TalentHR supports time off accrual policies, allowing Admins and HR Managers to automatically allocate leave days to employees based on custom rules and cycles. 

Accruals can be tailored by location, department, seniority, or individual employee needs, making leave tracking accurate and consistent.

To create a time off policy:

1. Sign in to your TalentHR account as an Admin or an HR Manager, and go to Settings > Time off (1).

2. Open the Policies (2) tab.

3. Click + Add policy (3).

4. Add a name (4) for your policy.

5. Choose the time off type (5) it applies to (e.g., Vacation, Sick Leave).

6. Define who it applies to using filters such as location, department, division, or individual employees, or select all employees (6).

7. (Optional) Select Unlimited days off (7) if you wish to grant employees with an unlimited budget for this type of time off. 

8. Otherwise, proceed by choosing whether this policy gives a starting balance (8) or not. 

The options are:

• None: Accruals begin from the first fire event. No starting balance will be allotted. 
• Retroactive: Calculates and grants a proportional balance for eligible accruals in the current cycle that would otherwise not be covered by the next scheduled fire event. The amount depends on the employee’s Hire date or eligibility date, the accrual schedule, and the applicable milestone rules.
• Custom: Instantly adds a fixed time off balance to all eligible employees, regardless of hire date or seniority.

9. (Optional) Choose to remove fixed budgets (9) if applicable.

Adding accrual rules (milestones)

By defining one or more accrual rules (milestones), you ensure accruals happen consistently, transparently, and in line with both company policy and local regulations.

To add accruals:

1. While editing your policy, scroll down to the Schedule (1) section. Define the following:

• Accrual amount (e.g., 2 days per month).
• Interval: How often the time off is granted (monthly, quarterly, yearly, etc.).
• Event timing: When the balance is added (start or end of the interval).
• Start date: When this milestone starts applying (e.g., 01/01/2025).
• End date: When this milestone stops applying (fixed date, or relevant to the start date).
• Cap on balance: Max amount of time off an employee can hold.
• Cap on carry over: Max balance an employee can transfer from one cycle to the next.
• Carry over period: Until when carried-over balance remains available.

2. Click Add milestone (2) if you wish to create a follow-up accrual with different settings. Perform the same steps to set it up. The new accrual/milestone will start to apply according to your settings.

3. Click Save (3) to save your policy. It will be activated immediately.

Time off accrual in TalentHR (Useful information)

Below are a few things you may need to keep in mind while working with time off policies in TalentHR.

A. Understanding fire events

Fire events are the scheduled dates when leave is actually added to an employee’s balance. These depend on:

• Accrual interval and timing (e.g., monthly at the start of the month).
• Policy creation date.
• Start date of the current time off cycle.

Example scenario

• If your company’s time off cycle starts on January 1
• Your policy gives 2 days per month at the start of each month
• Your policy is created on July 14

Then, the first fire event for this policy will occur on August 1, adding 2 days for August.

B. About starting balance: Retroactive and Custom

When adding a new policy or accrual, you can choose to provide a starting balance (1) to employees:

i. Retroactive starting balance

A Retroactive starting balance calculates the proportional entitlement that should apply to an employee in the current Time Off cycle, based on the policy’s accrual rules and scheduled fire events.

The exact period covered depends on when the accrual normally takes place.

• It applies only if the employee has not already accrued Time Off from the same Policy and Time Off Type.
• The employee’s Hire date or eligibility date is taken into account when they become eligible after the start of the cycle.
• If the current period’s fire event has already passed, Retroactive can grant the proportional entitlement that would otherwise have been missed.
• If the current period’s fire event is still upcoming, that period can instead be handled by the regular fire event, so Retroactive does not duplicate it.
• For a Yearly Policy that accrues at the start of the cycle, an employee hired after the cycle starts receives a proportional entitlement from their Hire date through the end of the current cycle.
• If an employee moves between milestones during the cycle, TalentHR calculates a proportional amount for each applicable milestone period.
• If the Policy is created before the first applicable fire event of the cycle, a Retroactive starting balance may not be generated, because the upcoming fire event will handle the accrual.

ii. Custom starting balance

Gives a fixed amount to all applicable employees regardless of seniority or hire date.

• Applies to both existing employees and new hires.
• Can be used when you want to issue a one-time bonus balance.
• Cannot be applied to employees who have already accrued balance from the same policy and time off type (whether via fire events or another starting balance).

New hires and starting balance

What a new hire receives depends on the selected Starting balance and the Policy’s accrual schedule:

• Retroactive: TalentHR determines whether a proportional starting balance is required based on the employee’s Hire date and the timing of the next fire event. If an upcoming fire event will already cover the relevant period, TalentHR does not grant a duplicate Retroactive balance for that period.
• Custom: The employee receives the specified fixed starting balance on their Hire date, provided they have not already accrued from the same Policy and Time Off Type.
• None: The employee receives no starting balance and begins accruing at the next applicable fire eve

C. Remove fixed budgets

If enabled, the Remove fixed budgets (1) setting will clear existing manually set budgets for employees affected by the policy, for the cycles expected to accrue from this policy.

This ensures no duplicate or conflicting budgets remain once the policy takes effect.

D. Carry over and caps

When configuring each accrual/milestone, you can set:

• Carry over rules (1): Determine if unused balance rolls over to the next cycle, and how long it's valid.
• Cap on carry over (2): Maximum amount of leave that can roll over between cycles.
• Cap on balance (3): Maximum total leave an employee can hold at any time.

E. Understanding Milestones

Milestones are the core of accrual rules in TalentHR. Each milestone defines how, when, and how much time off is granted to employees.

To reiterate, each milestone includes:

• Accrual amount: The number of leave days granted for the defined interval (e.g., 2 days).
• Interval: The frequency of the accrual (monthly, quarterly, yearly, etc.).
• Timing: Whether the time off is added at the start or end of the interval.
• Start and end date: The date range during which the milestone is active. Milestones can either end on a specific date or continue until the next milestone takes effect.
• Balance cap and carry over settings: Limitations on how much time off an employee can hold or carry forward, to ensure compliance with internal policies.

Important rules:

• Employees accrue time off based on the milestone that applies to them during a given period. If they transition between milestones (e.g., due to seniority), they receive a proportional accrual from each.
• The End date of each milestone is automatically set to the Next milestone when a new milestone is added.
• You can chain multiple milestones together to reflect seniority-based accrual changes or policy evolution over time.

Example scenario

Let’s say your policy includes:

• 2 days/month for employees with under 3 years of seniority (1)

• 3 days/month for employees with 3+ years of seniority (2)

An employee who reaches 3 years of seniority in July will:

• Accrue from the first milestone from January to June
• Accrue from the second milestone from July to December
   

Time off accrual policies in TalentHR offer powerful flexibility for automating leave allocation across different teams, roles, and employment terms. 

By combining starting balance options, tailored milestones, and carry over rules, you can create dynamic policies that adapt to your company’s needs, while keeping everything fair and consistent for your employees.

Additional resources

For more detailed walkthroughs and example configurations, feel free to download our two companion guides:

• Carry over and cap on balance – Time off policies (PDF)
  Learn how to limit year-to-year accumulation and manage liability with carry-over caps and balance ceilings, including real-life scenarios and what-if examples.

• Starting balance options – Time off policies (PDF)
  Explore how to configure retroactive and custom starting balances for your teams, and see how these settings apply in practical hiring and policy update scenarios.