Managing employees’ leave applications is one of the most simple yet critical HR activities. HR has to ensure compliance with labour laws and the organisation’s leave policies, while balancing employees’ need to take time off.
What is leave management?
Leave management encompasses the processes and policies of managing employees’ requests for time-off. This broad umbrella term covers all types of leaves, such as vacation, public holidays, sick leave, and parental leave. The leave management process starts from the direct manager’s approval and tracking of employee leave through to garnering additional approvals depending on the nature of the leave type (if necessary) and updating payroll records.
The primary objective of leave management is to handle employees’ time-off requests in a fair and accurate way. This way, organisations are able to run smoothly while ensuring that employees receive their leave benefits entitlement.
Why is leave management important?
Having a reliable leave management system is critical in ensuring that employees are satisfied and engaged. Senior management often underestimate the impact of absenteeism on employee productivity levels. Even if they are aware, they do not fully understand how serious this issue can evolve into. A poor leave management system can result in unauthorised absenteeism, lack of leave planning, and reduced productivity levels.
Research has shown that a poor leave management system can leave employees dissatisfied and affect employees’ morale. According to a Gallup-Healthways wellbeing survey, it found that the total costs related to lost productivity in the United States amounted to just over USD84 billion annually. All these unexpected employee behaviour can result in costly consequences for the organisation.
What are the 3 major challenges in leave management?
Inefficient tracking of leave applications
The most common mode of leave application is through an online leave system – employees submit their leave application on the internal Human Resources Management System (HRMS) and the leave application is routed to the employees’ direct manager for approval. Most often, this is done via email. While email approval is the most convenient method, these emails tend to get missed out in one’s daily influx of incoming emails.
Similarly, employees and managers may not have oversight on the team’s leave schedule. This may impact resource planning as managers and employees are unaware of who is available and who is off until the actual day itself. This could have serious repercussions on resource planning, project timelines, and workload allocation.
Poor linkage between leave management system and payroll
Inefficient management and tracking of leave applications can implicate the accuracy of payroll processing. Leave management and payroll are intricately linked. When leave application such as no-pay leave or maternity leave are not properly tracked and approved, these records do not get captured into the payroll system. When it comes to the month’s payroll period, these deductions or allowances will be missed out during payroll calculations, resulting in inaccurate salary disbursements. While salary readjustments are time-consuming and costly, it is also difficult to earn back employees’ trust in handling their payroll calculations with utmost accuracy and diligence.
Ineffective communication of leave policies
A common problem in leave management is employees’ lack of understanding of leave policies and practices. Oftentimes, it is attributed to poor communication of the organisation’s leave policies. Employees usually do not have the time to understand and familiarise themselves with their leave entitlements. Hence, the onus falls on HR to clearly explain employees’ leave entitlements and benefits – be it through periodic employee communication sessions, setting up a dedicated leave management portal or introducing a detailed employee handbook on the organisation’s leave benefits and entitlements.
Implementing a good leave management system
Implementing a robust leave management system does not necessarily have to be a herculean task. It all boils down to understanding the statutory requirements, introducing a simple yet detailed leave management system, and ensuring periodic communication to employees.
Keeping abreast of statutory requirements
The first step in implementing a leave management system is to familiarise with the country’s statutory leave requirements. When implementing leave policies, it is imperative to ensure that employees’ leave entitlements and benefits adhere with the respective labour laws. Similarly, these entitlements have to be consistent across all employee groups. Whilst organisations have the discretion to offer supplementary leave benefits on top of existing statutory provisions, there needs to be a clear distinction on who is entitled and under what circumstances. Concurrently, HR staff and direct supervisors need to be well-trained on these leave policies and entitlements to equip them with accurate information in order to manage employees’ leave requests fairly and appropriately.
Outline leave management approaches
Given the varying types of leaves available to employees, the process to apply for the respective leave and under what circumstances are employees eligible need to be clearly outlined. For example, some of the requirements for an employee to be eligible for paternity leave in Singapore includes the child being registered as a Singapore citizen and the employee has served the existing employer for a continuous period of at least 3 months before the birth of the child.
Here are some key considerations when drafting out leave management approaches for employees:
- How many Public Holidays are there in the respective country and how does the organisation intend to provide off-in-lieu for Public Holidays on non-working days?
- How are unused leave being accrued into the employees’ payroll? Is there a maximum number of days that employees can carry over to the next financial year?
- What is the procedure for employees to request for unpaid leave? Who is eligible to apply?
- Who should employees approach if they need to request for specific leave applications such as maternity leave, paternity leave, adoption leave etc?
- Are there any supplementary leave benefits for employees on top of the existing statutory requirements? Who is eligible for these supplementary leave benefits?
Once the leave management policies and workflows have been clearly drafted out, it is important to communicate these leave policies to employees. Organising quarterly employee benefits sessions is a great way to educate existing employees on the organisation’s leave policies and changes in entitlements. It also serves as a platform for employees to voice their queries and get immediate clarification. Setting up a dedicated site page for the organisation’s leave policies or drafting up an employee handbook for dissemination is also an efficient way to centralise all leave-related information. This allows employees to easily find relevant information and answers to common leave-related questions.
Finally, an efficient leave management application can help to further streamline the leave management process. A leave management application that allows employees to view and track their leave applications, while facilitating transparency in terms of who is or will be on leave, will help the managers and leaders to make better decisions in terms of resource planning and workload allocation.
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