The ultimate guide to employee leave management

Employees are the heart of any successful organization. When they feel supported, valued, and empowered to maintain a healthy work-life balance, they’re more productive, engaged, and likely to remain committed to their roles.

To ensure employees show up as their best selves, employers need to implement and maintain an efficient leave management process that supports the needs of their workforce.

Leave management is far more complex than tracking who takes time off and when. It involves understanding the nuances of labor laws, creating fair policies, and implementing streamlined processes that cater to your organization’s operational needs and employee well-being. Implementing a comprehensive and efficient leave management strategy is crucial in today’s fast-paced work environment.

Let’s explore what leave management entails, why it matters, common challenges, and best practices to make it work for your organization.

What is leave management?

Leave management is the end-to-end process of handling employee time off requests— such as paid time off (PTO), family and medical leave of absence (FMLA), holidays, sick or vacation days, bereavement, and unplanned leave.

Sometimes called absence or accrual management, the leave management process isn’t just about compliance. All paid leave under leave management is essential to an organization’s overall benefits program. After all, workers are human beings who get sick or need to take personal time off. Knowing that their employer has a reliable process to manage their leave requests can make all the difference in their employee experience.

 

Types of employee leave requests

As you build your organization’s leave management policy, here are a few of the employee leave options you’ll want to consider:

Paid time off (PTO)

An employer benefit that allows employees to take time off work for vacation, illness, or personal reasons while still receiving regular pay. While the amount offered varies from company to company, most organizations offer employees flexibility in how and when they use their PTO.

Family and medical leave of absence (FMLA)

Under FMLA, eligible employees can take up to 12 work weeks of leave in a 12-month period to care for an ill family member, a personal health condition, or a newborn, foster child, or adopted child. If the employee cares for a family member whose condition resulted from active military service, the employee can take off up to 26 workweeks in a 12-month period.

Holiday

A day designated as a paid day off by the employer, typically aligning with national or cultural celebrations, such as Independence Day or Christmas. Employees are not expected to work these days, though some roles may require holiday shifts.

Sick days 

Employees are given time off to recover from illness, attend medical appointments, or care for an ill dependent. Depending on the organization’s policy, sick leave may be categorized separately or included under PTO.

Vacation days

Paid time off is explicitly allocated for employees’ leisure or travel. Vacation days are typically planned and may be subject to managerial approval based on operational needs.

Bereavement

Bereavement leave is leave granted to employees to grieve and make arrangements after the death of a close family member or loved one. Depending on the organization’s policy, bereavement leave may be paid or unpaid.

Unplanned leave

Time off occurs without prior notice, often due to emergencies or unexpected circumstances such as illness, family crises, or severe weather. Employers may have specific policies for how unplanned leave is reported and managed.

Public holidays

Nationally or regionally recognized days when businesses and government offices may close in observance of cultural, historical, or religious significance (e.g., New Year’s Day or Labor Day in the United States). Employees may receive paid time off or additional compensation if required to work these days.

Understanding leave management policies

The debate over mandatory leave policies, such as “use it or lose it,” is ongoing. On one hand, these policies encourage employees to take their vacation days, which reduces burnout and fosters a healthier work-life balance. However, they can also be restrictive, especially for employees who wish to save time off for special occasions or emergencies. Moreover, not all states allow for these policies, so it’s essential to understand the legal implications.

When putting together your organization’s leave management policy, deciding on the policy that best suits your culture and operational requirements can be difficult. If mandatory leave isn’t the right fit for your organization, here are some alternatives to traditional “use it or lose it” approaches:

1. Carry-over rules: Allow employees to roll over a portion of unused leave into the following year, adding flexibility and accommodating long-term planning.
2. Payouts for unused vacations: Sometimes, paying employees for unused vacation time can be a good incentive, but it may discourage employees from taking needed breaks.
3. Vacation time donations: Consider allowing employees to donate unused leave to colleagues in need or a company pool for charitable purposes. Be mindful of any tax implications.
4. Company-wide holidays: Implement additional holidays, like closing the office during slow periods. This encourages employees to take time off without feeling like they’re missing out on productivity.
5. Unlimited vacation policies: While still a developing trend, unlimited PTO can work well for some organizations. It offers flexibility but requires a high level of trust and cultural alignment.

Why leave management matters to your workforce

There are many ways employees and organizations can benefit from a leave management policy designed to suit both of their needs. Four of the primary benefits of building a leave and absence management process are:

• It boosts employee satisfaction
• It supports your organization’s compliance efforts
• It reduces the risk of costly errors
• It drives team performance

Boosts employee satisfaction 

If you’ve ever worked for an organization that makes taking time off difficult or stressful, you understand the impact an inefficient absence management process can have on worker morale.

When employers make it easy for workers to request leave and provide tools to streamline the process, they foster a healthy work-life balance and show they care about their teams.

This can help eliminate nearly a quarter of workers’ anxiety about returning to work after time away because they think their managers disapprove of them taking time off. Plus, well-communicated policies mean workers always know what to expect regarding their leave. Consistency around approving and rejecting absence requests ensures fairness and promotes a more positive employee experience.

Supports your organization’s compliance efforts 

Organizations must adhere to internal policies, CBAs, and federal workplace and state labor laws to avoid financial and reputational risk. Balancing employee leave and compliance can become quite complex when you consider the various regulations involved and the dynamic nature of most workforces. This is particularly true if you employ a mix of full-time, part-time, and contracted workers or if you have employees who work in multiple locations. Using automated tools makes it easy to create a leave management process that supports compliance effortlessly for employees and managers.

Reduces the risk of costly errors  

Without a robust process or adequate tools for leave and absence management, it’s a huge pain to track all the records, calculate hours on the fly, and access historical records for each employee whenever they request time off. It’s a logistical nightmare that hinders employee productivity and creates unnecessary stress for the entire team.

By leveraging helpful tools such as automated leave management software, organizations can eliminate the need for manual tracking and calculations. This reduces human error and boosts efficiency by decreasing the hours you’d otherwise waste correcting these mistakes. In addition, employees can always see their accruals and the status of their leave requests and easily submit their time off. At the same time, managers can streamline the approval process without digging for context.

Drives team performance  

When submitting leave requests, employees want some reliability around whether or not their time off will be approved—and they expect confirmation or denial in a reasonable amount of time. Managers also need a consistent method for receiving requests, confirming the requested PTO is available, determining whether they’ll still have adequate shift coverage, and applying the time off to payroll and reporting.

By establishing policies that allow employees to request time off seamlessly, you can enable them to relax, recharge, and feel motivated to return to work. Taking time off work is essential to prevent burnout and increase productivity, especially since those who experience burnout are 63% more likely to take a sick day and 13% less confident in their performance than their counterparts.

When workers have complete visibility and access to their benefits, they feel their employer values their personal and professional needs. Since 82% of employees expect their employers to support achieving a healthy work-life balance, investing in a process and system that enhances leave management is crucial to ensuring employees feel empowered and know they can take time off when needed.

The challenges of building a leave management process

Unfortunately, there’s not a one-size-fits-all approach for leave management. So, when it comes to implementing or updating your organization’s leave and absence management policies, there will be challenges along the way. No matter what your organization’s size, structure, or industry, here are some challenges you might face:

Maintaining compliance and preventing payroll errors 

Ensuring accurate payroll reports is crucial to distributing paychecks, staying compliant, and preventing employee turnover. However, insufficient tools, human error, and poor policies threaten an organization’s ability to avoid these costly mistakes. And getting it wrong can be catastrophic.

With approximately 60% of Americans living paycheck to paycheck, even a minor error can cause significant financial issues and negatively influence an employee’s perception of their employer. And as employee expectations continue to rise, more than half say they’re already looking for another job. If your organization fails to establish a leave management process that ensures accurate payroll and correct paychecks, your top talent will likely look at other employers who have already prioritized these initiatives.

Sustaining effective communication 

When it comes to any internal policy, communication is king. Yet, many organizations’ methods fall short. When employees have to spend significant time searching through documentation or browsing clunky software to find policy information, they’re effectively slowing down operations and likely getting frustrated in the process. An ineffective means of communicating about leave requests and approvals makes it even more difficult for employees and their teams to plan for absences.

 

Giving employees and management teams quick access to leave requests and approvals is key to ensuring communication and maintaining an efficient leave management process. Additionally, communicating changes to leave management policies is crucial to ensuring all employees are updated on standard operating procedures (SOPs).

Tracking leaves with manual processes 

Manual systems and outdated software platforms not designed to handle leave management don’t ease the burden of tracking employee leave. They make it even more complex and challenging for already-busy staff and managers, leaving much to be desired regarding accuracy and efficiency.

If your teams still rely on tedious, time-consuming methods and tools to track and manage leave, they’re wasting precious hours that could be spent on higher-value initiatives. Plus, your organization is at risk for manual errors that can cause incorrect paychecks, noncompliance, litigation, and turnover issues.

Managing the complexities of leave requests 

Leave management is hardly ever a straightforward process that can be easily handled by spreadsheets or other tools that aren’t purposefully built for dynamic organizations. Employers often contend with complicated or layered policies they must abide by to stay compliant and maintain efficient operations. Organizations usually have multiple policies for various types of workers based on factors like the number of hours they work and their seniority.

When you add up all the different pieces and parts, you can unintentionally build a beast of nearly impossible policies to manage without the proper support tools. The best solution to these challenges is a leave management process and system that fits your organization’s and your workforce’s specific needs.

8 best practices for leave management

Developing a leave management process can be difficult if you don’t have the right tools and guidance, but following a few general guidelines can help your organization build the perfect policy for your team’s unique needs. Here are the 8 best practices to keep in mind when implementing your leave management process:

1. Understand relevant employment laws 

Before anything else, it’s crucial to understand the employment laws that apply to your organization and employees. Depending on your organization’s location, you must ensure your leave management process complies with wage rules, number of working hours, PTO, and more. Double-check these laws through The U.S. Department of Labor (DOL) and other state-specific sources to confirm that your processes are fair and compliant.

2. Establish clear guidelines 

A muddy process that’s difficult to comprehend or leaves room for interpretation isn’t helpful to anyone. So, make sure you set clear, actionable guidelines that address any potential questions or concerns. It can be beneficial to create a first draft of your policy and then gather feedback from a small group of employees by encouraging them to share the areas where they feel they need further clarification. Continue to revise your policy until you’re confident it’s crystal clear, then avoid making unnecessary changes down the line to mitigate confusion.

3. Communicate policies clearly 

A leave management process is only effective if clearly communicated to every employee. Set your organization up for success by ensuring your policy and process are well-documented and always available to workers, regardless of when or where they work. Employees should be able to access these policies and their accrual details 24/7, and you can enable this by using automated tools that make communicating about leave management policies and requests accessible.

4. Use specialized software  

At this point, you might be struggling with building an effective leave management process with your current setup. Perhaps you have several disjointed or out-of-date systems to keep track of leave, calculate accruals, submit payroll, request time off, and communicate with one another, making a solid leave management process seem out of reach.

The good news is that specialized leave management software eliminates siloed tasks, making every step of developing and maintaining a leave management process a breeze. A one-stop solution automatically applies relevant employment laws, applicable policies, and customizable rules to every part of your leave management process and it offers seamless 24/7 self-service access to workers across multiple devices. That way, employees have everything they need to understand leave management policies, view their available PTO, and request time off.

A one-stop solution automatically applies relevant employment laws, applicable policies, and customizable rules to every part of your leave management process.

5. Keep accurate records 

Manual or ineffective tracking methods can expose your organization to inaccuracies or misunderstandings, which can lead to legal troubles down the line. Investing in powerful tools that automate the process gives you an accurate, transparent record of every detail surrounding employee leaves. Plus, you can quickly generate reports that provide great insight into leave management to help you continuously improve your processes for a happier, more productive workforce.

6. Be consistent 

Poor leave management practices often result in inconsistencies, which can ruffle employee feathers. For example, if Jane’s manager approves her leave request but rejects John’s based on an accrual miscalculation, there will likely be some contention in the air. The same is true if one employee or team feels their process for requesting time off is more complicated than another’s.

To keep everyone on a level playing field and avoid accidentally playing favorites, create policies that ensure fairness and promote a positive employee experience. If you use automated software, it can use your policy as a baseline to eliminate the inconsistencies in policy management that typically result from human error.

7. Tailor your process with your organization’s needs and goals 

No two organizations are exactly alike, so building a process that works for your organization’s distinct needs, goals, and priorities is essential. You’ll need to abide by federal and state employment laws, CBAs, and internal policies while considering your organization’s culture, employee experience, and customers’ demands.

Start by determining the rate at which your employees will accrue time off, how far in advance they’ll need to submit their requests, and when they can expect a response. Among others in your process, these details should help support your higher-level needs and goals. Be sure to evaluate how they might impact operations, the employee experience, and your bottom line.

8. Integrate your process into your standard operating procedures 

Once you’ve created a leave management process uniquely tailored to your organization, including it as part of your standard operations should be relatively straightforward. To make this easier, ensure your leave management process integrates with your existing systems so you can centralize all things related to time off.

Seamless integration means employees won’t need extra time re-entering data into a separate record system to ensure accurate payroll reporting or correct paychecks. Instead, the leave management process becomes part of the bigger, more holistic operational picture, with total transparency, accuracy, and compliance for more efficient methods.

How to choose the right leave management system

If you want to take your organization’s leave management to the next level, it might be time to invest in a leave management system. With numerous tools and solutions available, it’s essential to evaluate effective leave management software options based on your organization’s specific needs. Here are some key factors to consider when making your decision:

Ease of use

A leave management system should simplify your processes, not complicate them. Look for user-friendly tools that allow employees and managers to navigate leave requests, approvals, and time tracking effortlessly. Intuitive systems reduce training time and ensure high adoption rates across the organization.

Scalability for future growth

As your organization grows, so do the complexities of managing employee leave. Choose a leave management solution that scales seamlessly with your business, accommodating a growing workforce and more intricate policies without compromising performance or usability.

Cloud-based vs. on-premise solutions

Modern organizations often prefer cloud-based leave management systems for their flexibility and accessibility. These solutions allow employees to access leave policies and submit requests from anywhere, making them ideal for hybrid and remote workforces. However, on-premise solutions may suit businesses with strict data privacy or regulatory requirements.

Customer support and training

Adopting a new leave management system can significantly change your team. Select a provider that offers robust customer support and comprehensive training materials to ensure a smooth transition. The right vendor will help troubleshoot challenges and provide ongoing assistance as needed.

Budget and pricing options

A leave management system is an investment, so finding a tool that balances features with affordability is crucial. Evaluate pricing plans carefully, considering subscription models, additional fees, and long-term costs. Opt for a solution that fits within your budget while delivering maximum value.

Popular leave management tools

Now that you know what to consider when assessing your leave management software options, here are a few tools on the market to consider:

• BambooHR
• SAP SuccessFactors
• Zoho People
• TimeClock Plus
• Calamari
• Timetastic

Each tool caters to different organizational needs, so assess their functionalities to find the best fit for your team.

By selecting the right leave management system, organizations can streamline their leave management processes, reduce administrative burdens, and provide seamless experiences for employees. A well-chosen system empowers employees and managers to manage time off efficiently, ensuring compliance and promoting a positive work culture.

Creating a seamless leave management experience for all

As work-life balance becomes increasingly important to today’s workforce, addressing your organization’s leave management policy is more crucial than ever. With 59% of American workers experiencing moderate to severe burnout, organizations can counter this and foster a more positive and engaging employee experience by proactively encouraging time off and demonstrating a genuine commitment to employee well-being. Investing in a well-designed, efficient leave management process is a strategic decision that benefits employees and the organization.

TCP Software’s employee scheduling and time and attendance solutions have the flexibility and scalability to suit your business and your employees, now and as you grow.  

From TimeClock Plus that automates even the most complex payroll calculations and leave management requests, to Humanity for dynamic employee scheduling that saves you time and money, we have everything you need to meet the needs of your organization, no matter how unique. Plus, with Aladtec, we offer 24/7 public safety scheduling solutions for your hometown heroes. 

Ready to learn how TCP Software takes the pain out of employee scheduling and time tracking? Speak with an expert today.