Definitions – Accural and Accural Rule

A client was unsure what is an accrual or accrual rule so I provided these definitions –

An Accrual is total of a given event over time, such as Sick-leave, Vacation balance, etc. This is normally recorded or accumulated over a calendar year or financial year. It is a way of tracking one or more events (e.g. holiday entitlement) that may get converted into Paid Time Off (PTO). This helps the HR department in determining employee absences and to perform reporting.

Accrual Rule is the ‘engine’ that drives Accruals. It is made up of company policies, for example –

• What entitlements does an employee´s seniority / job title give them
• What is a new employee allowed to have in regards to paid time off when they are in their probation period
• Can allowances be carried over to the next year e.g. holiday is carried over
• Accurals are reset at the end of the year – employees must use or lose their holiday allowance

Defining company policies in Accrual Rules minimizes compliance risk and allows fair and consistent treatment of employees across the organisation.