When it comes to managing and recording employee leave, there are many reasons why you should diligently manage, track, and pay leave.
Proper leave management will allow your business to operate more effectively, help you meet your employees’ need for time-off, and ensure you satisfy your legal obligations.
If organisations mismanage their annual leave, the errors can be costly. Here are five reasons why recording your annual leave efficiently is crucial to managing your business successfully.
Here Are 5 Reasons Why Recording Annual Leave Is Important
1. It Is The Law
First and foremost, keeping track of leave and paying correctly keeps you on the right side of the law.
Under the Organisation of Working Time Act, 1997, all Irish employers must keep accurate records of the daily hours every employee works, and the pay for those hours, as well as the leave accrued, entitled leave, and leave taken.
The law exists to ensure that all employees get the paid leave they are legally entitled to, as follows:
- Four working weeks for any leave year in which an employee works at least 1,365 hours; or
- One-third of a working week for each month in the leave year in which the employee works at least 117 hours; or
- Eight per cent of the hours that the employee works in a year are subject to a maximum of four working weeks.
Keeping accurate track of leave and holidays will eliminate or minimise errors in leave entitlement and payment calculations. Your employees will get the right amount of leave and pay, and your business will avoid having to pay backdated leave, or worse, a costly tribunal or fine for not following the law.
2. Reduced Costs
Effective leave tracking and management can lead to a reduction in costs. Paid time off has a significant financial impact on a company’s bottom line.
Temporary workers and contractors can cost much more than your regular staff. Or, if your existing employees provide cover, you may have to pay overtime.
There are other indirect costs and effects, including a potential drop in the quality of goods or services – due to understaffing, fatigue, or less-skilled replacement workers – which could lead to a drop in customer satisfaction.
There may also be increased administration costs and management time (finding suitable replacements, bringing them up to speed, maintaining team morale etc.), and potential safety issues with replacement or overworked staff.
Another financial implication of failing to manage leave properly is allowing employees to accrue weeks or years of leave, which is a liability to the company if the employee resigns and has to be paid out in a lump sum.
3. Sufficient Leave And Holiday Planning
Properly planning your employees’ leave means you can plan absences and ensure you have adequate cover, rather than being short-staffed or under pressure.
While there is not much you can do if multiple employees fall sick at the same time, planning annual leave and holiday cover will help reduce work disruptions, ensuring there is no drop in productivity and that the business can continue to meet its obligations and deadlines.
Using an efficient leave management service or software will make keeping track of leave easier and more accurate. Management will spend less time monitoring and responding to leave requests. The system will maintain accurate company-wide records, so you can easily check leave totals and demonstrate legal compliance.
4. Employee confidence and wellbeing
If your team members know they are getting their proper leave entitlements, they will have more confidence and trust in the business. This means happier, more engaged employees who are motivated to be productive and help the business succeed.
Your employees also want to know that the business is organised. If leave is poorly managed and several team members take leave simultaneously, the remaining people may have to do extra work to cover. This could lead to resentment if it happens regularly, and the damage will be even greater if it turns out you haven’t been calculating your employee’s leave or holiday pay correctly.
Modern leave management systems allow employees to see their leave balances and request leave electronically. This provides transparency, and the automation also reduces admin for the business.
5. Reduced Absenteeism
Taking leave is essential. It promotes good physical and mental health in the workplace and improves people’s work-life balance, which reduces stress and unscheduled days off.
Absenteeism can have a significant impact on any business. If you do not have the tools to track leave – especially sick leave accurately – you may not know how many days a year your employees are taking and how much that is affecting your business.
Proper leave management systems can give you a much better understanding of leave patterns across the business, and if there are issues, you have the chance to work on solutions with your employees.
HR Team has an exciting new HR leave management software launching soon. Register your email here for more information on how our new software can help you manage leave accurately and efficiently.