Create a Time Off Policy

  • May 14, 2026
  • Knowledge

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Create a Time Off Policy
Article Text
Screenshot of feature availability in Core, Pro, and Elite packages.

How do I create a time off policy?

Purpose: To help you understand how a time off policy can automatically accrue time off for your employees. This help guide will walk you through how to create a new time off policy.

Table of Contents

Did you know we have BambooHR Learning courses about Time Off? Click here to view a beginner's guide on Time Off and then click here to learn how to create a time off policy.

Do you prefer hands-on learning? Our interactive guides will guide you through different aspects of your BambooHR experience. We have an interactive guide specifically designed to show you how to create a time off policy. You can use the link below to access this guide. All you need to do is modify the "REPLACEME" with your BambooHR subdomain, and you can get started!

https://REPLACEME.bamboohr.com/home?pendo=MotsLgWNMve4gC6wcVL0zhBRQ8E&step=BeiUEu2kEyoCmGmU49aZO-OyOVM

New Policy

Screenshot of the Time Off section of BambooHR Settings, showing the option to create a new time off policy. A pop-up modal is displayed with settings for selecting accrual methods.

A time off policy gives your employees an automatic accrual amount on a specified schedule. The accrual amount adds to the available balance for the associated time off category. You can create as many different policies as needed in BambooHR. This is particularly helpful if you have locations with varied accrual rules or a handful of employees with negotiated policies.

To create a time off policy, go to Time Off in Settings, navigate to the Overview tab, and select + New Policy. Then select It accrues time (traditional) and click Create Policy.

An accrual time off policy is the most common use case, so the following examples will be using an accrual policy however, you can also create a flexible time off policy or a manually managed policy. Click here for more details on the different policy options.  

How to Add a Manually Managed Policy

This policy option works best for employees who accrue time off through manual adjustments. This type does not have automatic accruals, but it still shows a current balance to the employee.

Screenshot of the New Time Off Policy pop-up modal, where a user chooses to create a manually managed time off policy instead of an accrual-based one by clicking on the green "create a Manually Managed Policy" link.

To add a manual policy option, select the +New Policy button and click on the Manually Managed Policy link. From here, give the policy a name and determine the category the policy should belong to. Then, click Save.

How to Add a Flexible Time Off Policy

A flexible time off policy lets you track time off used YTD (year-to-date) rather than using a current balance. At BambooHR, we call it flexible time off, but also refer to it as unlimited.

To add a flexible policy option, select the +New Policy button and click the "It's flexible (unlimited).  From here, give the policy a name. You will stay on the Time Off Policy page, where you can add employees.

Add Time Off Policy

Screenshot of a page labeled New Manual Policy with input fields for policy name and category, plus an option to add a new category. This screen demonstrates how administrators define the basic structure of a new time off policy before setting up accrual settings.

When you create a time off policy, you will need to select which category the policy should belong to and add a policy name. If necessary, you can create a time off category by selecting + Add Category instead of an existing time off category. See the screenshot below.

Screenshot of a pop-up modal for creating a new time off category, starting with a text field to enter the category name, followed by additional settings include checkboxes to mark the category as paid, make it publicly visible, and determine who can view it. Below, a dropdown is available to choose whether to track time off in hours or days. Additionally, administrators can select a category icon and assign a calendar color for visibility, ensuring the policy is both customized and easily identifiable across the system.

A time off accrual policy determines how often and how much time off an employee earns. If your employees earn their time off at different rates and different times (i.e., full-time vs. part-time), you can create more than one policy option for the time off category.

Accrual Setup
Screenshot of the policy setup page named "New Policy," where administrators configure accrual settings step by step: (1) Accrual Schedule – choose how much time off employees earn and at what frequency, with a calculated annual total shown; (2) Accrual Waiting Period – define when employees become eligible to start accruing, such as two weeks after hire; (3) Balance Cap – optionally set a maximum balance where accruals stop until the balance drops below the cap; (4) Carryover Amount – determine whether and how much unused time carries into the next year; and (5) Add Tenure Milestone – add accrual changes based on employee service length. This structured sequence ensures all accrual parameters are covered.

Clicking Next Step will take you to the Accrual Setup step.

  1. Accrual Schedule: How much time off will your employees earn, and with what frequency? Once you have selected this, a calculated annual total will show to the side. For more information on each of the accrual options, click here.
  2. Accrual Waiting Period: Consider when the employees will become eligible to begin earning time off. In this example, our employees start accruing time 2 weeks after their hire date.
  3. Balance Cap: This setting is optional. Once the accrual amount reaches its maximum, the employees will not accrue any more time until the balance falls below the maximum.
  4. Carryover Amount: Determine if time off can carry into the following year. If yes, how much?
  5. Add Milestone:If your employees earn more time the longer they are employed, click + Add Tenure Milestone.This will allow you to add new accrual information that will apply based on how long they've been with your company.
Add Tenure Milestone
Screenshot of the Milestone section of the policy setup, with numbered options for defining milestone rules: (1) Milestone Schedule – enter when employees will move to this milestone based on service length; (2) Accrual Amount – set the new accrual amount employees receive once eligible; (3) Accrual Cap and Carryover – enter limits or rollover rules if they differ from the original accrual; (4) Add Another Milestone – create additional milestones with no set limit; and (5) Remove Milestone – delete an existing milestone by confirming in a pop-up modal. These steps allow policies to reward employees progressively over time.
  1. Milestone Schedule: Enter when your employees will move to this milestone.
  2. Accrual Amount: Enter the new amount they will be accruing. See this section is you need to change your accrual frequency.
  3. Accrual Cap and Carryover: If these settings are different than the original accrual, you can enter that here. If you need to adjust your carryover rules for the new year, click here.
  4. Add Another Milestone: There is no limit to the number of milestones you can add.
  5. Remove Milestone: Click Remove Milestone if you need to delete a milestone. A modal will appear, asking you to confirm the deletion.
Carryover Date
Screenshot of the Carryover Rules section of the policy setup, with numbered settings for rollover handling: (1) Carryover Date – choose when carryover applies, such as the start of the year, employee hire date, or a custom date; (2) Carryover Expiration – define if and when carried-over balances expire; and (3) Reset Negative Balance – an option to enable a checkbox to reset employees with a negative balance to zero on the carryover date. These settings ensure balances remain compliant with company rollover policies.
  1. Carryover Date:This section will allow you to choose if the carryover allowance takes place at the beginning of the year, on the employee's hire date, or on a specific date.
  2. Carryover Expiration: This segment allows you to set an expiration date for an employee's carryover. The carryover period cannot exceed 1 year.
  3. Reset negative balance:Checking this box will allow employees with a negative time off-balance to reset to 0 on the carryover date. This will apply to all accrual policy levels and is applicable in all carryover scenarios (None, Up to, and Unlimited).
Fine-tuning
Screenshot of the Fine-tuning section of the policy setup, with numbered options for adjusting accrual details: (1) Employees’ First Accrual – decide whether new hires receive a full or prorated amount when their first accrual occurs; (2) Employees Receive Accrued Time – select whether employees get their accrual at the start or end of the accrual period; and (3) Transition Employees to New Milestones – determine whether milestone changes take effect immediately upon eligibility or at the end of the accrual period.

Accrual options apply to all milestones within a time off policy:

  1. Employees' first accrual:Do you want the employees assigned to this policy to receive the full amount or a prorated amount (if applicable) when the first accrual occurs? For example, if an employee got hired in the middle of the month, should they receive the full accrual or a prorated amount for how many days they worked that month?
  2. Employees receive accrued time: Do your employees get their time off at the start or end of the accrual period? In the example above, my employees receive the accrual amount at the start of the accrual period, which is before they work that month (more information below).
  3. Transition employees to new Milestones:This determines when the employees will move up to the next accrual milestone (more information below).

Tip: If you need help with fine-tuning your policy, click on the question mark icon next to each option. This action will give you an additional explanation and help you make the right selection for your policy.

Employees' receive accrued time...
Screenshot of settings under "Some Fine-tuning" section of the policy setup that define when employees receive accrued time within a policy: (1) At the start of the accrual period – employees receive time up front, deposited on the first day; or (2) At the end of the accrual period – time is deposited after the period has been worked, similar to a paycheck. This choice determines whether accruals are front-loaded or earned retroactively.

This setting determines when employees receive their earned time off within an accrual period.

You can choose between:

  • At the start of the accrual period: Employees receive time off on the first day of the period. This gives them the full accrual before the period occurs.
  • At the end of the accrual period: Employees receive time off the day after the period ends. This works like a paycheck: they earn the time during the period and receive it after the period is complete.

Examples:

  • Yearly, start of period: Employees receive their yearly PTO on January 1.
  • Monthly, start of period: Employees receive their PTO at the beginning of each month.
  • Yearly, end of period: Employees work the year, then receive PTO on January 1 of the next year.
  • Monthly, end of period: Employees work through the month and receive PTO the following month.

Check our the time off policy FAQ for more help with accrual timing.

Transition employees to new Milestones...
Screenshot of the policy setup with configuration steps for accruals: (1) Accrual Schedule – employees accrue 8 hours monthly on the 1st, totaling 96 hours annually; (2) Accrual Waiting Period – accruals begin immediately upon hire; (3) Balance Cap – accruals stop once a maximum balance of 96 hours is reached; (4) Carryover Amount – up to 80 hours can be carried into the next year; and (5) Tenure Milestone – a milestone is added where, after one year, accruals increase to 10 hours monthly (120 annually), capped at 120 hours, with up to 100 hours carried over. Additional sections define the carryover date (e.g., January 1), with an option to reset negative balances to zero, and fine-tuning options where first accruals are prorated, accruals deposit at the start of each period, and milestone transitions occur at the end of the accrual period. The intent of this example is to illustrate how milestone transitions function: the employee may either start accruing at the new higher rate immediately upon becoming eligible or wait until the end of the accrual period before transitioning, depending on the setting chosen.

If your policy includes multiple tenure milestones, you must choose when an employee should move to the next accrual rate:

  • Right when they become eligible: Employees transition on their work anniversary date. This may result in partial accruals in that month.
  • At the end of the accrual period: Employees transition at the beginning of the next full accrual period.

Example:

If an employee hired April 8 becomes eligible for a new rate on April 8 of the next year:

  • Right when eligible: They receive a partial accrual from the old rate on April 1 and a partial accrual from the new rate on April 8.
  • End of the accrual period: They continue at the old rate through April, then begin the new rate on May 1.

Check our the time off policy FAQ for more help with milestone transitions.

Summary
Screenshot of the Summary step of the policy setup, consolidating all accrual, carryover, and milestone settings into one view. A navigation option labeled Next: Milestone [#] allows administrators to review milestone breakdowns before finalizing. Once verified, the summary page provides a Save & Finish button to confirm and apply the completed policy setup.

Clicking Next Step again will bring you to the Summary page. Here we will walk you through what this policy will look like. Click Next: Milestone [#] to see the breakdown of each milestone.

Once you are satisfied with the setup of your policy, click Save & Finish. This will take you back to the Time Off page in Settings.

Time Off Settings

Screenshot of the Time Off section in BambooHR Settings, showing a menu where created policies appear under their associated categories. Selecting a policy name opens a table listing assigned employees, with an Add Employees button to assign more. An Edit Policy option lets administrators change settings, and a note explains that not all categories (e.g., jury duty or unlimited time off) have accrual policies, as these can be managed with manual adjustments.

Policies live under the accompanied time off category* name in the middle menu once you create them. If you click on a policy name, a table will display a list of employees currently assigned to the policy. Click Add Employees to assign new employees to the policy. A modal will then populate a list of employees not currently assigned to the policy for you to choose from. If an employee is already assigned to a policy, the policy name will appear next to their name.

You can also make changes to the policy settings for accrual policies by clicking Edit Policy. The policy type is specified next to the gear drop-down.

Tip: Once you have created a time off accrual policy, you will need to assign it to any applicable employees. If you need those employees to access your new time off policy, be sure to grant them access through Access Levels settings.

*Not all time off categories have time off policies attached to them. For example, jury duty is usually a time off category without automatic accruals because not all employees are called to jury duty each year. Therefore, it would be better to add a manual adjustment instead of a time off policy. This adjustment refers to a manually updated balance. An unlimited time off category is another example. In BambooHR, we call this flexible, and we track the time off used instead of the current balance. Flexible or manually updated policies can be created in Time Off Settings. You can learn more about these different time off categories here.

Are you finding it challenging to maintain consistent and compliant tracking of employee time off? Many organizations struggle with ensuring all time off is accurately reported, leading to confusion, potential pay discrepancies, and a lack of accountability.

Our Solution: Our HR Consulting Services can help you delegate the task to a trusted expert to develop a comprehensive time and attendance strategy tailored to your needs.

This will optimize your BambooHR platform for clear policy communication, compliant tracking, and proactive leave management, empowering both managers and employees with visibility, accountability, and the tools to spot trends before they become problems. This paid service ensures you fully leverage BambooHR and promote a culture of accountability for time-off tracking.

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