What Is Accrued Leave?
Accrued leave refers to paid leave — typically Earned Leave (EL) or Privilege Leave (PL) — that an employee earns incrementally over a period of work, usually monthly or quarterly, rather than receiving the full annual entitlement upfront on day one.
How Leave Accrual Works in India
Under the Factories Act, 1948, and most state Shops & Establishments Acts, employees earn Earned Leave at a statutory minimum rate — a common benchmark being 1 day of EL for roughly every 20 days worked — though the exact ratio and eligibility conditions vary by state (Maharashtra, Karnataka, and Delhi, for example, each apply slightly different formulas and thresholds).
Accrual Methods Used by Indian Companies
- Monthly accrual (most common in IT/services): e.g., 1.5 EL days credited at the end of every completed month
- Quarterly accrual
- Annual upfront credit — common in practice, though it sits somewhat apart from a strict pro-rata accrual interpretation
Worked Example
An employee joining on 1 April with a policy of 1.5 EL days per month accrues 1.5 days by 30 April, 3 days by 31 May, and continues accumulating each completed month — reaching 18 days by the end of the financial year, assuming 12 months worked.
Accrued Leave vs Leave Balance vs Leave Encashment
- Accrued leave is what has been earned to date.
- Leave balance is what remains unused after deducting leave already taken.
- Leave encashment is the monetary conversion of unused accrued leave — commonly on resignation, retirement, or per an annual encashment policy.
How HR Software Helps
An HRMS automates pro-rata accrual calculations, prevents negative leave balances, and flags encashment eligibility automatically at year-end or on exit — removing the manual spreadsheet errors that are common with accrual tracking.
See how Trilliant Software automates this →Accrued Leave: Frequently Asked Questions
Is leave accrual mandatory in India?
Can accrued leave lapse?
Does the probation period count toward leave accrual?
This glossary entry is for general information and reflects common HR practice in India at the time of writing. Statutory thresholds, rates and deadlines change — verify against the latest official notifications or consult a qualified legal or tax advisor before acting.