Employee Leaves in an Organization: Types, Benefits, and More!

Have you ever wondered what types of leaves exist in an organization? And what benefits, challenges, and more the leaves in an organization present? 

Well, we are here to help you learn about the types, strategies, challenges, and benefits of having leaves in an organization. 

So without further ado, let’s start.

What are leaves in an organization?

Leave is any approved time-off that an employer grants his/her employee. When an employee is enjoying a paid leave, he/she is not working at the office but getting paid for the day. But the same can’t be said about unpaid leave. When on unpaid leave, an employee does not receive any pay for the particular day or days of leave. However, it is approved and no legal action can be taken against the employee’s absence. 

For example, this imaginary person, Mr. Paul, having completed a year with his employer,  wants two days of leaves. But he does not know his leave balance. So, he goes to the HR officer to know about his balance and apply for leave. 

However, as he discusses his status with the the HR officer, he learns that the organization has a leave management system that determines:

🔷Who can avail any leave?

🔷When can one avail leave?

🔷How can they avail certain leaves?

🔷What type of leave an employee can avail?

🔷Whether the leave will be paid, unpaid, or not at all a leave?

Having a Proper Leave System in Place

Mr. Paul realizes that having a proper leave system in a workplace is paramount. Understanding leaves in an organization is crucial for work-life balance and productivity. But leave management requires a thorough, comprehensive system to carry it out properly.  

The HR personnel goes on saying that in their organization, as per the US and state law, Mr. Paul can avail few types of leaves, depending on entitlement. And the number of days he can avail is based on the type of leave.  The same can be said about paid and unpaid leaves. 

However, had Mr. Paul not informed HR or taken approval for the leave, his leave of absence would have been unauthorized and his salary would have been deducted. What’s more, he could have faced disciplinary action. 

Types of Leaves to Include in Your HR Policy

The HR officer now shares the leaves that are available to enjoy in their organization. 

Unpaid Leave

The officer first informs Mr. Paul about the unpaid leaves, which he can avail when he runs out of entitled leaves. But, as mentioned above, he won’t get any payment for the days of leave. 

There are also circumstances when an employee can avail unpaid leave without having his leave quota completed. For instance, in the US, its majority states don’t have rules for paternity or maternity leaves. In those states, under the employer’s consideration, the employee may avail leave for parental duties, but unpaid. 

Vacation Leave

Vacation leave, also known as paid time off (PTO) and annual leave in many countries like the UK, India, or Brazil, enables employees to take time away from work for leisure, personal activities, or simply to recharge. Through this leave, individuals like Mr. Paul can enjoy time to rest and rejuvenate, reducing stress and promoting overall well-being.

How an employee can avail this leave or accrue it, depends on company policy and the length of an employee’s service. In the case of Mr. Paul, he just completed one year of service so he can now start availing it. However, unlike some companies, his vacation leaves are not encashable. 

Maternity/Paternity Leave

The HR officer informs about maternity and paternity leaves, too. Both maternity and paternity leaves provide time off to new parents for welcoming a child into their lives. Maternity leave applies to mothers, allowing them time to recover from childbirth and bond with their newborn.

On the other hand, paternity leave entitles fathers to be actively involved in the early stages of their child’s life and help the mother. 

As mentioned earlier, maternity and paternity leaves are not legally mandated in the US. However, the FMLA does offer certain protections and provisions for parental leave. Many employers now recognize the importance of supporting working parents. Thus they have implemented their own maternity and paternity leave policies, some of which are paid. Currently, 8 states are covered by FMLA. 

Bereavement Leave

Mr. Paul also gets to know about bereavement leave. This leave is a workplace-offered policy that provides time off to an employee following the loss of a family member or friend. The employers understand the impact of the loss on an employee’s emotional state, which can affect their performance on the job. 

Bereavement policies vary, from country to country, company to company. For example, bereavement leave may qualify as paid or unpaid leave depending on the employer. This is why understanding the leave policies of the company is crucial for employees like Mr. Paul..

Medical Leave

Unlike a typical sick leave, a medical leave of absence is a type of leave that enables seriously ill or injured employees facing medical conditions that reduce their ability to perform key job responsibilities. Depending on the regulations, this leave could be paid or unpaid. 

In the US, the Family and Medical Leave Act (FMLA) has a broad definition for what qualifies as medical leave that encompasses any serious health condition resulting in the inability of the affected employee to perform the functions of the position.  Of course, a registered medical practitioner’s certification is needed to avail this leave. 

In addition, any leave taken by the pregnant parent in the “postnatal period” is considered as medical leave unless specified otherwise. 

Casual Leaves 

The HR person goes on addressing casual leaves. Casual leaves are spontaneous, paid leaves employees can avail due to sudden and unavoidable circumstances. It’s not usually mandatory to provide a reason for taking casual leaves, and these can be taken in short notice. Unlike annual or earned leaves, you don’t need one year of tenure.

Compensatory Leave

Mr. Paul further learns about compensatory leaves. Here, employees can avail leave against days worked on weekends or holidays.  These are usually paid leaves and consider the overtime worked by an employee under it. 

Sabbatical Leave

Sabbatical leave, though not as common as the other leaves mentioned, is a form of long-term leave that employers are entitled to for employees for unpaid leave from work that can last for 6 months or more. This leave ensures the employees have job security. 

Reasons can include: pursuing  education or training or for personal reasons, like a long-term health issue. In general, this leave resembles a short career break.

Benefits of Leaves Procedures in an Organization

Having heard about all the types of leaves available in the organization, Mr. Paul realized there are an ample of benefits leave procedures and management provides. Let’s look at some of the major ones: 

🟢Clear and Fair Policy

With clear leave procedures in place,  everyone is updated about their leaves. This helps  employees get a fair game who may be working from home or on a long leave like maternity leave. Even if the employee is mourning the death of a loved one, they won’t be in the proper mind to check an employee handbook. 

🟢Adhering to Compliance

Having leave procedures in place ensures employees adhere to the company policies and relevant labor laws. The policies also guide the company to meet local laws and ensure legal compliance. Compliance with rules eventually enhances attendance management, boosting organizational productivity. 

🟢Enhanced Productivity

Proper leave policies and procedures ensure employee productivity is not compromised. As the HR department lets the employees know about where they stand with the leaves, the employees can adjust or avail leaves as per their leave balance. Also, if HR personnel can curtail unnecessary leave applications, the company can meet the required work output.  Also, absences can be managed well with more consistent productivity and outputs. 

🟢Employee Morale Boost

If employees know leaves in an organization has fair rules and policies, they will feel valued and perform to the best of their potential. They can plan leaves accordingly and avail them when the workload is less or at the right times of the month or year. 

Dealing with Leave Requests & Applications

If an organization has over many employees, it becomes difficult to track and monitor leave applications correctly, unless there is a leave management system in place. With technologies advancing through automation and AI, HR teams are learning to make the best use of these technologies to expedite and streamline work processes. 

And then there are issues in leave management where HR officers have to decide whether to allow or entitle a leave or not. In the case of Mr. Paul, who has just completed one year of work with the company, may be entitled to new types of leaves. However, whether he can avail them at the moment completely depends on the workload, the reason for leave, and the complications that can arise if he is on leave. 

Recording Leaves / Leave Reporting

Proper leave reporting is a crucial element of your business and organizational processes. In accurate leave reporting can create miscalculations in payroll management, which can make you redo the whole process again. You also lose the trust of your employees and peers when leave reporting goes awry. 

So, what challenges does an HR Officer or Manager face when managing leaves in an organization?

The Challenges

1. Rejecting leaves due to shortage of manpower: there might be situations when HR cannot allow leave to an employee simply because others from the functional team have already availed leaves. To keep the flow of work going, this hard decision is taken. 
2. Keeping track of accrued annual leaves: as annual or earned leaves can be transferred to the next year, there might be complications in keeping track of the carry-over leaves. As leave calculations are closed annually, one mistake here, and the whole process will need to be done again. 
3. Paid vs unpaid leave determination: there are times when HR officers need to decide between entitling a leave to an employee, either as paid or unpaid. The leave regulations usually set the rules for determining paid leave vs unpaid leave. However, in instances of availing paid sick leave and then unpaid sabbatical leave, employees might object to it. The same complication can occur in case of paid annual leave or unpaid vacation leave. 
4. Authorized HR personnel becoming bottlenecks: If the employer is too dependent on HR officer(s) to regulate and check all leave administration tasks, it becomes extra pressure on them. Additionally, proper distribution of HR operations does not take place, creating a lack of proper workflow and time. Also, if the leave tracking, leave scheduling, and leave documentation occurs centrally through one Leave Manager without any technological assistance, the organization leave norms will suffer. 

The Solutions

When there are problems or challenges, there are solutions, too. Let’s see some important steps that an HR officer or HR manager can take to better manage leave in an organization.:

✅Keeping Proper Leave Records

Keeping leave records accurately helps you and your employees know what their remaining leave balance is. It can also assist you calculate the percentage of your employees who aren’t using their paid time off (PTO) fully. This can help you encourage employees to go on extended leave, in case they haven’t availed any throughout the year. 

Using automated systems for recordkeeping and reporting boosts the speed of entry as well as accuracy. 

✅Establish and Follow Leave Policy

Once a policy is established, you should adhere to it strictly. Unless it hurts a particular culture or community, avoid making exceptions for anyone. This can feel like favoritism over time and disrupt the company’s culture. It is more prudent to develop a flexible policy from the outset, ensuring that everyone feels treated fairly without the need for special exceptions.

If you need to make changes to your policy, make sure to announce them to your entire company in a clear and transparent way. If possible, schedule a meeting with the employees so you can know their concerns and gather their feedback

✅Integrate Leave Management Software

An easy way to expedite managing leaves in an organization is through leave management software or solutions. These applications can track time off for each employee, auto-calculate remaining PTO and even set predefined policies for employees that live in different states. These solutions can automate the work in your hands and help you focus on more strategic areas of your HR duties.

Interesting Leave Stats Worldwide

Let us now look at some valuable statistics from around the globe on leave in an organization. 

• Japan offers one full year of paid parental leave exclusively for fathers.
• Sweden permits parental leave of one child up to  480 days for both parents or 240 days for a single parent.
• The U.K. has set 52 weeks of statutory maternity leave. 
• Austria ranks  No. 1 for providing workers with 25 days of paid annual leave and 13 public holidays, totaling 38 days of paid time off.
• Brazil allows 30 paid calendar days (20 business days) of paid annual leave after you complete one year of employment.
• The United Arab Emirates entitles employees vacation days after 6 months of employment at a rate of 2 days per month, during their first year of employment.
• Belgium grants 1 month of paid sick leave for white-collar workers at 100%.
• Luxembourg lets employees take the first 77 days off for an illness at 100% of their salary.
• The United States is the only industrialized nation in the world that does not offer a comprehensive leave policy

Wrapping Up

Managing leaves in an organization properly is essential in ensuring the success and sustainability of an organization. Leave administration may differ across countries and companies but fair organizational leave norms need to be universally fair. Setting up the right policies and using the right leave management systems assists HR teams in managing leaves. 

For more info on leave management, you can try reading What is Leave Management at Work: Employer’s Handbook.