hire Date

The following scenarios will be based on this information:

1. Calendar Month

Entitlement calculation starts on the 1st day of your selected month and runs on a 12-month period from that month.

Leave is granted based on the employee’s minimum Year of Service (YOS) at the start of the entitlement period, as per assigned entitlement table.

Impact:

The minimum YOS at the start of the leave period determines which entitlement tier is applied for the entire period, even if the employee reaches a new YOS during the month.

Example:

John Doe joined the company on 4 April 2022. In this example, April is the selected starting month.

What happens:

• On 1 April 2025, John is still in 2nd YOS

• On 4 April 2025, John enters 3rd YOS

Because the cycle starts before John's anniversary, system uses 2nd YOS for John's leave entitlement for the whole period.

If May is the starting month, 3rd YOS of entitled days is used for calculation.

Summary:

Entitlement is based on the employee’s years of service as of the selected starting month.

• If the selected starting month is before their anniversary, it uses the previous year’s service.

• If the selected starting month is after their anniversary, it uses the current year’s service.

2. Calendar Year

The calendar year always runs from 1 January to 31 December. Entitled days are calculated based on the employee’s maximum years of service within that year. 

Impact:

• The employee's hire date doesn't affect their entitlement tier.
• Entitlement is based on the maximum YOS reached in current year.
• All employees who reach the same YOS in the same year receive the same entitlement, even if their join dates differ.

Example:

John Doe joined the company on 4 April 2022.

Calendar Year: 1 Jan – 31 Dec 2025

What happens:

• 4 Apr 2025 = John reaches 3rd YOS

• Full entitlement for 2025 will follow the 3 YOS tier and begins on January.

Summary:
Calendar year entitlement is calculated from 1 January to 31 December, using the employee’s maximum years of service within that year.

This means the join date does not affect the entitlement within that year – employees who join in January or December will have the same entitlement if they reach the same years of service within the year.

3. Employee Anniversary Year

Entitlement based on the anniversary date is always prorated according to years of service up to 31 December of the current year.

Impact:

• Before the anniversary date, leave for 2025 is prorated based on the previous year of service.

• After the anniversary date, leave for 2025 is prorated based on the new year of service.

Example:

John Doe joined the company on 4 April 2022.

John Doe's Entitlement Cycle: 4 Apr 2025 – 3 Apr 2026

What happens:

• 4 Apr 2025 = John reaches 3rd YOS

• Full entitlement is given based on 3rd YOS tier

Summary:

Entitlement calculation is based on the employee’s anniversary date to determine the year of service.

• Before the anniversary date, leave for 2025 is prorated based on the previous year of service.

• After the anniversary date, leave for 2025 is prorated based on the new year of service.

4. Employee Hire Date

Each employee has a 12-month entitlement period starting from their actual hire date. Leave entitlement is determined by the employee’s Year of Service (YOS) at the start of each cycle.

Impact:

• Entitlement is calculated from hire date up to completion of 1 year.

• Each employee’s cycle is individualised, not tied to calendar months or years.

Example:

John Doe joined the company on 4 April 2022.

What happens:

• 4 Apr 2025 = John reaches 3rd YOS
• Full entitlement is given based on 3rd YOS tier

Summary:
Entitlement is tied to each employee’s personal hire date, covering a rolling 12-month period based on YOS.

Looking for specific example?
These scenario-based guides can help you understand how each Entitlement Calculation works:

• Leave Entitlement for Contract Staff
• Leave Entitlement Based On Calendar Year
• Leave Entitlement Based On Employee Anniversary Year

We hope this explanation clarifies the matter. If you require additional assistance, do not hesitate to contact our support team.