---
title: Leave Types and Policies
description: "Set up vacation, sick and other paid time off: the kinds of leave, and the policies that say how each is earned, capped and carried over, and who gets it."
url: "https://theasst.com/docs/leave-types-and-policies/"
updated: "2026-10-14"
category: Setup / Company
---

# Leave Types and Policies

Paid time off is set up in three places under Setup > Company: **Leave Types** (the kinds of leave), **Leave Policies** (how each is earned and carried over, and who gets it) and [Company Holidays](/docs/company-holidays-setup/). Balances are shown on [Leave Balances](/docs/leave-balances/) and requests are made on [Leave Requests](/docs/leave-requests/).

## Leave Types

A leave type is a kind of paid time off: Vacation, Sick, Paid Time Off, Bereavement, Parental Leave, Jury Duty. Each employee has a separate balance for each type. The first time the page is opened, one type is created for each paid-leave [pay code](/docs/pay-codes-setup/).

- **Name** – what people see.
- **Pay code** – what the time is paid as when it's taken. When a time entry uses this pay code, the hours come off the balance for this type. Pick one marked as time off.
- **Active** – leave types can be made inactive but not deleted.

![The Leave Types grid: each leave type and the pay code it is paid as](https://theasst.com/wp-content/uploads/2026/10/leave-types-setup.webp)

## Leave Policies

A policy says how one kind of leave is earned and carried over, and who it applies to. Use **Add a policy** on the list, or click a policy to edit it.

![The Leave Policies list showing each policy, its leave type, accrual, and how many employees it is assigned to](https://theasst.com/wp-content/uploads/2026/10/leave-policies-list.webp)

### How it is earned

- **Accrual**
  - *Granted at the start of each leave year* – the year's hours are added all at once.
  - *Earned monthly* – one twelfth of the year's hours is added at the end of each month.
  - *Earned per hours worked* – for example 1 hour earned for every 30 hours worked, credited monthly from the employee's reconciled hours.
  - *No automatic accrual* – balances change only by adjustment.
- **Hours per year** (or **Hours earned** and **hours worked** for the per-hours method).
- **Start accruing on** – use your go-live date. Nothing before it is back-filled, so setting it carelessly in the past would add years of leave.
- **Waiting period (days)** – no accrual until this many days after hire.
- **Leave year** – the calendar year (Jan 1) or the employee's hire anniversary. For a yearly grant you can *prorate the first grant* for the part of the year left.
- **More with service** – add tiers such as 5 years = 120 hours. The tier with the most years that the employee has reached replaces the base hours.

### Limits and carryover

- **Balance cap** – accrual stops when the balance reaches it (0 = no cap).
- **Carry over (%)** and **Carryover limit** – at the start of the next leave year, this percentage of the unused balance (up to the limit) carries over and the rest expires. For example, hourly employees in a group might earn 80 hours a year and carry over 50% of what's unused.
- **At termination** – pay out the remaining balance (a payout entry is recorded; the pay itself goes through your payroll).
- **Negative balance** – allow leave to be taken beyond the balance. If this is off and a policy applies, a time entry or request that would overdraw the balance is refused.

### Who it applies to

Check groups and/or individual employees. An employee gets the policy if they are in a checked group or are checked by name; a policy chosen by name beats one that comes from a group. If several of an employee's groups offer different policies for the same leave type, the most generous one is used.

![The leave policy editor with accrual, limits, carryover, and assignments](https://theasst.com/wp-content/uploads/2026/10/leave-policy-editor.webp)

## How balances are calculated

An employee's balance is the sum of their leave history: accruals, hours used, carryover write-offs, payouts and adjustments. Accruals are added when someone with payroll permission clicks **Run Accruals** on Leave Balances (and automatically each night when the nightly job is set up). Running it again never adds anything twice.