Global Payroll Payroll Leave Management

6 ways to improve the Company Leave Management System

Client Advisor Team Leader
March 20, 2024

A good work-life balance has many positive effects, such as less stress, lower risk of burnout, increased productivity, and greater well-being. Time off is beneficial to both parties; employers save on costs, experience little absenteeism and reap a loyal and productive workforce.

Every business is different, operates differently and may have somewhat unique steps in their payroll services to ensure its efficient functioning.

A little bit of planning and some strategic changes in the payroll management system can help in addressing any loopholes. These improvements can be valuable for your business. Here are some ways in which you can improve your existing payroll process.

Research states that an average American gets 11 to 15 days of paid time off every year. Unfortunately, 70 percent of employees do not take all of their leave. Research states that 23% of employee’s experience burnout often while 44% of employees experience it occasionally. Overall two thirds of the workforce had experienced burnout in their jobs.

What is a Leave Management System?

A Leave Management system is a process within an organization that deals with how to request leave, approve it, track balances and provide input for payroll.

Companies must have a leave management system in place, a software that tracks records of every employee’s leaves. It is an automated, online version of monitoring and managing leave to ensure smooth operations even in someone’s absence.

Conventional tools like paper forms, emails, excel sheets have mostly become redundant. Ineffective tools decrease productivity and employee efficiency so it’s sensible to structure leave management processes for best practice. Even a minor error can lead to workforce dissatisfaction, payroll processing errors or legal complications.

Challenges in a Traditional Leave Management System

  • Challenge 1: Employees are unsure about their annual leave balance and changes in leave policy

A traditional leave management system causes more than 100 queries per week, which can eat up a lot of your HR manager’s time. Additionally, employees need to wait for their leave balance to be accepted and updated and it’s more difficult to access leave & attendance details.

Updates in leave policies are not always communicated well, and delays can increase frustration amongst employees.

  • Challenge 2: Frequent payroll issues due to undocumented transactions

Leave without pay (LWP) and paid leave must be properly calculated to reduce payroll errors. Miscalculations can cause excessive financial costs in leave, attendance, and expense-related transactions.

  • Challenge 3: Line managers are not able to manage the leave of their team members and make an informed decision while approving leave

The line managers cannot identify patterns of leave requests by employees who take undue advantage of the leave policy. They cannot retrieve insights about the availability of employees to make informed decisions before approving leave.

6 Ways to improve a Leave Management System

The leave management system automates annual leave management processes, making it simple for both employers and employees. The leave management service reduces the complexity of the process and can save time. Below are 6 ways to create a robust leave management system:

  • Well-Defined Leave Policies

The first step on your way to improving leave management is to create leave policies. This ensures that the employees are aware of their rights while also balancing the interests of the business in mind.

Ideally, the leave management system enables HR to create and manage transparent leave policies. The software offers customization of rules regarding public holidays, half-day calculations, sick leave, maternity leave, paternity leave, etc. A departmental hierarchy allows HR admin to streamline the approval process.

  • All-in-one Dashboard

Employees should be able to check their leave balance and their co-worker’s days off while applying for leave. This requires an all-in-one dashboard that is easily accessible by all employees.

An all-in-one dashboard significantly improves the accessibility and efficiency of a leave management system. Department heads and HR professionals should have access to each employee’s leave history, balance, department schedule, holiday lists, and workforce coverage to evaluate a leave request fairly.

  • Leave Management Software

You can purchase software that records leave, holiday requests, time-off, etc, of each and every employee in the organization. Such software is beneficial as it simplifies the leave application approval process and keeps a history of available or unavailable leave.

A cloud-based leave and attendance management system offers multi-channel, on-the-go access, eliminating the need to install and regularly update software. It makes the system mobile/tablet-friendly and accessible at any point in time. Your employees can apply, reject, approve, or cancel leave requests from anywhere at any given time.

  • Leave Balances

Manually recording the leave balance of each employee is time-consuming, costly, and outdated. Purchasing a leave management system is meaningless if it cannot calculate leave balance. A good leave and attendance management system tracks and records the leave history of employees. All of the previous leave requests can be visible on a single platform. This improves the leave management service and increases transparency in organizations.

  • Effective Communication

To create a robust leave and attendance management system, it is essential to communicate effectively with the employees of the organization. Employees should be well informed about what they are supposed to do before, after, and during leave taken by them. This develops a positive work environment and trust in the organization.

  • Statutory Compliance

It is the responsibility of every organization to manage leave and attendance in accordance with labor laws and legislation. Leave policies should be in alignment with industry and government standards. It is essential to communicate the rights of employees’ so that they are aware of their privileges.

Automating the leave management system helps employees to build time-off policies that comply with local and federal laws. If annual leave allowances are overbooked, automatic alerts are generated, which makes it impossible to go beyond the set threshold. Non-compliance can ruin the reputation of the company, and additional employees can even sue you for unfair leave practices. Hence, it is essential to stay updated and in alignment with labor laws and legislation.

Benefits of a Good Leave Management System

The aim of adopting a leave management system is not just to mitigate errors but to benefit the organization. The benefits of a good leave management system are multi-faceted. Here’s what an ideal leave management software does for you:

  • Bye Bye Paperwork

Traditional leave record-keeping is full of inefficiencies. The painstaking amount of paperwork can come to an end with leave management systems. Spreadsheets can get manually deleted, edited, or modified by human error plus they can be messy when they are used to handle huge amounts of data. In 2020, nearly 0.86% of hard drives used globally had failed. Hence, storing employee leave data in a leave management system is the best way to mitigate human error and minimize the chances of data being lost.

  • Easy Accessibility

Data needs to be maintained in such a way that it is impossible to change it without authorization, and it should be easily accessible to employees. Striking this balance is often challenging. Many times, along with the manager, additional approvers such as HR manager, project manager, supervisor, etc. need to approve leave.

All of these professionals need to have access to leave schedules, histories, the balance of all the employees working under them. The all-in-one dashboard in a leave management system solves all of these problems. The cloud-based system offered by TopSource Worldwide makes employee leave data accessible to all the required parties.

  • Time-Saving, states that the average Human Resource Manager in the United States earns $105,88 annually. Assuming that the manager spends 7 hours per month tracking leave and updating the balance for 50 employees, it will take up 84 working hours annually. This will cost the company a large amount of money and lead to loss of productivity.

As the company grows, more time will be consumed to collate leave requests. A leave and attendance management system is much cheaper and more effective than this. This example makes it clear that there is a significant ROI in automating leave and attendance management systems.

  • Better Communication

With a centralized system and database containing all of the information about planned annual leave, you can check the availability of team members in the desired timeframe. There are fewer chances of confusion with better communication systems in place. The leave and attendance management system enables you to manage the leave of members who deliver their skills across the organization.

  • Real-time Visibility of data

To make an informed decision, you need to have relevant information at hand. Recording and maintaining data in a spreadsheet can waste time and this could delay the decision-making process. Plus, the data could be outdated, which could lead to errors in making decisions.

A sophisticated leave and attendance management system will enable you to maintain and access data instantly. Real-time visibility of data helps you to make quick and informed decisions with the latest data made available by your software.

The leave and attendance management system has made the life of HR managers easier and helped them to increase their productivity. Investment in a leave management system will surely be an advantage and help your company grow. Outdated leave management systems have been replaced by cloud-based sophisticated leave and attendance management systems which have reduced the company’s operational charges, enabled legal compliance, and allowed them to reap the benefits of a healthy workforce.

Now, you have a clear roadmap to build and improvise your leave and attendance management system. If you have defined policies, good communication, legal compliance, and the best software, your company will reap the rewards in the long run.

TopSource Worldwide is a globally operating payroll support and outsourcing company. It has 900+ clients, 150,000 employee transactions per month, and a workforce of 250+ skilled payroll and IT professionals.

The company provides a simple yet effective leave and attendance management system. Various reputed companies rely on TopSource Worldwide to manage their leave and attendance systems. The firm has simplified the workload of HR professionals, which enables them to instead work on their core responsibilities.

Fully configurable leave policies, simple leave application and cancellation process, and email alerts lead to minimal leave related queries from employees. The firm excels at dealing with encashment, carry-forward, and leave lapse for all employees. Leave and attendance management becomes effortless with TopSource Worldwide’s ability to provide a robust system for you. A seamless leave and attendance management system awaits you; book a free consultation call with TopSource Worldwide today!


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Nena Petrovic
Client Advisor Team Leader
Nena Petrovic is the Client Advisor Team Leader at TopSource Worldwide, a leading Global Expansion services provider. She oversees and guides a team of client advisors, who communicate and collaborate with clients effectively. She is responsible for ensuring the accurate and timely processing of client invoices and payroll, as well as developing strategies and maintaining a client-centric approach.

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