Add vacation and sick leave

Add employee time off accruals and balances, so they can request time off and they're paid correctly when taking time off.

How it works

Assign time off to employees for vacation and sick leave, and then define how their time off accrues. If you're entering opening time off balances, you only need to do this once before the employee's first pay run. Get advice from your accountant or bookkeeper if you're unsure which information to enter.

Assign time off balances

  1. In the Payroll menu, select Employees.
  2. Click the name of the employee to open their details.
  3. Select the Time Off tab.
  4. Click Assign Time Off Type.
  5. Enter information into the Assign Time Off Type fields.
  6. Click Save.

Assign Time Off fields explained

Time Off

Choose the type of time off that the employee has accrued. For example, vacation, sick or PTO leave.

Schedule of Accrual

Select the method used to calculate the accrued time off:

  • Beginning of the Calendar Year
    Based on the beginning of the calendar year date (that is, Jan 1, 20xx), the employee's hours accrue annually if they're included in the pay run.
  • On Anniversary Date
    Based on the start date, the employee's hours accrue in the pay run that includes the employee's anniversary date.
  • Each Pay Period
    The employee will accrue hours for each pay period if they're included in the pay run.
  • Each Hour Worked
    The employee will accrue hours based on the number of hours worked during the pay period.

Hours Accrued Annually

Enter the hours of accrued leave for the time off type.

Maximum to Accrue

Enter the maximum number of hours that the employee can accrue time off for. This is the total of the Hours Accrued Annually and Balance amounts. For example, if the Hours Accrued Annually is 40 and the Balance is 20, the Maximum to Accrue is 60.

You must enter an amount in this field, otherwise the employee will not accrue any time off.


Enter the opening balance (in hours) for the time off type. That is, the hours the employee had available on the day you started using Xero Payroll.

You can enter negative balances.