As we transition from 2025 to 2026, there are many changes to annual leave policies, and HR managers have a lot to prepare for. We've put together an Annual Leave All-in-one guide so you can review everything you need to take care of — policy changes, whether to introduce leave encouragement, leave settlement, and more — all in one place.
If you have any questions about annual leave, check this guide to find everything you need at once!
I'm considering changing the annual leave grant policy.
If you're internally considering changing the annual leave grant policy for 2026, there are a few things you need to prepare in advance in flex! Please refer to the information below.
Pre-Check Before Changing the Annual Leave Grant Policy
1. When changing the annual leave policy from fiscal year date to hire date and processing remaining quantities as an 'adjustment,' the adjustment must be made in a way that does not disadvantage employees.
2. When changing the annual leave policy, it is not possible to configure it to appear as though the policy changed starting from year 202n.
It will be applied retroactively as if annual leave was granted, used, and expired based on the hire date or fiscal year date from the very beginning.
3. If you change the grant start date to the point when the policy changes, past granted, used, and adjusted quantities will not be automatically calculated, so it is not recommended to change the grant start date.
For example, if you change the grant policy to a fiscal year basis starting January 1, 2024, and change the annual/monthly leave grant start date to January 1, 2024, the system will not automatically calculate the quantities of leave granted, used, and adjusted prior to the changed start date.
4. If you have nonetheless decided to change the annual leave grant policy, before and after the change, please make sure to download the [Attendance Management] → [Leave Management] → [Leave Balance Status] → [Leave History] report on the left side to check each employee's granted, remaining, and expired leave quantities.
Check Examples by Case for Annual Leave Grant Policy Changes
I want to change the annual and monthly leave expiration policy
If your leave management approach is changing at the start of the new year — whether to implement leave encouragement or to allow unlimited leave usage —
you will also need to update the leave expiration method in flex to manage it in line with your company's operational approach.
When the expiration method needs to change, please refer to the notes and make the update accordingly.
Pre-Check Before Changing the Annual Leave Expiration Settings
When changing the annual leave policy, it is not possible to configure it to appear as though the policy changed starting from year 202n.
It will be applied retroactively as if leave had been expired or as if there was no expiration from the very beginning.
If you change the grant start date to the point when the policy changes, past granted, used, and adjusted quantities will not be automatically calculated, so it is not recommended to change the grant start date.
For example, if you change the grant policy to a fiscal year basis starting January 1, 2024, and change the annual/monthly leave grant start date to January 1, 2024, the system will not automatically calculate the quantities of leave granted, used, and adjusted prior to the changed start date.
If you have nonetheless decided to change the annual leave expiration policy, before and after the expiration policy change, please make sure to download the [Attendance Management] → [Leave Management] → [Leave Balance Status] → [Leave History] report on the left side to check each employee's granted, remaining, and expired leave quantities.
View Details on Changing the Annual Leave Expiration Policy
View Details on Changing the Annual Leave Expiration Policy
Once you have downloaded the leave history under the current policy and completed all preparations for the policy change, select [Settings] → [Annual Leave Settings] → the [Annual Leave Policy] you need to change from the bottom of the left menu.
Select [Leave Grant Method] at the bottom of the annual leave policy.
Check the [Grant Start Date] in the upper right of the leave grant method.
Grant Start Date: This is the date when automatic granting begins in flex. For periods before the grant start date, no leave is granted and no remaining balance is calculated for usage.
Also, since the leave expiration method is applied retroactively based on the grant start date, all employees under the annual leave policy will have their leave changed to expired or no-expiration according to the expiration method. Please keep this in mind as you proceed.
Select [Auto Expiration Settings] at the bottom of the annual leave policy.
In the leave expiration settings, configure the expiration or no-expiration setting for annual and monthly leave.
If set to no-expiration, Smart Leave Encouragement cannot be used, so if you want to use flex's Smart Leave Encouragement, please select the expire after 1 year setting.
If you'd like to learn more about Smart Leave Encouragement, please check the Smart Leave Encouragement Settings for Leave Encouragement guide.
Review the expiration setting changes once more and click [Save] at the bottom.
When you change the expiration settings for an annual leave policy, the updated expiration method takes effect immediately upon saving, retroactive to the grant start date. If you need to adjust the remaining balance, you can do so using the [Annual Leave Adjustment] feature.
Use [Attendance Management] → [Leave Management] → [Leave Balance Status] → select [Annual Leave Adjustment] button in the upper right → [Annual Leave Adjustment] to adjust leave as needed.
Once all leave adjustments are complete, you can use the leave history feature again if needed to check the remaining balance and confirm the changes.
Settling Unused Annual Leave for Employees
If you want to clear out annual leave being carried over into the next year for current employees, or if an employee has resigned and you need to settle their unused annual leave, you can settle unused annual leave in flex using the Annual Leave Adjustment for Current Employees and Annual Leave Adjustment for Former Employees features.
Please refer to the guide along with the video below for more details!
Watch the Video on the Remaining Annual Leave Adjustment Feature for Current and Former Employees
Pre-Check Before Adjusting Remaining Annual Leave for Current and Former Employees
Remaining Annual Leave Adjustment for Current Employees
Annual leave for current employees is paid leave that accrues under the Labor Standards Act. Unused leave remains as remaining annual leave and must be reviewed and adjusted during settlement.
Annual Leave Accrual Basis (Based on Hire Date)
Employees with less than 1 year of service: up to 11 days
Employees with 1 or more years of service: up to 15 days or more
Usage Principles
Must be used within 1 year from the date of accrual.
If unused, the remaining annual leave will be settled as a leave allowance.
Exceptions
If an employee was unable to use their leave due to reasons attributable to the employer, the right to request leave does not expire and may be carried over or forfeited. With the employee's consent, leave carryover is possible. Leave carryover and expiration policies are handled in accordance with the company's employment rules or employment contract, and carried-over leave must be used the following year or settled as an unused leave allowance.
If you used the flex Smart Leave Encouragement feature to conduct leave encouragement in accordance with the encouragement schedule, but the employee still did not use their leave and it expired, the obligation to pay an allowance for that unused leave is waived.
Remaining Annual Leave Adjustment for Former Employees
When resigning, remaining annual leave can be handled in two ways: use the leave or receive it as an allowance. The company must settle it in the manner more favorable to the employee depending on the former employee's situation. If the employee chose to receive an allowance for unused annual leave, it must be paid as [Unused Annual Leave Allowance].
Before settling the unused annual leave allowance, use the former employee's remaining annual leave adjustment feature to check the departing employee's remaining leave and deduct or adjust it as necessary.
When settling annual leave at the time of resignation, the company must calculate it in the manner more favorable to the employee.
Calculation Based on Hire Date (Labor Standards Act Basis)
Annual leave accrues when an employee has worked for 1 year or more from the hire date.
Calculation Based on Fiscal Year
Annual leave accrues for all employees based on the company's fiscal year (e.g., January 1).
Applying the More Favorable Principle
Of the two methods above, the basis more favorable to the employee must be applied. However, even if the number of annual leave days granted under the company policy is greater than under the Labor Standards Act (hire date basis), if the employment rules or similar documents explicitly state that leave will be recalculated based on the Labor Standards Act (hire date basis) upon resignation, the settlement can be made using the Labor Standards Act basis.
For example, if an employee named Hong Gil-dong received 45 days based on the fiscal year and 43 days based on the Labor Standards Act (hire date basis) throughout their employment, the fiscal year basis is more favorable to the employee. However, if there is a recalculation clause in the employment rules, it is acceptable to apply 43 days (Labor Standards Act basis) as the final settlement.
Go to Remaining Annual Leave Adjustment Guides for Current and Former Employees