Guidelines for an Effective Leave Policy

By February 14, 2014 January 30th, 2018 Human Resource, Leave Management, Payroll

The commitment of an employee towards his company entitles him to certain leaves of absence from his office. These leaves have to be in accordance with the governing rules and individual company policies.

leavepolicyThe leave policy of a company should be clear cut and well-defined for a healthy work life balance of an employee and the productivity of the organization.

The need for a leave policy in every company arises out of a larger responsibility of a company towards the its employees and their loved ones. A specified number of paid leaves, which may vary according to organizations and industries, impart an employee’s basic rights of employment. Paid employee leaves are necessary for public health in general and help employees deal with certain obligations, including childcare and related activities, arising from a spouse, parent or child.

From the employees’ perspective, the provision of a leave policy aids them in balancing the demands of work and family with full job security. It also works as a motivating factor at the workplace. Various studies have indicated that employees value the flexibility provided by a leave policy.

On the other hand, not having a proper leave policy means little or no control over unscheduled absences from work— a serious problem that translates into big costs for many employers. Let us have a look at the factors that must be kept in mind, while designing a leave policy for an organization.

Devising a leave policy

1.    The first step towards designing a leave policy is to decide the number of leaves in a year that the organization is willing to provide. Out of these, the number of paid and unpaid leaves also needs to be categorised.

2.    Decide if you want to divide the total number of leaves into categories such as sick leave, casual leave, privilege leave etc. or merge all categories into one.

3.    Define clearly the process of availing leave such as:

  • who are the people who will approve the leave requests
  • what are the factors that need to be considered while permitting the leave
  • how to process the leave under normal circumstances

4.    The process for taking a leave in cases of emergency should also be defined. The level of flexibility may vary from organization to organization and some companies may allow a day off by informing the Department head through phone and submitting a leave application later.

5.    The maximum permit of occasional leaves such as in case of death of a loved one/unavoidable circumstances and marriage should be set.

6.    The action for uninformed or unauthorized leave should also be decided.

7.    The number and types of leaves for temporary/contractual should also be worked upon. The leave policy for this category, if it has to be different from the regular employees should be thought of and structured accordingly.

8.    The specifications, duration, extension, and eligibility of the female employees for maternity leave should also be adjudicated.

There is a need for a system to calculate and customize the leave account for all the employees of an organization to accommodate the different types of leaves and holidays, also taking into account the regional laws governing the state of workplace. Generally, the leave account of an employee operates on a yearly basis from January to December and some companies also allow encashment of accumulated paid leaves at the end of the year.

The employee payroll system that the company uses should be flexible to make accommodations for the different types of leaves that the different companies offer to their employees. For example: The number of sick leaves permissible according to the Shops and Establishments Act may differ for the different states of India. For an IT company which has offices in three different states, the payroll system should be customizable to be used in all the offices across the states. Similarly, for holidays that do not fall on a fixed date or are subject to the sighting of the moon, there should be a provision for adjustments in the payroll system that the company uses.

The employee leave and paid time off policy of a company is a standard portion of an employee benefit package that is offered to him at the time of his recruitment.  These policies go on to make a huge difference when the companies are hiring and trying to retain valuable employees.