A Guide to Better Employee Leave Management | Lucidchart Blog
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Employee leave management may feel like a necessary evil to an overworked HR department. However, a good leave management policy ensures your business runs smoothly while giving employees a chance to recharge, recover, or attend to family. 

But striking the balance between a happy team and a well-run business can be tricky. 

Here’s what you need to know about building an effective employee leave management policy.

What is leave management?

Employee leave management (or time-off management) encompasses the processes and policies of managing employee time-off requests, such as vacation, holidays, sick leave, and parental leave. 

The goal of leave management is to handle employee time-off requests in a fair and accurate way so business runs smoothly while employees get the benefits they are entitled to. 

Leave management is a primary component of the HR department’s responsibilities. Managing time-off requests means juggling staffing requirements while maintaining employee satisfaction and ensuring legal and policy compliance. 

This is easier said than done, which is why having a clear leave management process is so important. A good leave management system helps HR and team managers ensure everyone is on the same page and both business and personnel needs are being met. 

Benefits of a leave management process

Although it may sound counterintuitive, giving employees great time-off benefits (built into a clear leave management process) actually has many benefits for your company and its bottom line. 

A clear leave management process:

  • Increases employee satisfaction and retention
  • Creates policy consistency across the organization
  • Ensures compliance with labor laws
  • Reduces the number of management errors
  • Increases productivity and efficiency (e.g., managers know when people are leaving resulting in better work planning and labor orchestration)

According to research by Project: Time Off, employees rate paid vacation as the number-two most important benefit offered by a company, after healthcare. So getting your leave policies right is critical for attracting and retaining employees. 

Additionally, building a leave management process helps you ensure your policies are applied consistently and fairly across the organization and that there are fewer errors in communication or documentation. 

With everyone on the same page, managers are able to effectively plan their team workloads around employee leave without disrupting productivity.  

Challenges of leave management

HR and company managers face a variety of challenges when tackling leave management tasks. 

There are many moving parts to juggle and maintain, which can quickly throw your business workflow and employees off track. At best, those fumbles might result in lower productivity. At worst, you could be in hot water if you fail to properly comply with labor laws. 

Here are just a few obstacles organizations face when managing employee leave.

Tracking leave

Tracking employee leave is a fundamental part of leave management—and one of its biggest challenges. 

On a micro level, managers need to know what time off their employees are entitled to and when they can take it. How their PTO accrues will depend on your internal policies as well as local or state labor laws. 

On a macro level, the company needs to have clear records for tracking time off so leadership can make informed business decisions (like determining staffing needs, budgets, and timelines).   

However, without clear processes and policies, keeping track of who is out, when they’re off, and how long they will be gone can easily get lost in the shuffle, creating staffing shortages, workload buildups, and costly project delays. 

Payroll errors

Managing payroll goes hand in hand with leave management. When there is an error or miscommunication in your leave tracking records, payroll errors tend to follow. 

Some leaves are paid and others are unpaid. If you don’t clearly track which type of leave your employees are taking, you may not be compensating them accurately.  

Communication 

Leave management isn’t just about what goes on behind the scenes in HR. Your employees want and need to understand your leave policies and procedures so they can actually use their benefits.

For example, how does time off accrue? What are the policies on sick days and unused time? 

If your employees don’t know the answers to these questions, they may run into unwelcome surprises when they go to take time off (e.g., they planned and paid for a vacation, but they didn’t have the PTO they expected).

Failure to educate your employees on your policies and keep them updated on their personal accruals and benefits is a recipe for confusion and frustration. 

Best practices for developing your employee leave process 

Building a well-balanced employee leave process is another challenge altogether. Use the following tips and best practices to guide your policy development and leave management processes.

1. Understand the law

As you consider what policies to implement, be sure to brush up on your local, state, and federal labor laws. All your policies and their administration must comply with the law. 

There are many ways you can inadvertently run into legal trouble with your leave management. For instance, your policies must be applied consistently or you risk discriminating against different employees. 

This can happen for seemingly benevolent reasons, such as when a manager tries to take into account an employee’s personal circumstances. While this sounds considerate, making exceptions or bending the rules for some means others don’t get that same benefit—which can put you in hot water legally. 

To avoid this, your policies need to be written clearly and managers should be trained thoroughly so they manage employee leave consistently and appropriately.

2. Outline your leave policies

Next, outline your policies for your employees. There are many different types of leave and circumstances your employees will want guidance on. 

In your policy guidelines, be sure to clarify:

  • What holidays will be observed
  • How time is accrued
  • What the procedure is for requesting time off
  • What happens to unused time (e.g., use it or lose it vs. roll-over)
  • What other types of leave you offer, such as parental leave, sick leave, voting, and jury duty

This is also a good place to highlight your company culture surrounding PTO. Whether you offer a more traditional benefits package or have an unlimited time-off policy, you can use this space to encourage your employees to participate in the leave program and take advantage of the benefits they’re entitled to.

managing company leave example
Managing Company Leave Example (Click on image to modify online)

3. Communicate your policies clearly

Writing your policies up in an employee manual is a good first step. But if no one knows where to find it or what those policies really mean, it won’t do your employees or your business any good. 

Find ways to communicate your policies clearly at every level of the organization. 

Make sure employees are aware of their rights and benefits. Train managers on your policies so they understand them clearly and can communicate those policies accurately with their teams. 

Lucidchart is a cloud-based visual workspace that helps you document and clarify your processes and procedures. Use Lucidchart to map out your leave policies so employees can quickly understand the process and what their next steps are. 

family leave process example
Family Leave Process Example (Click on image to modify online)

Always communicate any changes or adjustments you make to the policies with your employees. And give as much notice as you can so they aren’t caught off guard and can plan ahead appropriately.

Finally, centralize your employee leave policy information in one location that everyone has access to. This prevents confusion from disparate or incomplete information and ensures no one is left in the dark. 

Summary

With the right policies and support systems in place, the nuts and bolts of leave management, like PTO tracking and attendance control become much easier. 

Use solutions like Lucidchart to keep your team on the same page and projects on track by documenting leave procedures and mapping out plans for workload handoffs and responsibilities as your staff moves in and out of the office.

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