Entitled, Accrued and Advanced leave – what is the difference?

We get a lot of questions around the labels used in payroll to describe Annual Leave so the following will hopefully help.

Entitled, Accrued, and Advanced are used to define the different elements of Annual Leave.  To understand them you first must remember that an employee’s Annual Leave year runs for a 12 month period annually from when they started (or a Company Anniversary Date if used).  At the end of each year, the balances are changed from one definition to another.

The leave that you accrue during the year (within your current holiday pay year) is called Accrued (or Accruing) Leave and every pay this keeps increasing based either on hours worked or days paid (depending upon setup) so that at the end of your 12 months you will have accrued your total minimum entitlement of Four Weeks (might be shown in hours or days), note however that the Holiday’s Act does not recognize the concept of ‘accrued leave’, it only references ‘entitled leave’.  The Accrual of leave is mainly done for Accounting (to record liability) and for the employees so they can have some understanding of their leave balance

At the end of your holiday pay year, the total Accrued Leave should be transferred to Entitled (or Outstanding Leave) and your accrual starts all over again from zero.  So on the date of your anniversary, your Entitled balance should show 20 days (weeks or hours), less any leave taken already and Accrued should be reset to zero.

If during the year you take leave (and you have no days left in Entitled as you have taken them all) then the leave you take is called Advanced as it is effectively an advance of your current year’s entitlement as strictly speaking you are not entitled to your leave until you have completed each 12 month period.

Most payrolls will draw down leave from your Entitled balance first and then from Accrued so you cannot have a situation where there is a figure in Entitled and Advanced.