Home / Blog / How to Manage Leave of Employees

How to Manage Leave of Employees

13 min read

What’s the one thing that drives an HR team so crazy that they want to quit their jobs? A company’s outdated strategy for managing leaves could be the clincher.

Outdated tools or human errors can lead to inaccurate data. This makes executive tasks like leave management and payroll extremely challenging. When an employee’s leave balance gets messed up, it’s annoying, to say the least. This, in turn, leads to endless queries for the HR team, leaving them frustrated.

Let’s see why effective leave management is a must in businesses today.

What is Leave Management?

Employee leave management is also known as time-off management. It refers to the procedures for processing employee leave requests. These requests are for vacations, holidays, sick days, or parental leave.

Leave management involves the processing of employee requests for time off. This ensures smooth business operations and the safeguarding of staff benefits.

Why is Leave Management Important? 

Businesses need proper leave management systems for the following reasons:

Record keeping

Employers need leave management systems to record leaves taken or accrued. Employees can verify their accrued vacations through these records.

Leave and holiday planning

Leave planning allows a company to avoid mass employee absences. Teams can keep projects running even when some members are on vacation. This helps avoid work breaks to maintain productivity and meet deadlines.

Reporting and analytics

Leave management provides a complete overview of absence trends. This highlights the impact of leaves on business operations. With this, managers can draw useful conclusions and take corrective actions.

Legal compliance

A record of employee vacations limits payment errors. It saves the company from the legal effects of such problems. Effective leave management helps companies comply with labour regulations.

Benefits of Leave Management 

Gone are the days when manual entries in attendance records were the thing. Today, organisations are turning to sophisticated methods for leave management. Here’s why effective leave management can be beneficial for companies.

Gaining employee trust

Employees satisfied with the leave policy are loyal to their company. This leads to a more engaged workforce that contributes to the company’s success.

Ensuring minimal absenteeism

Appropriate leave entitlements protect employees’ physical and mental health on the job. It promotes work-life balance, relieves stress, and reduces irregular leaves.

Tracking employee performance

Leave management allows HR teams to check employee leave statuses. It allows them to keep track of denied, requested, and/or approved leaves. Managers can use this information to find out how often employees clock in.

Challenges of Leave Management 

While leave management is improving, it still has some challenges. Following are the challenges companies face while managing leaves:

Tracking multiple leaves

Managers need to have an accurate knowledge of the types of leaves provided. They must know how leaves are granted and when employees can take them. Keeping track of working team members is essential for making decisions. These decisions influence finances, project schedules, and staffing needs.

Providing clarity to employees

Employee morale can suffer if employees don’t know the company’s leave policy. It is a must for employees to clearly understand their leave calculation process. Leave benefits they are entitled to are an add-on. Explaining these details to employees, particularly about balance calculation, carry-forward leaves, or leave encashment, can be challenging.

Payroll errors

Not all vacation days are paid. An employee may take both paid and unpaid leaves for their time off. This could lead to mistakes in calculating accrual, leading to inadequate pay for employees. A leave management system can help track both paid and unpaid leaves.

Outdated policies

When there is no leave management system in place, employees and HR professionals both feel overwhelmed. Complex and outdated procedures only cause delays and annoy employees. What’s more, filling out leave requests and waiting for approvals can be a tedious task.

Best Practices for Effective Leave Management

Developing a sustainable employee leave policy is challenging. Some best practices to create and implement leave policies are as follows:

Labour law compliance

Leave policies can lead to legal fallout. This is when some employees get preferred treatment at others’ expense.

This can happen for valid reasons. For example, a manager may consider an employee’s personal situation and grant time off. But with this, one person may be favoured over another. Hence, the application of the policy must be explained to managers. They must also be held accountable for complying with it.

Clear and precise policy

It is necessary to ensure that every employee knows how many leaves they have and how they can record them. They must be informed of all types of leave and their rights regarding it. In this manner, leave management issues can be resolved quickly.

Clear communication of policies

Employees must be informed of leave policies and how they apply to them. Lack of clarity about leave entitlement must be avoided. Further, the HR team should inform long-time employees of changes in leave entitlements.

Qualified HR team

HR managers and other team members must be familiar with all leave management policies. They must be able to respond to employee inquiries about leaves and related queries.

Up-to-date records

An important part of the leave management process is record keeping. All employees’ leave information must be documented to ensure compliance.

Records must be accessible to both the management and employees. Employees must be able to check their balance leaves. This will make it easier for managers to clarify doubts.

Collaboration across business units

Companies must ensure departmental cooperation in leave management. These departments include legal, HR, operations, and other related business units. Removing barriers help limit liabilities and create efficiency.


Companies must consider outsourcing if their regular processes are not cost-effective. There are plenty of options available for outsourcing. This can help a company avoid legal complications and ensure compliance.

Allow policies to evolve

Leave policies need to evolve with new developments. There should be room for all revisions that can favour both the organisation and the employee.

Checklist for Better Leave Management 

All companies need to create a checklist for effective leave management. The company can improve its leave management policies by doing the following:

Familiarise with labour laws

The manager must research federal and local labour regulations. This should be done before drafting the policy. This helps ensure that all conditions comply with labour laws. It is possible to violate these rules without being aware of them. They must be read to avoid fines, lawsuits, and other issues.

Consider industry standards

It is important to track how other competitor organisations handle vacation policies.

Companies implement unlimited paid vacation days to attract talent. Some mandate vacation policies to ensure employees get the needed rest. With this, managers must also check the effects of the leave policy on their operations and culture.

Understand business strategies and goals

Managers must have a clear knowledge of the company’s goals and strategies. This helps in drafting policies at the business, functional, and corporate level. This information helps create and implement effective leave management systems.

Create an outline

Every company needs to create an outline of the types of leave offered. This may include paid vacation days, sick days, maternity leaves, paternity leaves, and more. Each leave category must be assigned the appropriate number of annual days. Procedures for requesting leaves must also be smooth. Lastly, a provision for balance leave payout or carry-forward to the next year must be present.

Communicate the set policies

During onboarding, HR teams must explain leave policies to each new employee. This information must be available on the company’s portal. In addition, the company must also advocate for employee rights. Employees must be informed of unused and accrued vacation days. This can be done through regular reminders.

Automating Leave Management with Software 

A leave management system is a centralized platform for tracking time off. It controls all aspects of leave management. The streamlined process helps both the company and employees save time.

A leave management software allows employees to directly check their leave status from any device. They can view their leave balance, select the type of leave they want, and access all other relevant data.

Leave management software can also show changes in productivity. Other benefits of upgrading to automated leave management software include:

Reduced costs

Setting up a leave management system can be more expensive than its purchase price. However, the cost can be easily justified by the large reduction in administrative costs.

Increased productivity

Leave management software provides access to all necessary employee information. This allows managers to assign work schedules and monitor them. This also ensures employees’ adherence to their work schedules. These factors contribute collectively to employee productivity. This can improve the performance of the company.

Minimal errors

Automated leave management software helps in avoiding human error. Disparities in attendance can affect payroll and staff morale. In such situations, an online leave management system comes to the rescue.

Better planning

Employees can plan their vacations better when they are aware of vacation policies. They can make an informed decision with prior information on upcoming holidays. Supervisors can also schedule tasks according to employee availability.

Optimized communication and operation

The leave management software is updated when an employee submits a leave request. The supervisor is then informed of the request. They can accept or reject it according to policy. The employee gets notified when the management decides on the leave request. This streamlined process helps avoid repeated communication.


In today’s age, employees look for employers whose values they can agree with. A company’s success is often measured by employee satisfaction. With this, how a company treats its employees is critical. It serves as a guide to a company’s values.

Proper leave management can help companies comply with all laws and regulations. It gives the company a competitive advantage and helps maintain business efficiency.

Table of Contents

    Meet the author

    Keka Editorial Team

    A bunch of inspired, creative and ambitious youngsters- that’s Keka’s editorial team for you. We have a thirst to learn new subjects and curate diverse pieces for our readers. Our deep understanding and knowledge of Human Resources has enabled us to answer almost every question pertaining to this department. If not seen finding ways to simplify the HR world, they can be found striking conversations with anyone and everyone , petting dogs, obsessing over gadgets, or baking cakes.


    Thank you for Subscribing!

    Related articles

    9 Common Challenges Of Leave Management
    Keka Editorial Team 14 min read

    Leave management simply put covers all areas of an employees leaves This includes sickwellness leaves personal leaves vacations and so on Leave management may seem straightforward you tell your boss you want a day off someday and you get it or not! However things start getting more complicated as th

    The Ultimate Guide to Leave Management
    Dr. Nishat Afzal 15 min read

    India is listed amongst the top countries having the most vacationdeprived employees  Do your employees account for these stats   What does this say about your companys leave management policy   Where are you going wrong with it  For most companies employee leave is an afterthought considered

    13 Types of Leave Offered By Companies in India
    Anwesha Panja 27 min read

    The complete knowledge of leaves and it's types help employees in every field plan their schedules better. Explore the various major leave types in this blog!

    cookie image

    By clicking “Accept", you consent to our website's use of cookies to give you the most relevant experience by remembering your preferences and repeat visits. You may visit "cookie policy” to know more about cookies we use.