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Tips to Set Leave Policy in Your Company

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An image of a huge calendar, with one employee climbing a stair with a big lens to do some edit on it and the other is watching what he is doing

Employees need a day off every now and then to recharge, rejuvenate, and return to work with a stress-free mind. It’s their right to get leaves for important matters. Some companies have set the standard for amazing leave policy that keep their employees happy while maintaining the workflow smoothly.

However, others have gained a bad reputation in the industry for their vague, often questionable leave policies. When a company starts valuing its work over its employees at all times, it loses credibility to its workers.

What these companies fail to understand that just because employees need leaves, doesn’t mean their absence has to create a huge dent in the operations. A well-planned leave policy gives the employees their rightful days off while making sure the company doesn’t accumulate major losses. 

Leave trackers, otherwise termed vacation trackers are a great way to monitor which employees are available at any given time. But before that, you have to know what an effective leave policy looks like. 

Why Do I Need a Leave Policy in My Company?

Today’s world is all about balance. Employees’ lives don’t revolve around their workplace. Leaves help them break away from the monotony of their regular work and focus on other aspects of their life. It’s a part of being human.

Apart from that, there are certain laws in every country dictating the rights of employees when it comes to leave policies. Straying from that hurts employer’s reputation and it can also cost you fines from the government. 

A Leavy Policy is a set of rules outlining all possible protocols and procedures for employees to avail leaves. Your workforce is the biggest asset of your company.

Absence of a proper leave policy can result in:

  • Lower productivity
  • Unapproved leaves of employees
  • Decreasing productivity hours
  • Missing important deadlines, targets, etc.

All this and more can be solved with a good leave policy. For instance, if an employee goes on leave suddenly without any prior notice, their work suffers since the company wasn’t prepared to handle the unprecedented absence.

On the other hand, if the stakeholders were aware of it beforehand, the work could be distributed between the other employees to handle loss of productivity. This is where a solid PTO tracking software could do wonders for the company’s recording process.

When drafted and implemented properly, a Leave Policy delineates an understanding between the employees and the employer(s) as to how they can avail of leaves during their tenure.

A leave policy:

  • Defines the number of leaves an employee has.
  • The kinds of leaves they are eligible for.
  • How employees can apply for leaves

From the employee’s end, a leave policy gives them the assurance that their company will grant them leaves to:

  • Recover from physical complications
  • Handle any issue they’re facing
  • Go on vacation and enjoy
  • Celebrate their cultural and religious festivals
  • Simply break off from work to relax

The leave policy needs to be mentioned explicitly in the document of hiring policy. Your employees must know the dos and don’ts to applying for leaves. Furthermore, it’s important to ensure the employees aren’t taking advantage of the holidays and paid leaves offered by the company; helps maintain a steady level between employee satisfaction and productivity. 

If you’re struggling with falling numbers due to employees’ tardiness and sudden leaves? Ensure a proper leave management system using Day Off , a free vacation tracker.

The Purpose of a Leave Policy

As mentioned before, the purpose of a leave policy is to let employees know about when they can ask for a leave, the process of it, what leave with pay is and what leave without pay is, and so on.

All regular employees of your company are eligible for the leave policy.

Guidelines of the Leave Policy

  • Employees cannot claim leaves as a matter of right. They must know that any form of leave can be refused as it can be granted depending on the company’s requirements. 
  • Taking a leave from work without receiving approval for it will subject employees to disciplinary action.
  • The calendar year lasts from January to December. 
  • Employees’ leave records shall be maintained in an optimized HRMS tool. 
  • They shall be eligible for Earned Leave after completing their probationary period. After confirmation, that shall be credited to the employee’s account.
  • A limit of 9 paid leaves can be brought to the next year.
  • An employee is free to avail paid leaves based on the leave balance they have. Also, unpaid leave starts from when the leave balance is over but an employee is still in need of leave. The approval can be granted by a manager, HOD, or HR.
  • An employee cannot use the leave until it has been approved by the reporting manager.
  • Leave without approval shall be counted as leave without pay.
  • Weekends, as well as holidays falling within the sanctioned leave periods, shall be excluded and not be considered as earned or casual leave.
  • Leave for the upcoming year cannot be used in the present year.
  • It is the employee’s responsibility to apply for leave in advance in case of a planned leave. But if it’s an unplanned leave, an employee has to regularize leave under two days of resuming duty.
  • LTA leave is counted as earned leave, not casual leave.

Cancellation of Leave

An approved leave can be canceled at any time depending on the company’s demand but those must be within reason. Once canceled, the notice will reach the HR and employee through an automatic message. HR will update the leave balance.

Leave Extension 

  • Due to any unforeseen circumstance, if the employee has to extend their leave, they must inform HR beforehand. 
  • If an employee overstays without gaining proper approval, that will be considered as absence from duty and call for disciplinary action.
  • Extended leave without permission shall be treated as a loss of pay.

Calculating Leave on Termination/Resignation

In case an employee is terminated from the company or resigns, privilege leave shall be calculated until their final working day. They will be paid in full.

Types of Leave Policies

A number of leave policies could be effective for your company. Generally, leave policies fall within one of these three types:

Fixed number of credited leaves

This kind of paid leave policy fixes the number of paid leaves an employee can get on a fixed date. Thus, following company guidelines, you can grant (credit) all the leaves at the beginning of the calendar year or the financial year.

Set amount of accrued leaves on a daily, weekly, or monthly basis

A specific number of leaves are accrued based on a daily, weekly, or monthly calculation.

Unlimited leaves

There is no fixed number of leaves. Employees can use an unlimited number of leaves.

How to Choose the Best Leave Policy for Your Company

The three types of leave policies entail a different set of rules and regulations. As the main decision-maker of the company, you have to consider a few things to know which leave policy would work best.

Ask yourself: which leave policy would do the most for your employees? It goes without saying that the unlimited/flexible leave policy encourages employees to apply for as many leaves as they want, whenever they feel like it. However, there is no limit to this policy, meaning employees make abuse this opportunity.

Thus, industry leaders recommend companies take the opinions of their employees on the leave policy. This will make employees realize that they are valued and kept in the loop while the company will be able to narrow down on the policy serving the best interest of their workforce. 

Why You Should Create Varying Leave Categories

There are a bunch of reasons an employee would use their paid leaves such as personal emergencies, sickness, vacations, and maternity or paternity leaves. Once you know which leave policy would suit your company the best you need to know how to categorize them.

Majority of companies like having distinguished leave categories like earned leaves and sick leaves as clean differentiation helps them to track employee absence better. Plus, you would be abiding by Labor Laws.

Now, how do you decide how many leaves to account for each leave category? The count of casual and privileged leaves that your employees are entitled to be decided by the State you are operating in. The number is determined by the State’s Shops and Establishments Act.

Considerations about Leave Management

At this stage, you’ve already implemented the best leave policy. The next step is to learn how to manage leave accruals and leave applications alongside calculating leave balances. An employee leave tracker app such as Day Off can help you track everything from one place conveniently. It’s best to use digitized methods as manual recording is time-consuming and takes too much effort.

Managing Leave Applications

Designing a process for applications

The key to a smooth employee leave management process is timely organization and clear communication. Leaves play an important part in activities such as payroll, which is why it’s even more important to set a fixed process on applying for and approval of leaves.

You might ignore this procedure as you think it’s too obvious, but clarity will do wonders for your company. It’s as important as the job description.

Administer the approval power

You must then decide who will be responsible for approving employee leave applications. Is it going to be their immediate supervisor or the HR manager? Employees need to know where to send their requests to decrease processing time. 

Tracking Leave Requests

Leaves are directly connected to the payroll process. Collating leave requests at a month’s end from leave request slips or emails is a crucial task. Track these efficiently on an employee time off tracker app to manage everything with the least amount of effort and time. 

How to Track Leave Requests Efficiently 

Using an intuitive employee time off tracker such as the Day Off app helps companies track employee leave applications quickly and better. Here are the reasons you should consider this time off app.

  • For starters, you can get this service for free! Set up your company profile and fill in the information for a unique, personalized experience.
  • The mobile app is super convenient. It keeps the managers and employees connected to the database at all times.
  • The system automatically sends the employee leave request to the appropriate person.
  • HR has total control over the workflow. That means defining teams, managers, and employees.
  • Increase transparency between line managers and employees.
  • The HR dashboard – Calendar view for both employer and employee. You can monitor workflow and team absence, generate detailed and consolidated reports for any period, and send notifications to the team. 
  • You can add new leave types and define balances for each. There is also a half-day option.
  • Manager’s Web Dashboard – Get a full overview of the team, their leaves, and statistics from one point. 

Small businesses will love this impressive free time off tracker. You can also upgrade to the Pro version for the affordable price of $1 per employee per month. The free version has some of the basic options you would want in any PTO tracker while the Pro version comes with some exciting features that would take your HR game to the next level.

Final Thoughts

A company that neglects the leave policy is directly ignoring the needs of its employees, and we know that’s the first step towards the fall of an organization. Do not take it lightly as leaves are enough to get you sued too!

Make sure to go through all the rules and regulations the state has set. It’s best to mention them in your company policy too. Lastly, have an attorney look at the policies. If they approve, you should be good to go. However, try to stay flexible for the best results.