The earned paid time off accumulated by an employee based on the number of days or months worked during a calendar or financial year.
- Category
- Attendance & Leave
- Legal status
- Governed by Indian law
- Relevant to
- HR, managers & employees
- Reading time
- 3 min
What is Accrued Leave?
Accrued Leave represents paid leave days that an employee earns proportionally as they complete service periods (typically 1 to 1.75 days per month worked). If unused, accrued leaves may carry forward into the next calendar year, subject to company caps, or be encashed upon separation during Full & Final (FnF) settlement.
Key takeaways
- 1Accrued Leave represents paid leave days that an employee earns proportionally as they complete service periods (typically 1 to 1.75 days per month worked).
- 2If unused, accrued leaves may carry forward into the next calendar year, subject to company caps, or be encashed upon separation during Full & Final (FnF) settlement.
Why Accrued Leave matters
Constitutes a significant balance-sheet liability for employers and guarantees employees statutory rest intervals.
How Accrued Leave works in practice
- 1
Set the policy
Define how Accrued Leave works: eligibility, accrual or limits, approval flow and carry-forward rules.
- 2
Capture data
Record Accrued Leave through biometric, mobile or web check-ins and leave requests rather than paper registers.
- 3
Approve & regularise
Managers review exceptions, missed punches and requests related to Accrued Leave within a fixed window.
- 4
Feed payroll
Lock the cycle so Accrued Leave flows into salary, loss-of-pay and encashment calculations.
Real-world example
An employee earns 1.5 days of Earned Leave (EL) for every month worked. After 6 months of continuous service, they have accrued 9 days of paid leave.
Indian statutory reference
Factories Act, 1948 (Section 79: 1 day leave for every 20 days worked) and state Shops & Commercial Establishments Acts.
Rates, limits and state rules change often. Confirm against the latest notification or with your compliance advisor.
Best practices and common mistakes
Best practices
- Publish a clear policy for Accrued Leave and keep it in the employee handbook.
- Use one source of truth for attendance, leave and shift data.
- Set approval timelines so requests do not pile up before payroll.
- Audit overtime and loss-of-pay entries each cycle.
- Align policies with the applicable Shops & Establishments rules.
Common mistakes
- Applying Accrued Leave differently across teams, which causes disputes.
- Letting attendance corrections happen after payroll is processed.
- Not tracking leave balances in real time.
- Ignoring state-wise holiday and weekly-off rules.
Managing Accrued Leave in SleetHR
SleetHR manages Accrued Leave with configurable policies, self-service requests and approvals, and sends the final numbers to payroll automatically.