Global HR 9 min

What is leave management? The best practices you need to know

Written by Amanda Day
April 4, 2024
Amanda Day


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There’s more to life than work. If your employees can't take the time they need to balance their work and life, they might decide to leave your company.

It’s important for employees to take breaks from their jobs so they can focus on their family lives, health, and personal goals. Employees might also need some time to simply decompress and unwind.

In this article, we’ll go over what leave management is and the best practices for managing unpaid and paid time off for employee retention.

What is leave management? 

Employee leave management is the process of managing your team member's time away from work, which can include parental leave, sick leave, or vacations. 

Paid leave is an integral part of a company’s employee benefits program. Typically, HR professionals makes sure that paid leave is included in an employee's benefits package to stay compliant with local employment laws.

Leave management isn't just about compliance. Effective leave management shows that you care about your team members and their well-being.

“Not only does paid leave fundamentally impact [...] mental well-being in the workforce, but it also highlights that an organization truly cares about its employees,” says Sina Chehrazi, CEO at Nayya.

Why is leave management important?

It pays to give your employees the time off they need to focus on their personal lives. Here’s why leave management needs to be a top priority for companies:

It improves physical and mental well-being 

83% of US workers experience work-related stress. Presenteeism, which occurs when employees feel the need to work even when they’re sick, undercuts productivity while harming your employee's mental health.

Offering enough leave is vital because it puts your team’s physical and mental health first. With paid leave, your team members can feel comfortable recharging without letting their health problems get in the way of their work performance. 

It boosts employee engagement

Employees who get more time to focus on their health and personal responsibilities are happier and more engaged at work.

“[Employees] who took sabbaticals experienced a decline in stress and an increase in psychological resources and overall well-being,” says psychologist Davod Burkus in an article for Harvard Business Review. “Those positive changes often remained long after the sabbatical takers returned to work.”

It leads to better employee retention

When employees feel like they’re not getting the support or time off they need, they’re more likely to leave their company. 89% of employees leave a job because of burnout. 

Employees can pace their workload and manage stress through effective leave management. Employees will feel happy that their organization allows them to take time off — and they’ll be less likely to leave your company. 

Better work-life balance

Proper leave management and better work-life balance go hand in hand. When employees get paid leave benefits or non-paid leave for longer breaks, they have more time to focus on other things outside work. Fathers and co-coworkers supported former X CEO Parag Agrawal when he took weeks-long paternity leave. Agrawal had the chance to bond with his child while setting the example for other parents at the company.

The different types of leave policies

You can include various leaves as part of your company policy. We'll take a look at different types of leaves including: public holidays, compensatory leave, sick leave, casual leave, maternity leave, religious holidays, and bereavement leave.

Public holidays

Public holidays are any days off that the government gives to employees. Many different institutions, such as schools, government offices, and banks, are obligated to grant public holidays to employees.

For example, federal public holidays in the US include the following:

  • New Year’s Day: January 1

  • Martin Luther King’s Birthday: third Monday in January

  • Washington’s Birthday: third Monday in February

  • Memorial Day: last Monday in May

  • Juneteenth National Independence Day: June 19

  • Independence Day: July 4

  • Labor Day: first Monday in September

  • Columbus Day: second Monday in October

  • Veterans Day: November 11

  • Thanksgiving Day: fourth Thursday in November

  • Christmas Day: December 25

Compensatory leave

If an employee is working overtime, they can be eligible for compensatory days off. You’ll need a strong backend system that keeps track of work hours to give your employees appropriate paid compensatory leave.

Sick leave

Companies can offer paid sick leave to employees who are ill or have an emergency. Employees can take the time they need to rest and recover without having to worry about their wages. 

Casual leave

Casual leave refers to any time off a company provides to an employee for personal reasons or external circumstance.

Casual leave could be paid leave for an employee who needs to travel to another country for family matters. Casual leave can also be non-paid. For example, an employee can receive several months off to pursue a passion project but plans on returning to work afterward. 

Parental leave

The birth of a new child is always an important event. In the US, new mothers get a period of 7 to 17 weeks to spend time with their newborn child without having to worry about their wages. 

The number of days allowed for parental leave varies greatly between countries. In Thailand, for example, an expectant mother can take up to 98 days of paid leave. And in the Netherlands, pregnant employees can take up to six weeks of pregnancy leave and 10 weeks of maternity leave.

Religious holidays

Different religious holidays include:

  • Eid (Islamic)

  • Janmashtami (Hindu)

  • Rosh Hashanah (Jewish)

  • Yom Kippur (Jewish)

  • Christmas (Christian)

  • Lent (Christian)

  • Easter (Christian)

Bereavement leave

Companies can offer bereavement leave to their employee if someone in their family passes away. It gives the employee time to mourn the death of their loved one without worrying about job responsibilities. 

Challenges of employee leave

Practicing proper leave management comes with its fair challenges for workplaces. We’ll discuss a few of them below.

Payroll errors

Companies can struggle to pay employees properly factoring employee leave. This is often the case when companies are using outdated methods, such as messy spreadsheets, to keep track of their payroll processing and their team’s time off. 

Accurate employee time tracking

Companies may also struggle to keep track of their employees’ schedules and when they decide to take time off. The most common way for employees to ask for time off is through personal communication, which can easily lead to the message being lost. Things get even more difficult when multiple employees are taking time off at the same time. 

Employees who refuse to take time off

Some employees have a hard time taking leave. They might find it hard to ask for some time off to relax, even if not doing so is damaging their health and work performance.

You don’t want presenteeism to become part of your company culture. Try to find out why your employee is not taking time off. It might be because they have too much work, or feel uncomfortable asking for back up when they are away.

Resolve the issue that is preventing your employee to recharge. Then personally communicate how taking leave is important to the employee and also the organization. This will also foster a supportive work culture.

Extension of paid leaves

Employees might be away longer than expected because of illnesses or medical emergencies. This can create staffing issues since you might need to find someone to replace the missing team member.

Managing leave for employees in other countries

You may have contractors or employees who work for your company remotely in several countries. Different countries have different holidays and leave requirements, so you’ll need to keep track of international benefits when hiring globally.

4 useful leave management practices 

Effectively managing leave requires proper preparation. Here’s what you can do to ensure you stay on top of leave management:

1. Define a clear policy

Make sure to have a policy in place that outlines exactly how your company will manage unpaid and paid leave for your team.

Employees need to know what kind of leave options they have throughout the year. Your leave management policy can also clarify how employees should communicate their requests for time off.

2. Research the law

Stay up to date with local labor laws surrounding leave. For example, in Mexico, employees are entitled to a minimum of 12 vacation days for one year of service — that number increases with every year of work. 

3. Use clear communication around policy changes

If you make changes to your paid leave policy, let your whole team know. Listen to your team’s feedback on the change, including whether they would like to see anything added to it. This will help you give employees the support they need to recharge.

4. Take advantage of leave management software

Automation goes a long way in improving your leave management processes and tracking employee absences. Leave management software gives you a detailed overview of the hours your team members work, employee time-off requests, and reminders of upcoming holidays so you can stay ahead of the curve.

Remote HR management helps you manage your HR data and processes as you scale. Approve leave requests, track work hours and stay ahead of international holidays to manage your team workload — all in one place.

Improve employee satisfaction by giving them the time off they deserve

Your employees work hard and deserve some time to relax outside of their job. Proper leave management improves the employee experience, increases team satisfaction, and shows you value your employee’s well-being. In return, they’ll likely be more productive and willing to stay with your organization.

Are you looking to grow a diverse team and start hiring team members from overseas? Chat with Remote today to learn how to efficiently onboard new international employees to your team. 

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