Earned Leave (EL), also known as Annual Leave in many Malaysian workplaces, is a crucial benefit that allows employees to take paid time off for rest, personal matters, or family commitments. While most employees understand they are entitled to a certain number of leave days per year, many are unsure about when they can start using those days — especially if they see leave balances reflected on their payslip early in the year.
This article explores what earned leave means, how it is typically managed in Malaysian companies, and what employees should know about eligibility before planning time off.
Scenario: Leave Balance Available, But Not Usable?
Aida, a full-time employee, had planned to take a week of earned leave in December to attend a family event in her hometown. She checked her payslip and saw that she had 10 days of annual leave reflected in her balance. Confident, she submitted a leave request to her HR department.
However, HR responded that she was not yet eligible to use all of her leave entitlement, as her leave accrual was based on monthly pro-ration and she had not completed a full year of service. This left Aida confused — if the leave shows up in her account, why can’t she use it?
What is Earned Leave (EL)?
Earned Leave is the paid time off that an employee is entitled to each year, based on their length of service with the company. In Malaysia, under the Employment Act 1955, the minimum annual leave entitlement is as follows:
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8 days per year if the employee has worked less than 2 years
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12 days per year if the employee has worked between 2 to 5 years
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16 days per year if the employee has worked more than 5 years
Companies may offer more than the legal minimum based on their internal policies.
How Earned Leave is Accrued
In most companies, earned leave is not given in full at the beginning of the year unless stated otherwise in the company policy. Instead, it is accrued monthly — meaning the leave balance increases gradually throughout the year.
For example, if an employee is entitled to 12 days per year, they would earn 1 day per month. If the employee has only worked for 6 months, they would have accrued only 6 days of leave, even if the system shows a full-year allocation for visibility.
This is often the reason why HR may reject leave applications that exceed the accrued balance, even if the annual entitlement appears fully on a payslip.
Company Leave Policy Matters
It’s important to note that earned leave usage is governed by company-specific policies, including:
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Eligibility Period: Some companies only allow employees to use earned leave after a probationary period or after completing a certain number of months.
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Advance Leave Restrictions: Some companies prohibit taking leave in advance before it is accrued.
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Carry Forward Rules: Some policies limit how many unused leave days can be carried forward to the next year.
Employees should always refer to the employee handbook or HR policy to understand the specific leave management practices at their workplace.
Best Practices for Employees
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Check Your Leave Policy
Always refer to your company’s HR policy before applying for leave. Don’t assume all 12 or 14 days are usable upfront. -
Track Accrued Leave Monthly
Understand how your leave is being calculated — if it’s pro-rated monthly, only use what you’ve earned so far. -
Communicate with HR
If you’re unsure, ask HR to clarify your leave balance and eligibility. It’s better to check early than have leave rejected last-minute. -
Plan Early
For important events like weddings or family trips, plan ahead and ensure you have enough accrued leave before confirming travel plans.
How HR Software Can Help with Leave Transparency
Modern HR systems like Pandahrms offer real-time leave tracking where employees can see:
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Accrued leave balances (not just annual entitlement)
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Remaining usable leave
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Leave approval status
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Policy guidelines and entitlements
With such tools, both employees and HR can manage leave more effectively and avoid misunderstandings like in Aida’s case.
