If approved time off is showing as undertime in an employee’s Attendance timesheet, check two settings in the relevant Attendance policy.
In the Attendance policy, the following settings usually need to be enabled:
- (Potential hours include) Paid statutory and bank holidays
- Count paid leave hours towards overtime threshold
Below is an explanation of these settings.
(Potential hours include) Paid statutory and bank holidays
People's total potential hours and days always include paid time off (this cannot be changed).
You have control whether they also include bank holidays. Consult with your payroll team.

Count paid leave hours towards overtime threshold
And with this setting, you have control whether bank holidays and/or time off count towards the overtime threshold.
Because paid time off is always included in potential hours, having this setting disabled means time off counts as undertime. Enable this setting to prevent that undertime.
Having this setting enabled, may require that you also include bank holidays in the potential hours (in the previous setting), otherwise bank holidays will count as overtime.

Suggested article:
Amending Attendance Settings When Bank Holidays Are Incorrectly Counted as Undertime or Overtime