The Ultimate Guide to Managing Employee Leave

Written by Asim Qureshi
By Asim Qureshi, CEO Jibble

Hi, I’m Asim Qureshi, the CEO and co-founder of Jibble, a cloud-based time and attendance software. I have several years of experience in building and scaling software products and teams across various industries and markets. Before I founded Jibble, I worked as a VP at Morgan Stanley for six years. I’m passionate about helping businesses improve their productivity and performance through effective employee time and leave management strategies.


Every holiday, HR executives and small business owners are bombarded with multiple requests for time off. Responding to these requests is a tricky affair. On one hand, the Society for Human Resource Management finds that denying your employees’ requests for time off has been found to lower their morale. But on the other hand, you need to keep business operations running. 

So, how do you strike the delicate balance between optimizing staffing requirements while ensuring that your employees take their legally mandated leave and get time to recharge?

As the CEO of a time tracking software company with part-time, full-time, and contract employees in different parts of the world, here’s my guide on managing employee leave. In this article I’ll be diving into the key steps and best practices for creating an effective leave management strategy tailored to your organization’s needs. Let’s get crackin’. – 

This article covers:

  • Important Considerations in Employee Leave Management
  • How to Create an Effective Leave Management Strategy

Important Considerations in Employee Leave Management

1. Legal Compliance

The first key consideration in employee leave management is understanding the law. Federal and state labor laws in most countries outline the eligibility and entitlement of employees to different types of leave. These laws apply to companies and businesses in their jurisdiction. Be sure to brush up on the relevant labor and employment laws. Understanding the relevant laws will save you from making any expensive mistakes. You may need to consult a lawyer who is conversant with labor laws before handling any leave requests. 

2. Consider Staffing Requirements

Second, establish your staffing requirements. How many employees do you need to maintain basic service delivery standards and meet customer demand? Computing this number is a crucial step in the leave management process. Without it, you cannot guarantee continued business operations on days when some of your employees are on leave, especially during holidays when those requests for time off start trickling in. 

Time tracking is a great way to determine your staffing requirements. With time and attendance software, you can generate timesheets and use them to calculate the hours spent on essential services. The number of employees who can work these hours is your staffing requirement. Keep the number in mind whenever you are approving requests for leave. 

3. Maintaining Employee Motivation

You’ve studied the labor laws that apply to your business and determined the minimum number of employees who must be at work on any given day. Next comes the hardest part: keeping employees happy and motivated. 

Poor leave management practices will leave your employees feeling undervalued. Keeping their morale high requires you to navigate a different kind of balance. You need to ensure that all your employees take enough time off to avoid burnout and enjoy an optimum work-life balance. However, they shouldn’t take so much time that they become unproductive. To do this, you need a good leave management strategy. 

How to Create an Effective Leave Management Strategy

Here’s your guide to creating an effective leave management strategy for your company:

1. Understand the Law

When managing employee leave, you must comply with all applicable laws. Otherwise, you’ll land your organization in potentially expensive legal trouble. To avoid breaking any laws, study the relevant employment and labor laws carefully. Remember to train all your managers on the laws as well.

2. Set a Clear Leave Policy

Next, determine the types of leave you will offer your employees. Let the law, industry practices, HR policy, and your benefit packages guide you here. 

Consider national holidays and statutory leaves such as parental leave, public duties such as jury duty and voting, and how many days of extended leave you are required to give by law. How much time off will you allow for emergencies? Will you increase your staff’s paid time leave after every year of service to your company? Does further education increase your employees’ value to your organization? If so, will you allow extended leave for further studies? 

Once you have the answers to these questions, you’re ready to write your leave policy. The document should be easy to understand. So, be sure to include: 

  • Which holidays your organization will observe
  • The types of leave you offer and the maximum days for each
  • The eligibility criteria for each type of leave
  • How you calculate leave days
  • The leave application procedure
  • What happens to unused leave days
  • Whether leave approval is tied to hours worked

It’s important to distribute the policy to all employees and encourage them to take advantage of their guaranteed time off. 

3. Invest in Time Tracking Software

To work out an employee’s time off, you need to know two things. First, how many days or hours have they worked? Second, how many days off have they taken in the current year? For this, you need an accurate time tracking solution. A good time tracking software with a basic clock in and clock out feature and a timesheet will accurately record the hours worked. You can use the information to determine an employee’s eligibility for leave and  their leave days. 

Time tracking software is also indispensable for scheduling your employees’ time off while maintaining your staffing requirements. Here, you’ll need time tracking software with a scheduling feature. Otherwise, how else will you ensure that leave days don’t overlap in critical departments? What’s more, you can use the feature to redistribute the tasks of one employee to the rest of the team. That way, all work gets done when one employee is on leave, and no one gets work calls on their days off. 

Third, some advanced time tracking systems have calendar integrations to make tracking your employee’s time off easier. All you have to do is create multiple calendars that show which days each employee will take their leave. You can also set reminders to let the team know when their fellow team members are set to go on leave. 

4. Automate Leave Management

Employee leave is more than just signing off a leave request form. So much more goes into planning. For instance, leave affects the finance department through payroll. If an employee goes on unpaid leave, the department will receive instructions to adjust their pay to reflect the reduced hours worked. 

Now, I know what you’re thinking: Oh boy, payroll just got a lot harder. Well, not really. Here’s a simple hack. With a free payroll hours tracker, you can generate timesheets of your staff’s hours and plug them into your payroll system. Better yet, you can have timesheet software do it for you.  Using either solution, you can work out the wages for employees on unpaid leave in the time it took you to read this sentence. 

The software tracks all payroll hours and generates timesheets with the total hours worked, including overtime. With a few clicks, you can generate payroll adjusted for unpaid or partially paid absences. Forward those timesheets to the finance department, and you’re done with payroll for the month. 

Ensuring employees on unpaid leave only get paid for the hours they work is important. But it’s even more important to ensure that employees on paid leave are compensated for their time off. Pay their dues for their paid leave on time and watch your employees’ productivity grow as their morale soars. 

As you focus on paying your employees on time, don’t forget to encourage them to use their leave days. Don’t underestimate the power of a simple reminder to employees that their leave days are expiring soon. While at it, consider sending automatic reminders to managers when leave requests sit on their desks for too long. Most importantly, set an automated warning to alert you when approving leave requests will upset your staffing requirements. 

5. Align Leave Management with Business Needs

Employee leave management is a delicate process, but it has its rewards. For one, a good leave policy is a great way of maintaining optimum staffing requirements during your busiest season. Plan your leave policy around your production and sales cycles for the best results. This way, you guarantee your organization’s ability to meet customer demand all year through. 

You can start by setting deadlines for employees to request time off. Receiving leave requests one month in advance gives you enough time to plan for an employee’s absence. 

Next, have a clear policy for dealing with overlapping requests. Here, you can encourage employees to book their time off weeks in advance. The secret is designing a policy that rewards early requests by prioritizing the employees who put in their leave requests first. 

6. Adapt and Communicate 

Finally, your employee leave management policy should be comprehensive, but you won’t get everything right the first time. I would recommend updating it regularly until it’s right for your company. This kind of flexibility will allow for constant improvement. 

With a flexible leave management policy, you can keep up with the dynamic needs and structure of the workforce. For instance, you can hop onto the current flexible working arrangements and remote work trends. And why wouldn’t you? You get to keep your employees happy and increase productivity. Remember that time tracking software you invested in? Use it to track time worked by the staff on these arrangements. 

Lastly, let your employees know every time you change or adjust your leave policy. Better yet, involve them in the process. Seek their input when reviewing your leave management policy. Nothing will make them feel more valued and trusted than seeing their suggestions implemented. 

Final Thoughts

A good employee leave management strategy will increase employee satisfaction and productivity. It guarantees you will attract the best talent and keep your best employees. The tips discussed in this article are a practical guide for creating an employee leave management approach that works for you. By embracing flexibility, automation, timesheet and leave tracking software, and communication, you can comply with labor laws, keep your employees motivated, and keep your organization running smoothly.