Leave Management

The Top Challenges Faced by HR in Leave Accrual Calculations

For an outsider, it may seem like a simple task of applying for or granting a leave at an office. However, in reality, the Human Resource department at the workplace deals with several issues and has a lot of policies to consider to be able to effectively manage the employees off days.


Typically, in any organisation, there are three kinds of leaves – casual leave, earned leave, and sick leave. One of the major problems for the HR personnel is to calculate the leave balances according to the policies maintained and issue cash out for the accrued leaves, if applicable. What makes this such a tedious and time-consuming task? Let’s have a look.


Leave Policies:

First of all, in many cases, the systems employed for calculating the employees’ leaves do not allow for automatic carry forward of the accumulated balance leaves. There are different leave policies in India depending upon the State the company comes under, since the State’s Shop and Establishment Act decides that. The HR department requires a solid system which can automatically manage complex leave policies as the company can have its offices at different locations.


Varying Rules for Leave Calculations:

The next big task is to be able to customise the leaves of every individual employee. For instance, an employee may take half-day off to attend some personal responsibilities. Then at some organisations, late remarks, i.e. reaching office later than the stipulated time, results into a half-day leave depending on the time of entry. In that case, the HR needs to calculate those permissions against the total availability, at the end of the year. Or then, there are the newly joined staffers who are allowed offs on a pro-rata basis. Such calculations on a person-to-person basis demand greater flexibility from the system. More often than not, employees keep on checking their leave balance with the HR persons. They just need to make sure that they have enough leaves on hand before applying for one or may want to check if they can possibly cash on the remaining ones. In fact, it may also lead to disputes over the exact figures. At such times, it is quite distracting for the HR authorities to go back to the records for individual requests, how much ever they may be accessible online, and provide and explain the details. A system which allows employees as well as the authorities to log in and track past leave history, or when and for what reason a leave was taken can make things simpler for all. This can save a considerable amount of time and energy in responding to general leave related requests.


Management of Balance Sheet Vis-à-vis the Leave Cash Outs:

Employees often resort to accruing leaves and then opting for cash outs at the end of the fiscal year. If such a scenario occurs at a small to medium sized company, it creates substantial pressure on the balance sheets. Even at larger organisations, companies find it hard to provide monetary benefits in lieu of attendance. It creates liability and significant cash flow problems. Such instances have to be dealt with very carefully by the HR so as not to upset the employees and yet manage the company’s administrative concerns. The stakeholders need to have a complete picture to be able to effectively manage the cash flow.


Employee Engagement:

The HR also needs to maintain specific details pertaining to the employees’ reasons for absences to monitor their performance. Understandably then, it is quite a task to note down and then categorise the reasons according to their frequency. These statistics further need to be compiled for the benefit of the manager who can look into its results and accordingly explain those to the employee. Sometimes, frequent leaves by employees could also be a sign of employee disengagement. A consolidated and quick reference to the leave record can throw a good light in this matter.


Leave Carry Forward:

Finally, the HR has to handle requests for advance leave from the next accrual year, the reasons for which could be varied. However, not all systems have the feature of automatically carrying forward the balance leaves to see if any from those can be availed. In that case, the HR personnel have to manually do the calculations. Also, there are no provisions for advance day offs mentioned in any systems. To top it, every employee is entitled to a certain number of leaves depending on the designation, and the yearly accrual criteria differ from one organisation to another. All these add up to the HR responsibilities.


To counter these issues, a worthy solution is to make use of a reliable Workforce Management System. It should be able to accept minute details and once those are fed, the HR authorities simply need to put in the employee details such as the name and code to access entire information. This guarantees efficiency and ease of completing tasks. Data gathered from such systems can also be shared with the concerned employee and the managers so that there are no discrepancies amongst individual inputs and a complete transparency is maintained. It can even generate mail alerts for approvals and other attendance notifications. All in all, having such systems for the HR departments can go a long way in ensuring smooth functioning of the backbone of the organisation.

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