Build a Leave Management System you can be proud of

Build a Leave Management System you can be proud of

Probably the most important part of any business setting is its employees. And 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. 

Leave management in an organization is all about making sure that the company honors this basic right for all employees, in a manner that does not affect the day-to-day operations. Leave Management, as a result, is one of the most important practices in HR, and 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.

In today’s blog post, we will cover:

  1. What is HR leave management
  2. Why leave management
  3. Benefits and importance of leave management system
  4. Challenges in leave management system
  5. Leave policies and its importance
  6. Different types of leave and how they are allocated
  7. Online leave management system
  8. Leave procedure for employees
  9. Leave management best practices
  10. How asanify simplifies leave management
  11. Frequently Answered Questions

What is HR Leave Management?

Leave management is a process that involves regulating leaves for an employee. It starts from the application stage for a leave, involves the creation of the right policies, process 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 the 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 but the problem starts when it leads to issues such as errors in calculation, payroll errors, non-compliance with labor laws.

How to manage employee leave?

Managing employee leaves can be a nightmare for the HR department if the leave management process is ineffective. We can resolve this with some tips listed here. Place them in your action plan.

  • Use a Leave Management Software
  • Map out a clear leave policy for your company 
  • Inform and guide your employees about the leave policies and laws 
  • Set a notice period for employees
  • Integrate employee leave management with payroll, and last, but not the least
  • As emotional beings, you need to be empathetic with your employees

Optimized process of Leave Management

Automating end-to-end 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 resource department. Some of these being – ensuring labor law compliance, easing out the workflow by preventing leave approval issues, employee disagreements, and conflicts. Also, with automation, losing pay for excess leaves can be integrated with the payroll. And, in case there are any leave encashments, that can also be considered in the final processing.

  • You can build a custom online leave management system
  • Configure each step of approval workflow
  • Create digital forms and work efficiently without errors
  • Notifications to both the 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 involves processes such as:

Attendance integration: capturing attendance regularly through the software to take out the report, which can process payroll at the end of the month.

Leave application: employees need to fill in the application in order to take time off. If managed manually, then they need to fill in the form, otherwise, it can be done in the software.

Leave tracking: once the application is submitted it goes to the hr department which checks the employee leave balance to check his eligibility and forwards the application to HOD. leave management system automates this whole process.

Attendance regularization: when an employee is working from home attendance can be automatically updated so that the leave application process can be automated.

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

Leave encashments: leave encashment can be calculated on the basis of unused paid leaves not taken by the employee in case of leaving the company or retirement of that employee, which can be done automatically through leave management software.

Why Leave Management?

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 clashing 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 a law
  • Save HR time and capacity
  • Boost your employee productivity and morale
  • Reduce error and reduce cost
  • Have a detailed analysis and reports for assessment

Need for Leave Management

Leave management needs dedicated attention as it saves cost, time and increases business productivity. It is a crucial activity for several reasons:

  • Statutory compliances
  • Record keeping
  • Business operation and planning
  • Analytics
  • Prevent revenue leakages

Features of a good Leave Management System

leave balance
  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 the manual work and saves time
  3. Seamless integration- leave management software comes with integrating other HR management software such as Payroll, Timesheets so that it 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.

Benefits and importance of a Leave Management System

Companies growing in size find it very difficult to manage leaves manually. According to a survey, 93% of the companies with employee 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 the labor laws
  • Error in calculation of leave and attendance drops significantly
  • Employee productivity and efficiency increases
  • Promotes company’s value

In business, if employees are taking long and unplanned leaves, it can lead to reduced productivity, stunted business growth and it will consume a lot of time and money. So it is advisable for businesses in their growth phase that they deploy a good leave management system to save all the cost and time, and select the best suitable leave management software for you that meets your requirements.

Challenges in Leave Management System

Here is the catch if you end up choosing a leave management system that is incompetent and does not meet your requirements, you would 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 absence, as they are not informed and educated about your policies.
  • Poor time-off management – this can lead to higher turnover rates, negative reputation, violations of labor law, and much more.
  • Errors in payroll accounting – with manual calculations, errors can occur in your payroll that will cause employee dissatisfaction and low morale or even leakage in your payroll costs

Leave policies and their importance

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 with daily wages basis the number of days of work by him. The number of days entitled for earned/privilege leave can also be pushed to the next year according to the act. It also entitles the employees to take encashment of earned/privilege leave under the shop and establishment act. 

Sick leave – sick leaves are 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 can’t be clubbed with any other leave types. Also, it cannot be encashed or carried forward to the next year.

Different types of leave that are allocated to employees

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

  • Earned leaves or privilege leaves
  • Casual leaves
  • Sick leave or medical leave
  • Maternity leave
  • Half pay leave
  • Quarantine leave
  • Study or sabbatical leave

Online Leave Management System

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. It saves a lot of spare capacity and time by ensuring that every process is literally one-click whether checking for employees’ past data or ensuring enough resource availability at any point in time. Keeps the company compliant with the laws, and of course, ensure that you are paying your employees on time.

It does not stop here. Your leave management software must include other addons 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 the 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 management 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 individual employee and also for the company.

Leave procedure for employees

Here is the standard operating procedure for leave administration

  1. The human resource department will decide and inform employees about their leave entitlement of the year
  2. An employee will submit a leave application to the head of the department for approval offline through a form or online if the company is using a leave management software that automatically emails the HR department.
  3. The HOD will inform about the leave approval and inform employees about their request
  4. The HOD will then submit the leave application to the human resource department for recording and monitoring
  5. The HR department will then update leave taken and accordingly adjust the employee’s leave balance
  6. They will also determine if the employee’s salary has to be deducted, basis the past leaves data
  7. The HR department will then inform employees about the status of their applications.
  8. They will also process payroll based on deductions if any.

Leave Management Best Practices

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

Avoid rigidity in the policy

Make sure that you have the right policies that are flexible and can be implemented with ease.

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 every process, accessibility to employees, and transparency

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

As 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.

How Asanify simplifies leave management 

In these tough times where businesses are struggling for proper resource management, Asanify can help companies in not only automating their end-to-end leave management but also integrate it with other HR modules such as Attendance management and time management, employee directory.

asanify leave management system

Frequently Answered questions

How do you maintain leave management?

Leave requests can be maintained through excel sheets or paperwork when your company size is small. However, when the company size increases, it is difficult to manage leaves manually.

What is a leave policy?

Leave policy is a set of rules and procedures that govern employees’ entitlement regarding the different paid and unpaid leaves they are eligible to take throughout the term of their employment.

What is the purpose of employee leave management?

Leave management is useful for running a smooth organization, especially an organization at scale. 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 with the company, increases employee morale, which further results in greater productivity and efficiency.