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Changing leave entitlements can lead to HR scrambling. If employees are entitled to more leave, you need to be prepared to handle people taking more time away from your organization. The leave management process is likely to come under increased scrutiny.

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You may not think your leave management process is a concern. After all, it seems simple enough on paper. An ineffective process, however, has more risks and costs than you might otherwise imagine. Here are a few of them.

1. An Ineffective Leave Management Process Can Cost You More

One of the risks associated with ineffective leave management is the cost. Like anything else in business, if it’s not done right, it will likely run up a higher bill.

What are some examples of the financial risks of ineffective leave management? Perhaps the most prominent is the risk of leave encashment. There may be laws about how to carry forward unused leave, and your organization may also have its own policies about carrying forward vacation days and sick days.

These unused days present a financial risk for your business if employees decide to take them all at once. You’ll need to pay out more at one time, and the pay-outs may exceed what you had set aside for annual vacations.

2. You May Have Issues with Staffing

Ineffective leave management processes can result in your workforce being understaffed.

If your process is ineffective, you may not have accurate information about who is away when. This may allow you to issue more time-off approvals than you should. The result is that too many people are away at the same time, causing issues for the business.

3. There Are Potential Legal Issues

As noted, certain leaves are laid out in legislation. This means violating regulations can lead to penalties and fines.

Failing to grant leaves will be a violation of labour law. The same is true of vacation time and pay calculations. Effective leave management ensures you’re compliant.

4. You Could Harm Employee Morale

If your leave management process is ineffective, you may not grant days off when employees need or want them. You may issue more denials to avoid overlapping time off. Your policies may not be clear, or they may cause some employees to be disgruntled about how you allot time off.

Employee engagement and morale could take a hit if your policies are seen to favour certain employees or if employees feel they’re always being denied.

5. Difficulty Reconciling Time Off

Finally, an ineffective leave management process could leave you second-guessing. If you rely on employees to manually record their time off, for example, you could end up arguing about whether or not they’ve taken more time off than they say they have.

If you postpone recording time off, you might underestimate how much time someone took off. This could cause issues with payroll or with additional time-off requests.

It’s easy to see just how much leave management can affect your business. Luckily, refining your process and getting more effective leave management is easier than ever with the right technology.


Kaneez Jaffer

Kaneez is a Certified Human Resources Leader (CHRL) with an advanced knowledge of human resources and organizational structure and design. She has extensive experience with HRIS systems and understands the need to move HR from a transactional model to a transformational one. She has worked in the investment banking, insurance, and legal industries, as well as with large not-for-profit centres helping to simplify and streamline their internal systems. Kaneez is an expert in building relationships and affecting change in a positive and productive way. She acts as the key HR business partner at Apri Insurance Services Inc, managing the implementation of JungoHR, while providing expert advice and counsel on a range of HR matters. Kaneez holds a Graduate Certificate in Human Resources Management as well as a Certificate in HR Law for HR Professionals from Osgoode Hall Law School in Toronto, Canada.

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