All You Have to Know About Leave Policy

Leave Policy in a Nutshell – The Intricacies of Leave Management

For HR departments, the end of the year is busy: you have to approve the vacation schedule for all employees for the upcoming year and urgently send those who have outstanding vacations. It is necessary to coordinate the plan for each employee's coming year and urgently close the tailings of the outgoing year. Otherwise, not only local conflicts with employees are possible, but also fines. 

The problem is that not all employees are willing to share their vacation plans in time. It is up to the heads of departments and offices to help solve the problem. Many of them do not really understand why they need planning. Often it is because of the negligence of department heads that organizations do not have vacation schedules, and project deadlines are disrupted.

This is why leave policies are essential. This article will cover what vacations are, why you need a separate policy for leaves, and what an employee leave management should ideally be.

Law Base for the Leave Policy

Any leave policy must have a legal basis - those laws and regulations that the country or state sets. Leave laws to govern whether an employer must allow employees to take paid or unpaid leave under several circumstances and determine whether an employer must pay accrued leave to employees upon termination.

It is worth noting that neither state nor federal law requires you to take different types of leaves, although there are some exceptions. Examples of such exceptions are holiday leave, vacation leave, bereavement leave, and general sick leave. Also, some states will legally guarantee jury duty and voting leave. Here, you are already legally required to take paid or unpaid leave. In addition, it is illegal to claim the use of such leave as a substitute for, for example, vacation leave.

In some states, employers will be required to pay their employees money accumulated as vacation pay, which employment contracts and collective bargaining agreements will govern. Such benefits will be paid upon termination of employment and if the employee has not taken a leave of absence for a year. 

Federal and several state laws require family and medical leave for employees. This is regulated primarily by the Family and Medical Leave Act (Act). But similar laws exist at the state level. Some states have laws that require parental leave, which allows you to watch your child, attend school activities, or see a pediatrician. Finally, if your company has employees with military duties, you will be required to provide leave under the Uniformed Services Employment and Reemployment Rights Act (USERRA).

Why Having a Leave Policy in Company Is Vital

Imagine a company is running a big project that a whole team is working on. Sometimes people stay late and work on weekends. At one point, someone gets tired and asks for paid vacation. The manager, of course, is against it, and the employee goes to personnel services, which cannot help but let him go.

When an organization does not have a vacation schedule, the employee's statutory right to regular vacation is actually violated. From the point of view of the law, if the employer did not fulfill his right to schedule a vacation, then the employee can go on vacation when it is convenient. The law officials and the court will unequivocally stand up for him.

Those managers who have never had to plan a vacation schedule usually get into an employee's position. It is understandable: it is challenging to plan a vacation for the whole year in advance. It is more convenient to determine the date a few weeks in advance. 

There is a contractual practice on the market: the employee writes a vacation request, and the employer approves it. In this scheme, everything is fine until the first conflict, when the company refuses to let the employee go at this time. Therefore, it would be best to create a written leave policy and create a mechanism (such as signatures) or a whole leave management system to confirm that your employees have read the policy and agree to it.  

In addition, a good vacation policy helps you as managers and employers determine the amount of vacation time your employees are entitled to, the types of vacation time, and how to apply for vacation. That way, your employees and co-workers will be sure to have time for rest, holidays, sickness, and personal problems.

The Role of HR in Leave Policy Implementation

HR is the first person in the company that an employee can go to with their problem. Even the most productive employees can get burned out from a heavy workload. According to Gallup, 23% of employees experience overload and burnout. 

A company's HR manager can help with this issue in the first place. In addition, if an employee has an emergency, such as a child's illness or the need to leave urgently to another city, with such a problem also go to the HR.

The employee needs to be told about the work tasks, deadlines set by the manager, and general workload. And HR should listen and offer options on how to get out of the overload situation - from hiring employees to outsourcing to short-term leave to reload.

Developing and implementing a leave policy is in the best interest of the HR professional, as it will make his job more accessible in the first place. It will make it easier to plan vacations and process employees who wish to take time off work. In addition, there will be a complete understanding between HR and the employee regarding leave - no one will have to be processed retroactively or not pay benefits without proper paperwork - which means everything is fair and equitable.

An HR professional can help employees solve many problems, which will have a positive impact not only on the person's job but also on the company. After all, if employees are motivated and engaged, they do their jobs better and increase business revenue.

Keystones for a Leave Policy

In general, you can construct the entire vacation policy according to fairly universal rules. To do this, it is sufficient to clarify and define within the company the following issues:

1. What types of leave do you need and want to give your employees? 

2. What are the laws, rules, and regulations governing each type of leave in your state?

3. What will be the policy regarding time off - will employees work weekends, getting double time, or have a chance for a raise, or is this approach strictly prohibited?

4. What will be the policy on holidays during the year - will your employees rest only on the day of the holiday, or will you give them a few days off before or after the holiday?

Note that paid vacations are available to employees above the holidays as required by law - that is, you cannot let an employee rest on the 4th of July and deduct that day from their vacation pay. In addition, if an employee has exhausted his entire paid vacation, he can still take a few days off, but without compensation. Let's look at the different types of leaves that a company can have to talk more substantively.

Leave Types

As we wrote above, there are public holidays on which all employees must rest - this is regulated at the federal level. But in addition to holidays, organizations have the following types of leaves:

  • Earned leave (EL, also called privilege leave PL)

  • Sick leave 

  • Maternity leave 

  • Paternity leave

  • Casual leave 

  • Bereavement leave

  • Leave without pay 

  • Compensatory leave

  • Religious holidays

  • Sabbatical leave

In addition to the above vacations and leaves of absence established by labor law, you can add your types of leave as a supervisor. However, don't go to extremes! For example, one extreme is to give only those leaves necessary to comply with the law, and not a day more. And the other extreme is to grant the leave at any time at short notice in your sample leave policy. Neither the first nor the second approach will do you any good as an employer or manager or your employees.

Leave Rules

Let's say you've decided on the number and type of leaves you're going to give your company. That's half the battle; congratulations! Next, however, you need to establish the rules by which your leave policy will work.

These might include the frequency and timing of leave, employee eligibility for different types of leave, rules for days off, compensation and vacation pay, as well as limits on what can be encashed, year-end vacation postponements, and so on. Let's look at each of these rules in more detail.

1. The quantity and frequency of leave

The first thing you need to look at here is state law - for example, some states require several days of paid leave or sick leave each year. But for other types of leave, you can decide for yourself.

As for the frequency of leave - it can be monthly, quarterly, every six months, or annually. Monthly or annual leave is considered the most convenient for both parties and preferred by the law.

2. Leave time limits

For each type of leave, its duration may be different - and government regulations prescribe this for certain types of leave. For example, annual earned leave balances can be carried over to the next year up to a specific limit. If you cannot carry over your vacation, either you’ll have to encash it, or all of your vacation days will be burned off. But time off, which can be granted for working on a day off, has a short duration of 3 to 8 weeks.

3. Eligibility and leave subsidies

Some leaves can be granted only once (e.g., marriage leave) or to specific people (e.g., religious vacation leave). Of course, as an employer or human resources manager, you can change these rules, but they are generally the same for everyone. The same goes for subsidies - their amount is often not determined by policy but is decided by management on a case-by-case basis.

It is also worth keeping in mind the many conditions for an employee to be eligible for a particular type of leave. These may include a certain waiting period from the date of hire, a certain gender, marital or employment status, and a prohibition on using a specific type of leave in combination with a different kind of leave.

4. Leave encashment

Leave encashment is the conversion of earned vacation days into monetary compensation. The employee receives the money, and the vacation balance is reduced by the number of days encashed. This usually occurs at the end of the year, in case vacation cannot be carried over to the following year.

5. Availing rules

So, you've decided on the types of leave, the subsidies, and the frequency of leave. It's time to establish vacation rules that both the employee and the HR manager should know. The most straightforward rule is that the supervisor, manager, and team must be informed before taking leave, except in emergencies. Also, long vacations (a week or more) should be approved a couple of weeks in advance. Think about what vacation issues may be necessary to your company and put them in your policy.

What Is a Good Leave Policy?

So, once you've decided on all the details and components of your vacation policy, all that's left to do is write it. Let's talk about what the ideal policy should be, what sections should be included?

1. Purpose - it displays the intent of the entire document, such as rights, procedures, and guidelines for employees and managers regarding leave

2. Scope - who your policy will apply to

3. A detailed description of all leave provided, its frequency, duration, minimum and maximum duration, and so on

4. Rules for taking leave - what documents need to be provided, as well as who and when to notify that the employee wants to take time off

5. Exceptions - a classic clause in any contract stipulating force majeure events with wording like "Any exceptions to this policy require the approval of the head of human resources or director."

And if you or your hiring manager is having a hard time managing leave tasks manually, you can always turn to leave management software, such as Lanteria. Lanteria is a full-fledged HR platform that can be adapted to the needs of any business. With Lanteria, you can solve the day-to-day routine tasks of HR management and develop strategic global solutions such as leave policies. Get a quote from us today!


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