diff --git a/erpnext/hr/utils.py b/erpnext/hr/utils.py
index 03f8b139f5a84..3d4ada186a072 100644
--- a/erpnext/hr/utils.py
+++ b/erpnext/hr/utils.py
@@ -287,21 +287,23 @@ def generate_leave_encashment():
 
 def allocate_earned_leaves():
 	'''Allocate earned leaves to Employees'''
-	e_leave_types = frappe.get_all("Leave Type",
-		fields=["name", "max_leaves_allowed", "earned_leave_frequency", "rounding", "based_on_date_of_joining"],
-		filters={'is_earned_leave' : 1})
+	e_leave_types = get_earned_leaves()
 	today = getdate()
-	divide_by_frequency = {"Yearly": 1, "Half-Yearly": 6, "Quarterly": 4, "Monthly": 12}
 
 	for e_leave_type in e_leave_types:
-		leave_allocations = frappe.db.sql("""select name, employee, from_date, to_date, leave_policy_assignment, leave_policy from `tabLeave Allocation` where %s
-			between from_date and to_date and docstatus=1 and leave_type=%s""", (today, e_leave_type.name), as_dict=1)
+
+		leave_allocations = get_leave_allocations(today, e_leave_type.name)
+
 		for allocation in leave_allocations:
+
 			if not allocation.leave_policy_assignment and not allocation.leave_policy:
 				continue
 
+			leave_policy = allocation.leave_policy if allocation.leave_policy else frappe.db.get_value(
+					"Leave Policy Assignment", allocation.leave_policy_assignment, ["leave_policy"])
+
 			annual_allocation = frappe.db.get_value("Leave Policy Detail", filters={
-				'parent': allocation.leave_policy,
+				'parent': leave_policy,
 				'leave_type': e_leave_type.name
 			}, fieldname=['annual_allocation'])
 
@@ -310,24 +312,42 @@ def allocate_earned_leaves():
 			if e_leave_type.based_on_date_of_joining_date:
 				from_date  = frappe.db.get_value("Employee", allocation.employee, "date_of_joining")
 
-			if check_frequency_hit(from_date, today, e_leave_type.earned_leave_frequency, e_leave_type.based_on_date_of_joining_date):
-				if annual_allocation:
-					earned_leaves = flt(annual_allocation) / divide_by_frequency[e_leave_type.earned_leave_frequency]
-					if e_leave_type.rounding == "0.5":
-						earned_leaves = round(earned_leaves * 2) / 2
-					else:
-						earned_leaves = round(earned_leaves)
+			if check_effective_date(from_date, today, e_leave_type.earned_leave_frequency, e_leave_type.based_on_date_of_joining_date):
+				update_previous_leave_allocation(allocation, annual_allocation, e_leave_type)
 
-					allocation = frappe.get_doc('Leave Allocation', allocation.name)
-					new_allocation = flt(allocation.total_leaves_allocated) + flt(earned_leaves)
+def update_previous_leave_allocation(allocation, annual_allocation, e_leave_type):
+	divide_by_frequency = {"Yearly": 1, "Half-Yearly": 6, "Quarterly": 4, "Monthly": 12}
+	if annual_allocation:
+		earned_leaves = flt(annual_allocation) / divide_by_frequency[e_leave_type.earned_leave_frequency]
+		if e_leave_type.rounding == "0.5":
+			earned_leaves = round(earned_leaves * 2) / 2
+		else:
+			earned_leaves = round(earned_leaves)
+
+		allocation = frappe.get_doc('Leave Allocation', allocation.name)
+		new_allocation = flt(allocation.total_leaves_allocated) + flt(earned_leaves)
+
+		if new_allocation > e_leave_type.max_leaves_allowed and e_leave_type.max_leaves_allowed > 0:
+			new_allocation = e_leave_type.max_leaves_allowed
 
-					if new_allocation > e_leave_type.max_leaves_allowed and e_leave_type.max_leaves_allowed > 0:
-						new_allocation = e_leave_type.max_leaves_allowed
+		if new_allocation != allocation.total_leaves_allocated:
+			allocation.db_set("total_leaves_allocated", new_allocation, update_modified=False)
+			create_additional_leave_ledger_entry(allocation, earned_leaves, today)
+
+
+def get_leave_allocations(date, leave_type):
+	return frappe.db.sql("""select name, employee, from_date, to_date, leave_policy_assignment, leave_policy
+		from `tabLeave Allocation`
+		where
+			%s between from_date and to_date and docstatus=1
+			and leave_type=%s""",
+	(date, leave_type), as_dict=1)
 
-					if new_allocation == allocation.total_leaves_allocated:
-						continue
-					allocation.db_set("total_leaves_allocated", new_allocation, update_modified=False)
-					create_additional_leave_ledger_entry(allocation, earned_leaves, today)
+
+def get_earned_leaves():
+	return frappe.get_all("Leave Type",
+		fields=["name", "max_leaves_allowed", "earned_leave_frequency", "rounding", "based_on_date_of_joining"],
+		filters={'is_earned_leave' : 1})
 
 def create_additional_leave_ledger_entry(allocation, leaves, date):
 	''' Create leave ledger entry for leave types '''
@@ -336,33 +356,13 @@ def create_additional_leave_ledger_entry(allocation, leaves, date):
 	allocation.unused_leaves = 0
 	allocation.create_leave_ledger_entry()
 
-def check_frequency_hit(from_date, to_date, frequency):
-	'''Return True if current date matches frequency'''
-	from_dt = get_datetime(from_date)
-	to_dt = get_datetime(to_date)
-	from dateutil import relativedelta
-	rd = relativedelta.relativedelta(to_dt, from_dt)
-	months = rd.months
-	if frequency == "Quarterly":
-		if not months % 3:
-			return True
-	elif frequency == "Half-Yearly":
-		if not months % 6:
-			return True
-	elif frequency == "Yearly":
-		if not months % 12:
-			return True
-	return False
-
-def check_frequency_hit(from_date, to_date, frequency, based_on_date_of_joining_date):
+def check_effective_date(from_date, to_date, frequency, based_on_date_of_joining_date):
 	import calendar
+	from dateutil import relativedelta
 
 	from_date = get_datetime(from_date)
 	to_date = get_datetime(to_date)
-
-	from dateutil import relativedelta
 	rd = relativedelta.relativedelta(to_date, from_date)
-
 	#last day of month
 	last_day =  calendar.monthrange(to_date.year, to_date.month)[1]