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Setup: Vacation Policy - Monthly Earning

How to set up a vacation policy where vacation days are earned monthly.

Written by Mathias Anneberg

Introduction to monthly vacation earning

This article explains how to set up a vacation policy with monthly earning in BitaBIZ.

The article covers:

  • how to set up policies

  • which planning rules can be used

  • how to select the vacation period used in a country

This article describes the general functionality in BitaBIZ.
If your company follows specific national vacation rules, you should also follow the setup in the relevant country-specific article.

Other leave that is settled via a supplementary balance (e.g. 6th vacation week, other vacation, FF days, OK days, care days) is set up separately from vacation. Read more about supplementary balance here.

Create monthly vacation earning on a policy

How to create a vacation policy with monthly earning:

  1. Go to Setup Admin

  2. Select Modules

  3. Click Create new policy

  4. Open the Vacation tab

  5. Enter number of vacation days per year
    Enter the number of vacation days the employee earns per year.

    The system will then automatically calculate monthly earning.
    ​
    Example: If you enter 25 days per year, the employee will earn 2.08 days per month.

Review the following settings to set up your vacation policy:

1. Earning

Tab: Earning

Select: Monthly earning

2. Vacation year (period)

Tab: Earning

Select: Vacation year (period) from the drop-down list. For example:

  • 1/1-31/12

  • 1/2-31/1

  • 1/9-31/12 (the following year)

  • etc.

The selected vacation year includes:

  • the earning period

  • the usage period

⚠️ The vacation year must be selected to match a country's vacation legislation. See country-specific articles for choosing the correct period that matches a country's legislation.

3. Earning

Tab: Earning

Select: No setting required

  1. Vacation days become available from the start (start-of-period) of the month in which they are earned.

  2. New employees start earning vacation from their date of employment.
    ​
    If the employee starts:
    - on the 1st of the month → a full month's earning is accrued
    - mid-month → the earning is calculated proportionally

4. Choice of planning rule

Tab: Rules

Select: Max, payroll deduction or advance

The planning rule you choose determines how employees can plan vacation. Choose one of 3 rules:

  1. Max
    Employees can only plan vacation that has already been earned.

    This ensures that employees never have a negative vacation balance in a month.

  2. Payroll deduction
    Employees can request more days than earned in a month. But the days are deducted from pay.

  3. Advance
    Employees can plan vacation before the days are earned.
    This means employees can plan vacation days in advance (advance vacation), which are earned continuously later in the vacation year.

    This allows for a negative vacation balance in a month, which is offset by subsequent months' earning.
    You can set on the policy how many days of advance vacation the employee may have as a maximum.
    ​
    ⚠️ The max advance cannot be higher than the number of days earned per year.

User guides for the 3 planning rules:

User guide for vacation with Max rule

User guide for vacation with Payroll deduction rule

User guide for vacation with Advance rule

Click the image to see the 3 vacation methods:

5. Approval requirements and planning half days

Tab: Rules

Select: enable or disable approval requirement and choose whether half days can be planned

6. Payroll export

Tab: Payroll export

Select: Optionally enter absence code for payroll system

Absence codes can be customized per staff group, e.g. with or without paid vacation, so they match the setup in the payroll system. Only enter if the staff group should not follow the official standard code for vacation created for your payroll system.

Your vacation policy with monthly earning is now set up.

Below we describe other settings you may want to be aware of.

Other settings

Once you have set up the basic vacation policy with monthly earning, you can add a number of optional settings.

1. Public holidays

Fixed official public holidays

BitaBIZ supports official public holidays for 40+ countries.

Vacation days planned over a public holiday are not deducted from the vacation balance.

Add public holidays under “Public holidays” in the policy – they are automatically added to employees' calendars.

2. Weekends

Working week

Specify whether weekends should count in the vacation calculation or be considered days off.

Set this in the policy under Working week → Weekend days off.

3. Approver

Reminder to approver

Send an automatic reminder to the approver if vacation or absence registrations are not approved by a selected date.

Enable under Modules → Notifications & rules → Payroll administration.

4. Integrations

Payroll export

Vacation can be transferred to the company's payroll system.

Once vacation is processed in payroll, the registration is locked and cannot be changed by the employee.

📑 Read more about payroll export here

Outlook Exchange

Vacation can be automatically synced to employees' Outlook calendars when the integration is enabled.

📑 Read more about the Outlook integration here!

FAQ

When does a new employee start earning vacation?

An employee starts earning vacation from their date of employment.

  • If the employee starts on the 1st of the month, a full month's vacation is earned

  • If the employee starts mid-month, vacation is earned proportionally (per day of employment)

Earning is calculated automatically based on the vacation policy (e.g., 2.08 days per month for 25 days annually).

What is the difference between vacation and other vacation in the system?

Vacation and other vacation (supplementary balance) are two separate balances with their own rules:

  • Vacation: Statutory vacation days, which are earned according to applicable rules

  • Other vacation (supplementary balance): Extra days off (e.g., 6th vacation week, FF days, OK days, care days), which the company defines itself. These are not covered by the vacation law but may be subject to a local agreement.

I need to create a vacation policy with monthly earning for employees in Denmark. How do I do that?

To create a Danish vacation policy, you need to do the following:

  1. Follow this guide that walks you through how to create a vacation policy with monthly earning.

  2. Follow the country-specific guide for setting up the Danish vacation law. It guides you through the country-specific settings that can be selected for the Danish vacation law.

How do public holidays work in the system?

Public holidays are linked to the policy under the Public Holidays tab.

If vacation overlaps with a public holiday:

  • the public holiday does not count as a vacation day

  • the vacation balance is therefore not reduced for that day

Example:
A week with vacation and one public holiday → only 4 vacation days are deducted.

When do you use monthly earning for a vacation policy?

Monthly earning is used in countries where vacation is earned continuously.

The choice of earning method depends on the country's rules and the company's setup.

Find country-specific setups here.

How do I activate public holidays for a country in the calendar?

To activate country-specific public holidays

  1. Go to Setup Admin → Modules

  2. Open or create a policy

  3. Go to the Public Holidays section

  4. Select country and check the relevant public holidays to activate them on the policy

Can employees take vacation before it is earned?

Whether employees can plan vacation in advance depends on the vacation rule in the policy:

  • Max → only earned vacation can be planned

  • Advance vacation → vacation can be planned before it is earned

  • Deduction from salary → vacation that is not earned can be planned but is unpaid

Can we change the earning method on an existing vacation policy?

No. The earning method (e.g., annual or monthly) cannot be changed on an existing vacation policy after it has been created.

This means that:

  • You cannot edit an existing policy to change the earning method

  • Instead, you must create a new policy with the desired setup

If you want to change the earning method, you should:

  1. Note the employees' current vacation balances

  2. Create a new vacation policy

  3. Assign employees to the new policy

  4. Adjust balances manually as needed

Why can't an employee register vacation?

If an employee cannot register vacation, it may be due to several reasons:

  • The Max rule is activated (only earned days can be used)

  • There are not enough vacation days left

  • Another registration type is blocking

  • A period has been selected that consists only of public holidays

For advance vacation:
Even if advance vacation is enabled, the employee can only register vacation to the extent that the days can be earned within the same vacation year, which means that:

  • The employee may have a temporary negative balance

  • But the balance must not become so negative that it cannot be balanced before the end of the vacation year

If the employee tries to register more vacation than this, the registration will be rejected.

We have staff groups with special vacation rules. How do we create a vacation policy for their rules?

If your company has employees with special terms, you may need a customized vacation setup.

This typically applies to:

  • Part time employees, where earning depends on the number of workdays

  • Trainees and apprentices, who may have special rules for, e.g., advance vacation

Important: Rules for employee groups with special terms are governed by country-specific rules. Therefore, follow our guide for the specific country you need to set up the rules for.

Where do I change to “no max” for monthly vacation earning?

For monthly vacation earning, there is no setting called “No max,” and the field “Employee can take more days than earned” is not shown.

With monthly earning, vacation is managed by 3 rules:

  1. Max - only the number of days earned in a month can be planned.

  2. Deduction from salary - no limit. But days not earned are deducted from salary.

  3. Advance - days that have not yet been earned can be borrowed. You must set how many days can be borrowed. For example, the balance can go negative by a maximum of 5 days.

Go to:

Setup admin -> Modules -> Policies -> Edit vacation policy -> Vacation -> Rules

Select Advance if employees should be able to borrow vacation days that will be earned later.

Select Deduction from salary if employees can plan unlimited days at their own expense if the days are not earned.

What do we do if employees should not earn vacation?

If employees should not earn vacation, it is not recommended to use vacation with 0 days.

Instead, you should use a registration type under “Other leave,” so the vacation still appears in BitaBIZ, but no vacation accounting is kept.

Read more about Other leave here.

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