Workday Absence Setup: Time Off Plans vs Leave Types

In Workday Absence Management, time off plans handle short, balance-driven absences such as vacation, sick days and PTO, while leave of absence types handle extended, excused time away where the worker keeps employee status, such as FMLA, disability or military leave. Choose the right container first, then build eligibility, accruals and validations around it.

Key takeaways

• A time off plan holds the rules for one or more related time off types, including accruals, carryover and limits.
• Leave types belong to leave families and carry effects on payroll, benefits, time off accrual and worker status.
• Each plan and leave type uses a single unit, hours or days, and Workday does not convert between them.
• FMLA rules come from the Department of Labor, so map each statutory requirement to a specific configuration choice and test it.

What is the difference between a time off plan and a leave of absence in Workday?

Workday's Absence for Administrators course draws a firm line between the two. A time off type is the category a worker picks, such as Vacation. A time off plan defines the rules for entering and tracking one or more related time offs, and it is where accruals, balances, carryover and limits live. A leave of absence is described as excused time away from work for a specific reason, during which the worker keeps employee status and related benefits.

Question	Time off plan	Leave of absence type
Typical use	Vacation, PTO, sick days, floating holidays	FMLA, disability, parental, military, unpaid personal leave
Balance	Accrues and is consumed	Optional; leave types can track balances and entitlements or not
Grouping	Time off types grouped in a plan	Leave types grouped in leave families
Downstream effects	Feeds payroll earnings through time off calculations	Configurable payroll, benefits, accrual, talent and scheduling effects
Worker status	Unchanged	Can inactivate the worker for the duration

A useful test: if the absence changes how payroll, benefits or worker status behave, it belongs in a leave type. If it simply reduces a balance and pays the employee, it belongs in a time off plan.

How should you design time off plan eligibility and accruals?

Start from the written policy, not from the configuration screens. For each plan, write down who is eligible, how much they earn, when it posts, the maximum balance, the carryover rule and what happens at termination. Then translate each rule:

• Eligibility. Plan eligibility applies to all time offs in the plan unless a time off or accrual has its own rule, in which case Workday enforces the more specific rule. Keep plan level rules broad and override only where policy truly differs.
• Accruals. Each accrual has an amount, a processing priority and scheduling rules. Service-based tiers usually become separate accruals with eligibility tied to length of service.
• Accrual timing. "Start of Period" posts the accrual before time off is deducted, so workers reach the upper limit sooner. "End of Period" posts after, so workers hit the lower limit sooner. Match this to how your handbook describes accrual.
• Limits. The upper limit caps the balance and forfeits anything above it. The lower limit decides paid versus unpaid time off.
• Carryover. Set the maximum carried into the next balance period, whether it expires, and whether it counts toward the upper limit.
• Units and period schedules. Every plan needs a period schedule and one unit of time. Workday does not convert hours to days, so a plan in days cannot serve hourly staff who take partial days.

The unit decision catches many teams: with mixed 8 and 12 hour shifts, a plan built in days hides the real cost of a day off. If you are comparing approaches across systems, our guide to accrual policy setup and testing uses the same test-case method.

Validation rules that save payroll corrections

Time off validations cover consecutive day maximums, minimum and increment rules and unpaid time off limits. Leave validations run against each day of the requested leave and can be a hard error that blocks submission or a soft warning that lets the worker submit and routes the request for review. Use hard errors for policy rules that never bend, such as minimum increments, and soft warnings for situations where a manager may legitimately approve an exception.

One limitation to plan for: Workday's setup considerations for Absence Management note that being on leave does not by itself block time entry in Time Tracking. If you use Workday Time Tracking, build validations so workers on certain leave types cannot submit hours, or payroll may pay both. Our Workday time tracking setup for hourly workers covers where those time entry validations sit.

How do you configure leave types and their effects?

Each leave type defines its family, unit of time, eligibility, validations and entitlement. Leave types without balance tracking suit leaves with no fixed entitlement, such as bereavement or long-term disability. Leave types with balance tracking add balance calendar dates and entitlements.

The effects are where leave setup gets consequential. Decide each one with payroll and benefits in the room:

1. Payroll effect. Stops regular payroll processing unless the run category continues specific earnings or deductions, such as benefit premiums the employee still owes.
2. Benefit effect. May require a benefit event so elections can change during leave.
3. Absence accrual effect. Lets eligibility exclude workers on leave from accruing time off. Confirm whether your policy, or a state rule, says workers keep accruing during protected leave.
4. Inactivate worker. Makes the worker inactive for the duration, which can affect reports, headcount and integrations.
5. Other effects. Continuous service dates, stock vesting, talent processes and scheduling eligibility may all need decisions or manual handling.

Cascading leave lets one leave generate a request to move the worker to a next leave type when it ends, if eligible. That is useful when, for example, short-term disability is followed by long-term disability.

What should you consider when tracking FMLA in Workday?

Workday's course material lists FMLA as an example of a legally mandated US leave in a regulatory leave family, but the statutory rules come from the Department of Labor. According to the DOL, covered private employers have 50 or more employees in 20 or more workweeks, and an eligible employee has worked for the employer at least 12 months, has at least 1,250 hours of service in the 12 months before leave, and works at a location with at least 50 employees within 75 miles. Eligible employees can take up to 12 workweeks in a 12 month period, or 26 workweeks of military caregiver leave.

Map each rule to a configuration decision:

• Eligibility data. The 1,250 hour test needs reliable hours of service. For exempt employees whose hours are not recorded, decide how you will establish hours before you automate eligibility.
• The 12 month period. DOL Fact Sheet #28H allows a calendar year, a fixed 12 month period, 12 months forward from the first FMLA leave, or a rolling 12 months backward. Pick one, apply it to all employees, and make sure your balance tracking matches it. Changing methods requires at least 60 days' notice.
• Intermittent and reduced schedule leave. Decide whether these are requested through the leave type, time off entries, or both, and how they draw down the same entitlement.
• Running concurrently. If paid time off runs alongside FMLA, document how balances interact.
• State leave. The DOL notes that state laws may give greater protections. Build state leaves as separate types and test overlap scenarios.

Audit risk usually comes from inconsistent records, not from the software itself. Our article on FMLA data patterns that trigger a DOL audit explains what reviewers look for.

Frequently Asked Questions

Should sick leave be a time off plan or a leave type in Workday?

Short, paid sick days that reduce a balance usually fit a time off plan. Extended medical absence that changes payroll, benefits or worker status fits a leave type, often with paid sick time running alongside it. Workday's own guidance for UK sick leave leans toward time off unless there is a strong reason for a leave type, which is a reasonable default elsewhere too.

Can Workday convert time off balances between hours and days?

No. Workday's course material states that it does not convert hourly values to daily values or daily values to hourly. Every time off, accrual and limit in a plan must use the same unit. If you need to move from days to hours, plan a balance conversion and a new plan rather than editing the unit.

Does Workday stop employees from entering time while on leave?

Not automatically. Workday's absence setup considerations state that being on leave does not prevent time entry in Time Tracking, so you need to build validations for the leave types where working should be blocked. Test with a worker on each leave type before go-live so payroll does not pay leave and hours together.

How do I choose the FMLA 12 month period method?

The DOL allows four methods: calendar year, a fixed 12 month period, 12 months forward from first use, or a rolling period measured backward. The rolling method prevents two full entitlements being taken back to back across a year boundary, but it needs the most careful balance tracking. Whatever you choose, apply it to everyone and give 60 days' notice before changing it.

Practical next steps for your absence rollout

1. Inventory every absence policy and label each one time off or leave.
2. Decide units and accrual timing with payroll before building anything.
3. Write test cases for eligibility, accrual, carryover, limits and each leave effect.
4. Map FMLA and state leave rules to specific configuration choices and get legal review.
5. Build time entry validations for leave types if you use Time Tracking.

For related setup walkthroughs, see our Workday guides.

Last reviewed: October 2026.

Sources

• Time Off Plans and Components, Workday Education
• Leave of Absence, Workday Education
• Family and Medical Leave Act, U.S. Department of Labor, Wage and Hour Division
• Fact Sheet #28H: 12-month period under the FMLA, U.S. Department of Labor