How to pro-rate annual leave in Singapore when an employee resigns
Divide the completed months of service in the year by 12, multiply by the annual entitlement, and round to the nearest whole day (below 0.5 down, 0.5 or more up). A month only counts once the employee reaches the same calendar day in the next month. In the exit year, split the calculation at the work anniversary and round each part separately.
Most leave disputes at resignation come from one of three mistakes: counting months the wrong way, rounding at the wrong moment, or forgetting that the entitlement changes on the work anniversary. Here is the method we use, with a worked example you can copy.
The rule in one line
For an incomplete year of service, annual leave is pro-rated in proportion to the number of completed months of service in that year:
Pro-rated leave = completed months ÷ 12 × annual entitlement, rounded to the nearest whole day
Two definitions carry the whole method.
1. A completed month
A month is complete only when the employee reaches the same calendar day as the reference date in a later month. The reference date is the join date (in the first year) or 1 January (in later years).
- Joined 22 May. On 21 June, zero completed months. On 22 June, one completed month.
- Joined 27 March. On 26 April, zero. On 27 April, one.
- Reference 1 January, last day 28 May. Four completed months (Jan, Feb, Mar, Apr). May is not complete.
Days in a partial month earn nothing. That feels harsh to employees, so say it plainly in the confirmation letter and show the dates.
2. Rounding
Round the result to the nearest whole day: a fraction below 0.5 is dropped, 0.5 or more rounds up to a full day. This is MOM's published approach for the statutory minimum and it is what most Singapore employment contracts adopt. Check your own contract wording, because a contract can be more generous.
Why calendar years matter
Most Singapore companies grant leave per calendar year and increase the entitlement on each work anniversary (for example 14 days in year 1, then one more day each year, capped at 20). That means the exit year often has two tiers: the old entitlement before the anniversary and the new one after it.
The rule we apply, and the one that avoids arguments:
- Join year: completed months from join date to 31 December, at the year 1 tier.
- Full calendar year: no proration. Give the full tier the employee moves into on the anniversary within that year.
- Exit year, anniversary on or before the last day: two chunks. 1 January to the day before the anniversary at the old tier, anniversary to the last day at the new tier. Round each chunk separately.
- Exit year, anniversary after the last day: one chunk at the current tier, 1 January to the last day.
- Joined and left in the same year: one chunk, join date to last day, year 1 tier.
Rounding each chunk separately matters. Combining then rounding gives a different answer, and the employee will often find the other one.
Worked example
Policy: 14 days in year 1, plus 1 day per completed year of service, capped at 20. Employee joined 22 May 2023, resigned 2 April 2026 with 8 weeks notice, so the last working day is 28 May 2026.
| Year | How it is worked out | Days |
|---|---|---|
| 2023 | Join year. 22 May to 31 Dec = 7 completed months. 7 ÷ 12 × 14 = 8.17 | 8 |
| 2024 | Full year. Year 2 tier from 22 May 2024 | 15 |
| 2025 | Full year. Year 3 tier from 22 May 2025 | 16 |
| 2026 | Exit year, anniversary 22 May is before last day 28 May. 1 Jan to 21 May: 4 completed months. 4 ÷ 12 × 16 = 5.33 → 5 22 May to 28 May: 0 completed months. 0 ÷ 12 × 17 = 0 | 5 |
| Total entitlement | 44 |
Now compare against leave actually taken (approved leave only, up to and including the last day). If the employee has taken 44 days, the balance is zero. If 40, there are 4 days to use during notice, to bring the last day forward by 4 working days, or to encash if your policy allows. If 46, two days of excess are deducted from final pay.
Three things that go wrong
Approved leave after the last day
Staff often have leave approved for dates after their resignation. Exclude it from the reconciliation, list it separately in the letter, and say the approvals are withdrawn. Otherwise payroll pays for leave that is never taken.
Encashment basis
The Employment Act does not fix a formula for valuing a day of leave. Common practice is annual basic salary divided by the number of working days in a year (for example 260 for a five-day week), or the MOM gross rate of pay method. Write the basis into your policy once so every exit uses the same number.
Falling below the statutory minimum
Under the Employment Act, an employee with at least three months of service is entitled to a minimum of 7 days of annual leave in the first year, rising by one day a year to 14 days from the eighth year. A company policy can be more generous, never less. If your contract pays less, the Act applies.
What to put in the resignation confirmation
- Start date, resignation date, notice period, last working day.
- Entitlement by calendar year, with the basis for each line.
- Leave taken by calendar year and the resulting balance.
- Any approved leave after the last day, and that it is withdrawn.
- The options for a positive balance, or the deduction for a negative one.
- Handover, return of property, and when final pay is made.
Done this way, the letter settles the question before anyone has to argue about it.
This article is general reference material for Singapore employers and not legal advice. Check the Employment Act 1968 and current MOM guidance for your case, and take advice for contested exits.
Frequently asked questions
How much annual leave must a Singapore employer give?
An employee covered by the Employment Act with at least three months of service is entitled to at least 7 days of paid annual leave in the first year, rising by one day for each year of service to 14 days from the eighth year. Company policies can be more generous but never less.
What counts as a completed month of service?
A month is complete when the employee reaches the same calendar day as the reference date in a later month. Someone who joined on 22 May completes one month on 22 June, not on 21 June. Days in a partial month earn no leave.
Do you round pro-rated leave up or down?
Round to the nearest whole day. A fraction below 0.5 is dropped and a fraction of 0.5 or more becomes a full day. When the exit year is split at the work anniversary, round each part separately before adding them.
What happens to leave approved for dates after the last working day?
Exclude it from the leave reconciliation, list it separately in the resignation confirmation, and state that the approvals are withdrawn. Otherwise payroll may pay for leave that is never taken.
How is unused annual leave paid out at resignation?
Use the valuation basis written in your leave policy, commonly annual basic salary divided by the working days in a year (for example 260 for a five-day week). Apply the same basis to every exit so the figure cannot be disputed.