How to Establish a Leave Management System you can be proud of

How to Establish a Leave Management System you can be proud of

Probably the most important part of any business setting is its employees. Irrespective of what age group an employee might belong to, or the department – he/she deserves to take time off. It is a basic right of an employee to take time off. This starts with managing leave and putting the applicable leave policies in place which can be achieved through the right leave management system.

In today’s blog post, we will cover:


What is leave?

Leave management in an organization is all about making sure that the company honours this basic right for all employees, in a manner that does not affect day-to-day operations.

Leave Management, as a result, is an important practice in HR. As one would imagine, it is extremely difficult to process everything on paper manually, or on excel sheets and emails. It may cause errors, loss of productivity loss, management mishaps, and much more.

Leave is taking time off from work. These are provided to employees by their organizations that can be paid or unpaid. We have come a long way since there were no paid time-offs to now where employees are entitled to different paid leaves and public holidays.

Paid leave is offered as a benefit by different organizations and is the second most preferred benefit after healthcare.

All countries have labour laws that entitle different leaves to employees all over the year for different causes. 

Mostly, earned leave balance is carried forward every year till the time the employee is working in the same organization.





Annual / Privileged / Earned Leave

15 days

After 12 months of continuous service

5 days

After 4 months of continuous service

Casual Leave

12 days

Sick leave or casual leave, both combined

1 day

After one month of continuous service

Sick Leave

12 days

Sick leave or casual leave, both combined

1 day

After one month of continuous service

Maximum AL/PL that can be carried forward

45 days

Working hours in a day



Total hours per week



Rest interval

30 minutes

Rest after 5 hours of work


How do you manage employee leave?

Managing employee leave can be a nightmare for the HR department if the leave management process is ineffective. This can be resolved with some tips listed here.

  • Use a Leave Management Software
  • Map out a clear leave policy for your company 
  • Inform and guide your employees about their leave policies and laws 
  • Set a notice period for employees
  • Integrate employee leave management with payroll
  • Be empathetic with your employees

What do you mean by employee leave management?

employee leave management

Leave management is a process that involves regulating leaves for an employee. It starts with the application stage for leave, involves the creation of the right policies and processes for approval/rejection while ensuring sufficient staffing to run the daily business operations. It also includes managing and reviewing the leave policies for your organization, under labor laws.

As mentioned earlier, it is the right of every employee to take time off from work. The end goal of Leave Management is to ensure these time-offs are carried out in a fair, accurate, and legal way so that the business always runs smoothly.

It is one of the most important processes that need to be regulated, as a part of HR.

While small businesses may find it handy to work, update and regulate leaves in the Excel sheet, emails, or any other source, the problem starts when it leads to issues such as errors in calculation, payroll errors, and not compliant with labor laws.

Who is responsible for leave management?

Managing employee leave is a core HR activity. Every organization needs to handle the leave requests of their employees. 

Defining leave policies is a one-time activity, but enforcing them is a long term job for HR. Here is the list of activities that an HR admin needs to handle as part of leave management:

  • Leave Accounting
  • Granting Leaves to employees
  • Handling Employee query
  • Monthly Payroll 
  • Reporting
  • Year-End Activities

Employee Leave Management

Automating end-to-end employee leave management with the help of leave management software can help you manage the entire process with ease.

Through automation, you can ease out many of the challenges for your human resources department.

Some of these are – ensuring labour law compliance, and easing out the workflow by preventing leave approval issues, employee disagreements, and conflicts. With automation, you can integrate Loss of Pay (LOP) leaves with payroll.

You can also consider leaving encashment for final processing if there is any.

  • You can build a custom online leave management system
  • Configure each step of the approval workflow
  • Create digital forms and work efficiently without errors
  • Send (automated) notifications to both parties to avoid any confusion or conflict
  • Connect forms with a custom database so that you can fetch them anytime
  • Customize your leave policies 

Leave management in HR

Administration can get in a lot of trouble and productivity issues with unplanned leave management, and as a result, there may be too many leaves being taken by too many employees, and often clash with each other.

As a first step, organizations must maintain a simple record of leaves taken by all the employees, in order to maintain proper operational efficiency month by month.

It does not stop here, though. Find below some reasons it is a have to administer a proper leave management system for your organization:

  • It is the law
  • Save HR time and capacity
  • Boost your employee productivity and morale
  • Reduce errors and reduce costs
  • You can have a detailed analysis of the reports for the assessment


Process of leave management

Leave Management involves processes such as

Attendance integration: 

Capturing attendance regularly through the software to remove the report, which can process payroll at the end of the month.

Leave application:

Employees need to fill in an application in order to take time off. If managed manually, then they need to fill in the form, otherwise, they can submit it through application or software.

Leave tracking: 

Once they submit the application, it goes to the HR department who checks the employee’s leave balance to check his eligibility and forwards the application to HOD. The leave management system automates this entire process.

Attendance regularization: 

When an employee is working from home, an automatic update to attendance and automation of the leave application process is possible.

Managing weekdays and holidays: 

Planning holidays in advance, make a fixed period of holidays and set a priority list to avoid conflicts so that your workforce can adapt in advance.

Leave encashment:

Calculation of leave encashment is based on leave not taken by the employee in case of leaving the company or retirement of that employee, automation of leave encashement is possible in the leave management software.

Importance of a well planned Leave Management system

Companies growing in size find it very difficult to manage leaves manually.

According to a survey, 93% of the companies with employees size 40 or more outsource or automate their leave management. Even at this size and scale, it is more costly and time-consuming, if done manually through paperwork and emails.

Efficient leave management can also bring some benefits to a company, here are some of them:

  • A more streamlined attendance and payroll process
  • Better employee satisfaction and retention rate
  • Improved communication between employees and managers
  • Ensures consistency and keeps the process smooth
  • Makes you better compliant with labor laws
  • Error in calculation of leave and attendance drops significantly
  • Employee productivity and efficiency increases
  • Promotes the company’s value

In business, if employees are taking long and unplanned leaves, it can lead to reduced productivity and stunted business growth, and it will consume a lot of time and money.

So it is advisable for businesses in their growth phase to deploy a good system to save all the cost and time and select the most suitable LMS for you that meets your requirements.


Challenges of not having a Leave Management System in place

Here is the catch: if you end up choosing a leave management system that is incompetent and does not meet your requirements, you will face certain challenges:

  • Low employee productivity – If you are managing leaves manually or through Excel sheets, then your employees are uninformed of their leave balance. It may cause employees to take too many leaves, which can increase the burden on other employees, which further leads to burnout and other long-term effects.
  • Poor customer service – If one of your star performers is on a well-deserved holiday, and you have a high ticket client project that is approaching its deadline – this poor timesheet management can cause customer dissatisfaction.
  • Legal complications – tracking leave requests through emails and Excel sheets can be a time-consuming activity if you have to search for previous leave data for every employee. You may refuse a valid time-off request and trigger employee dissatisfaction.
  • Unauthorized Absenteeism – If you do not have proper leave policies in place, you may face unauthorized absences as they are not informed or educated about your policies.
  • Poor time-off management – can lead to higher turnover rates, negative reputation, violations of labour law, and much more.
  • Errors in payroll accounting – with manual calculations, errors can occur in your payroll that will cause employee dissatisfaction, which causes low morale or even leakage in your payroll costs


Leave Management Best Practices

As we now know, leave management can be a real hassle for HR and managers without a proper system in place. It can lead to employee burnout, and dissatisfaction, and can also cause legal complications. Here are some of the best practices to avoid such issues:

Avoid rigidity in the policy

Your leave policy should be easy to implement and flexible.

Provide a help desk or Q&A

If any queries arise, clear them and promote consistency in the policy. Show commitment to supporting compliance.

Make sure you automate the whole leave management process

All-in-one leave management software allows you to customize all processes, convenience to employees, and clarity.

Evaluate the system regularly

Refine both the policies and processes regarding compliance, accuracy, transparency and employee morale.

Get outside help on legal terms and developments

Leave management is subject to regulations, so keeping yourself compliant with the laws is important. You can also use these terms to your advantage, as you can offer them more flexibility.

What is a Leave Management System?

The Leave Management System is a platform that enables a company to easily and correctly allocate, grant and track leave, and also allows for employees to request and track their own leave.

Today’s leave management system is more often found as a web-based application because of its easy accessibility and ability to run on almost any device and operating system that has a web browser.

A leave management system provides an easy way for human resources or management to administer leave, granting the ability to set up a standard leave policy.

The leave management system automates the entire process of leave requests within a company, saving time and resources by letting employees focus on the important tasks before them and eliminating the traditional need to record and file leave documents.

How to automate leave management?

An online leave management system is a platform that automates every step of leaves i.e., applying for leaves, balance checks, approval/rejection of leaves, and reporting from anywhere or from any device. which saves a lot of bandwidth and time by ensuring that every process is one-click, whether checking for employees’ past data or ensuring enough resource availability at any point in time. It keeps the company compliant with the laws, and of course, ensures that you are paying your employees on time.

It does not stop here. Your leave management software must include other add-ons such as

Configurable fields (leave policy, leave type, and holiday list) to easily customize the platform, as every company has a different type of policy. 

Integrated payroll management so that you can pay your employees on time and accurately. You should be able to complete the payroll process in a matter of seconds.

All-in-one dashboard where employees should be able to check their leave balance and other co-workers’ time off. HR and line managers should also be able to view this data for all employees.

Timesheet and attendance management where you can track employees’ productivity and pay them fairly

Analytics and reports that simplify all the budget reports showing demands, approvals, and denial of leaves, for each employee and also for the company.


Features of the Leave Management System

  1. Cloud-based software-enables supervisors to manage seamlessly, and it provides access to all the data in one place. 
  2. Auto-updates leave balance so that it reduces manual work and saves time
  3. Seamless integration – This comes with integrating other HR management software such as payroll and timesheets which allows cross-functional reports.
  4. Customized and flexible leave policies for all departments 
  5. On-mobile compatibility and all-in-one dashboard so that employees can access their leave balance anywhere.
  6. Employee self-service that removes manual work.
  7. Improved decision-making with reports and data through analytics.

Best Leave Management Software

leave management

These are tough times when businesses are struggling with proper resource management.

Asanify helps companies in not only automating their end-to-end leave management but also integrating it with other HR modules such as Attendance management, time management, and employee directory.

Leave Policy and types of leaves

In order to improve the balance between their work and personal life, employees are entitled to different leaves during their work tenure, whether they work in a government or private organization.

Studies have shown that people who are provided with a better balance between work and personal life are more productive and are retained for a longer term.

Why leave policies are important

One of the most important questions asked by employees when they are first recruited is about how many and what types of leaves they will get.

Employees use their time off for various activities such as travel, spending time with friends and family, and taking part in sports and recreation. 

Also, read – leave policy: how to maintain compliance for your small business

Leave policy as per Labor Law

The Shops and Establishment Act is enacted by every state in the country. It entitles employees to certain types of leaves every year, aside from holidays and time off. There are three types of leaves mentioned under this act, i.e., Privilege leave, sick leave, and casual leave.

Types of Leaves

Earned leave/ privilege leave – these are additional leave of absence that is awarded to an employee on a daily wage basis, and the number of working days. The number of days entitled for earned/privilege leave can also be pushed to the next year according to the act. It also entitles employees to take encashment of earned/privilege leave under the Shop and Establishment Act. 

Sick leave – sick leave is to be availed by an employee in case of illness. The number of sick leaves is fixed as per the State and Establishment act. These types of leaves of paid and accumulated leaves can be carried forward to next year.

Casual leave – this leave can be taken by an employee for a day or two, in case of unplanned events where he/she cannot come and work for personal reasons. This number can vary for different companies, as per the Shop and Establishment act. Casual leave cannot be clubbed with any other leave type Also, it cannot be encashed or carried forward into the next year.

What are the types of leave?

leaves in india

Types of leaves in India

Here are the various leaves that employees can take in India:

  • Earned leave or Privilege leave
  • Casual leaves
  • Compensatory leave
  • Sick leave or medical leave
  • Maternity leave
  • Paternity leave
  • Loss of Pay leave
  • Marriage leave


Frequently Asked Questions

What is the leave policy?

Leave policy is a set of rules and procedures that govern employees’ benefit. This ensures that employees are eligible to take different paid and unpaid leaves throughout their term of employment.

What is the purpose of employee leave management?

It is useful for running a smooth organization especially when the size of an organization increases. It helps HR teams to track records such as employee leave data, payroll, and overall performance.

How does leave management help employees?

It improves an employee’s trust and morale in the company it results in greater productivity and performance.

How are leaves calculated in the Leave Management System?

The leave tracking software tracks and records employee attendance details and leaves taken throughout the period, this way the remaining leaves are calculated accordingly.