Time off policies establish how your employees request and accumulate time off. Each time off type you create can have multiple time off policies. This enables you to manage different market-specific requirements within a single time off type. You can use one of our country-specific templates to help you with the creation process. This approach offers several benefits:  

• Reduced complexity: Minimize administrative tasks by decreasing the number of time off types you need to manage.
• Flexibility: Adapt to local regulations, ensuring compliance across various markets.
• Efficiency: Streamline your time off management process, making it more effective for your organization. 

As you’ve started implementing Time off after 8 March, you have access to our new experience, which introduces long-term effects for time off policies.

Before you start

• To set up time off policies, you need edit permission to the Account configuration > Time off section.
• According to the templates selected for the time off policy, the system might have prefilled some sections described in this article with recommendations.  
• You can assign different policies to different employees, but each of them can only have one time off policy per time off type at a time.
• You can only add long-term effects for time off policies to time off types measured in days, and not to ones measured in hours.

Create a time off policy

To create a new time off policy, follow these steps:

1. Go to Settings > Time off & Attendance > Time off.
2. Select the time off type you want to create a policy for.
3. Click Add policy to open the creation drawer.
4. Select a template or scroll down and click General guidance to only view generic recommendations. Keep in mind: 
   • We don't recommend using other countries' templates, as they might have a calculation logic that doesn't apply to your country.
   • If you’re creating a paid holiday policy for Germany or the Netherlands, use the corresponding country-specific template. They contain special rules for these countries not available otherwise.
5. Add a policy name and description. While the description is only visible to Administrators, we recommend not adding confidential information to it.
6. Fill out and review the policy sections, described in detail below. 
7. Check the final policy summary and confirm.
8. Assign the policy to your employees.

Time off policy details

Entitlement

Using these settings, you decide if a time off policy offers a fixed or unlimited amount of time off.

If you offer unlimited entitlement, assigned employees can request open-ended time off periods. This is useful if the duration of the time off is uncertain. For example, an employee might need to take extended time off for sick leave, family leave, or public obligations like jury duty.

If you’ve used the Dutch template for the vacation (paid) time off, you can set up statutory and non-statutory entitlement separately.

If you enable a fixed entitlement option, the following sections appear.

Granting

Tenure-based granting

With this section, you can reward tenured employees with permanent extra entitlement. If you want to grant a bonus for a single cycle instead, use a relative balance adjustment.

You may select between one-off or recurring rewards:

• For one-off rewards:
  • Set how many days or hours to reward and after how many years to reward them. 
  • Click Add to add more rewards.
• For recurring rewards:
  • Set how many days or hours to reward and the reward frequency in years.
  • Decide if the rewards stop after a certain number of years, or have no limit.

For both types of rewards, you can grant the additional time off either:

• On the work anniversary
• On the start of the granting year (as set by the When should the accrual year start? setting) following the anniversary. 

Carryover

With this section, you can let your employees carry unused entitlement to the following years. If you enable the setting, you can:

• Limit the number of days or hours employees can carry over
• Set a limit for employees to use the carryover, measured in months.

Before changing the carryover settings of an already existing time off policy, read our dedicated article.

Proration

With these settings, you can reduce an employee's entitlement proportionally, based on their working time or when they join or leave in the middle of a cycle.

Long-term effects for time off policies

The following sections are only relevant if you want time off periods to have specific effects on any of these:

• The employee’s compensation.
• Their Personio status.
• Their accrual of other types of paid time off.

For each of the sections below, you can set the number of days the setting applies from. These include weekends and working days. You can use these sections in two ways:

• The time off type you’re creating the policy for is specifically set up for long-term leaves (example: paternity leave). In this case, set these effects to start immediately by setting the number of days to 0. 
• The time off type you’re creating the policy for has both a short-term and a long-term use (example: sick leave turning into a longer period of sickness). In this case, set these effects to start after a specific number of days, including weekend and working days..

If you don’t need any of these in place, you can leave all the following sections disabled, and move on to the policy summary.

Compensation proration

With this setting, you can reduce compensation to zero. Keep in mind:

• If you’re using Personio Payroll, you can’t set up compensation proration. Instead, compensation is prorated by additional questions in the time off period.
• You can’t decide to reduce the compensation by a specific amount or percentage.
• One-off compensations and bonuses are not impacted by this setting.

When you enable the checkbox, after the set number of days:

• The employee’s Salary tab automatically reflects the reduction.
• The system adjusts the base salary and other recurring compensation, including additional compensation, according to the duration of the leave. 

Employee status

With this setting, you can automatically change the status of an employee to “Leave”. The status changes back to Active automatically when the leave is over. When you enable the checkbox, after the set number of days:

• The employee stops receiving any Personio notifications.
• The employee stops appearing in the employee list and org chart. If another employee has Personal data > Edit permissions to the section containing the Status attribute for the employee on leave, they can still see them in the list and org chart.
• Any change that would trigger a recalculation of the employee's overtime balance doesn't trigger.

Impact on paid time off 

With this setting, you can reduce entitlements of other paid time off types. When you enable the setting checkbox, after the set number of days:

• The system reduces the entitlement for all the selected paid time off types.
• The system shows their updated entitlement under the accrual entry in the Balance > Activity tab.

To enable this setting:

1. Enable the checkbox.
2. Select the types of time off you want to reduce the entitlement for. Only time off types of the “Holiday (paid)” category appear in the dropdown menu, as this setting only applies to those. 
3. Optional: if you want to set up different rules for different types of time off, uncheck the Use same settings for all time off types option. If you do, repeat all the following steps for each time off type.
4. Type after how many days the system should reduce entitlements.
5. Choose one of the reduction rates described below.
6. Optional: add another reduction rule. The number of days must be bigger than the first rule.

Available reduction rates

There are three types of reduction rates available:

Example scenario

On 10 January, the system starts reducing paid time off for an employee on leave until 15 March. Their paid time off entitlement is 2 days per month, granted yearly. Depending on the reduction rate you choose, Personio reduces the entitlement differently:

Daily proration

The system reduces entitlement for every single day between 10 January and 15 March. With an entitlement of 2 days/month, the reduction is:

Monthly proration (calendar)

The system only reduces entitlement for February, as it’s the only full calendar month in the leave. January and March are partial months and don’t affect the entitlement. The reduction is:

Monthly proration (rolling)

The system reduces entitlement for 2 full months, starting on 10 January until 9 March:

Assign a time off policy to your employees

These instructions apply when you're assigning a time off policy to employees for the first time. To change a policy assigned to employees instead, follow the steps here instead.

Automatically assign all time off types that only have one policy

If you haven't assigned any policy to the employee yet, go to their Time off tab and use the Quick assign button. This automatically assigns all time off policies to the employee for any time off types that have only one policy available. This option is particularly useful for assigning policies to new employees.

Assign a policy to a single employee

To assign a time off policy to a single employee, follow these steps:

1. Go to their employee profile > Time off.
2. Go to Time off balances on the right
3. Click Unassigned tab, then the relevant time off type.
4. In the time off type window, go to Policies.
5. Click Assign policy and select the time off policy you'd like to assign.
6. Review the time off policy details and click Next.
7. In Effective from, select one of the options shown in the table below. These options apply for both policies with and without entitlement limitations.
8. Review the impact of the assignment.
9. Click Assign to implement the changes.

Effective from options

Assign a policy in bulk

There are two ways to assign a policy to multiple employees at the same time:

• Using the People List, recommended in most cases.
• Using an import. This option is particularly useful if you need to assign a policy to many employees and time off types. With the import, you can avoid spending time on setting these up individually.

Using the People List

1. Go to Organization > People list.
2. Optional: Apply filters to narrow the employee selection.
3. Check the box to the left of the relevant employees' names.
4. Click Edit time policies > Assign time off policy.
5. Select the relevant time off type and the time off policy you'd like to assign.
6. Review the time off policy details and click Next.
7. In Effective from, note the following:
   • If it's a policy with unlimited entitlement: You can assign it from today, the hire date, or a specific date.
   • If it's a policy with limited entitlement: You can assign it from one of the options shown in the table below.
8. Review the impact of the assignment.
9. Click Assign to implement the changes.
10. For time off with entitlement limitations, the system calculates the entitlement based on the assigned time off policy.

Effective from options

Using an import

You perform the import via Settings > Organization > Imports. Learn more in our dedicated article.