In this blog, we will discuss the following topics –
- What is Leave?
- What is leave management?
- What is the Need For Leave Management?
- Challenges of Leave Management for HRs and Employers
- Routine activities of HR in Leave Management
Managing employees’ leave with day-to-day activities is a crucial and core part of HR activity that employers have to handle. And if there are any doubts or errors, then it can affect your business. To help with this, we are going to explore leave management in detail in this blog. Let’s get started.
What is Leave?
Leave is a kind of benefit offered by every organisation that is provided by the employer to the employees. Employees are entitled to take time off from their work after informing the manager formally or informally. And there are two types of leaves one is Paid Leave, another one is Leave Without Pay or Loss Of Pay.
What is leave management?
According to the company policy, leave management is the process of HRs and employers that manage the employees’ leave or time-off requests fairly and accurately. So the business can run smoothly. And it is handling for employee better engagement, employee productivity, and employer branding.
There are the kinds of leave management for HRs and Employers – 1. Routine leave management
2. Enforce and implement leave management
3. Designing leave policy
What is the Need For Leave Management?
There are multiple needs for leave management that help you to understand and grow your business
Recording & Analytics
According to compliance, it is most common and frequent for employers to track absenteeism and detect taken leaves patterns of the employees. So, as an HR, it is necessary to prepare entire and accurate reports to analyse the data.
Record keeping is one of the essential parts for the employers, such as leave balances, leave transaction history, policy, entitlements and lapsed balances of the employees. So, you need to keep records as evidence for full and final settlements of the employees. If records are not maintained and prepared, then it could be the reason for disputes and annoyance for employees and ex-employees.
As per statutory compliance, except for granted paid leave to employees, the employer needs to maintain all data of the granted paid leaves to the employees. Such as registration of leaves with wages under Form F or Form 14 and others have to be maintained.
Prevention of revenue leakage
If you are not able to keep track of reports, then you have to pay for incomplete working hours, latecomers, and absences. So, it can be the reason for disputes between employers and employees, which will impact your brand.
Smooth business functioning
If employees take leave at one time, as a manager, you are not aware your work and business will get hampered. So, when you approve leaves at that time, you need to consider the roster for that day and have to decide whether to approve or reject. That is called the leave management system.
Challenges of Leave Management for HRs and Employers
There are various challenges for HRs and employers to manage the leaves of employees –
Managing payroll manually with leave management and keeping records might be the reason for errors. Because, there are lots of things to track, such as paid leave, unpaid leave, and others. With that, you have to prepare the entire data accordingly and accurately.
Tracking leave is an essential and most challenging part for the employers. Because you need to know and have to keep all records of the employee’s paid time off and when they can take leave. So, you can make business decisions on time and can inform your team, such as forecasting, budget, timelines, staffing needs and others.
Routine activities of HR in Leave Management
There are the following routine activities that HR has to follow accordingly –
A leave account is an account where you have to deal with your leave balances. And have to keep track of your different kinds of leaves, such as – Earned Leaves (EL), Casual Leaves (CL), Sick leaves (SL), Restricted leaves (RH), Gadget leaves (GL), and others. So, As per your employer’s leave policy, if you earn leave, then it will be a plus in your leave account. But it is credited monthly and annually. If you avail of your earned leave, then your leaves will be debited.
So, as an HR manager, your responsibilities are to keep track of employee leave transactions with net leave transactions of all leaves.
According to the leave policy, employees are entitled to particular leave yearly, such as – earned leaves and sick leaves and others. So, the leave allowances are granted approximately on a monthly or yearly basis, most companies prefer monthly. Because when an employee exits from the company, then it will be easy for final settlement work.
Handling the queries of employees
As an HR, you need to guide and support your employees related to employee’s benefits, salaries, leave balance and policies, and others.
Monthly calculation and payroll Advice
Based on the company leave policy, HR has to calculate the monthly leave of the employees, such as LOP (Loss On Pay), absentees, late-coming, working hours and others.
If an employee will be late or unnecessary absent, then they have to pay penalties in the form of leave deduction or LOP leave transactions. So, most organisation operate with strict working hours.
However, in every organisation, finance departments/ managers manage the payroll and HR admin advises for LOP deduction to keep payroll processing on time.
MIS Report, which an HR administrator has to prepare monthly to show the details of leave balances and transactions of the employees, such as monthly leave transactions, leave balance reports, leave encashments reports, leave summary reports, leave annual reports, and others.
Calculation of Year-end
At the end of the year, the remaining leave balance of the employees will be carried forward to the next year or lapse, but it depends on the leave policy. So, aside from preparing the list for next year’s holidays, HR also has to update leave accounts of all the employees.
This is the end of our discussion on A guide to Leave management for HRs and employers. Let’s know your other questions and opinions on this topic. Mention below the comment box.
All about leave encashment & its tax implications
One time tax for leave encashment in Saral Paypack