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The modern guide to building your business's leave policies

The modern guide to building your business's leave policies
How to timer icon2022-12-22

The modern guide to building your business's leave policies

PeopleForce team

Creating a great employee experience is an ongoing process, from hiring the right people to helping them grow in their roles so they stay with your company for the long term. You can do many little things to build employee loyalty. For example, something as simple as revising your leave policy could have a major effect on company morale and decrease turnover. A strong leave policy conveys to your staff that they are individuals who are valued, not just cogs in a machine.

With so many modern workplaces offering different leave policies, it's not always easy to know what’s right for your business. You need a plan that reflects who you are as an organization while being flexible enough to adapt if circumstances change. To help you find this balance, here’s our guide on how to build an effective leave strategy for your business.

What is a leave policy?

A leave policy is a set of rules that determines how an employer handles leaves of absence and time off. There are many reasons employees may need time off from work, including sick and medical leave, parental leave, vacation, and more.

A leave policy is especially important when employees work in a remote environment with limited physical access to the office. Without a clear leave policy, remote employees may find it difficult or impossible to take legitimate time off, which can have a negative impact on engagement.

Why is a leave policy important for employee’s engagement?

A leave policy that employees can depend on creates a sense of empowerment and engagement and helps offset the risk of absenteeism. Transparency and clarity around days off and the various options and reasons for leave means employees know exactly what is expected of them and what their entitlements are. Employees tend to feel valued and are more engaged when they feel that their needs are being met and that their employer trusts them to know how to use company benefits appropriately.

Today’s workforce is a mobile one. With the explosion of mobile technology and connected devices, people can work from anywhere at any time. In fact, a recent survey from Gallup found that 56% or 70 million full-time employees in the US believe they’re capable of working remotely.


However, this doesn’t mean that remote workers don’t require some time off from work. Leave policies should be the same for remote and on-site workers.

Ensure the company’s leave policy is provided and accessible to all staff.

4 Important components of an effective business leave policy

Make sure your policy covers the “who, what, when, why, and how long” of employee leave.

1. Timing of the leave

Timing is an important factor in creating a leave policy. Business leaders must ensure there are enough people on hand to keep things flowing smoothly. Unfortunately, some businesses need people to work on holidays. Who will get the time off and how that decision is made should be covered in your policy to ensure fairness. Have clear expectations around how much notice is required when time off is requested.

2. Reason for the leave

The reason an employee is taking leave can have a big impact on how a leave policy is implemented, as well as how it is managed. For example, if an employee is taking a leave of absence due to illness, you may want to require a doctor’s note outlining the disease and expected recovery time.

3. Duration of the leave

You’ll want to include a specified end date for each type of leave in your leave policy, as well as how long they can take a vacation.

For example, if you offer employees 10 days of vacation leave each year, you may want to specify whether they can take the leave all at once or in smaller chunks throughout the year.

4. Recurrence of the leave

When an employee takes a leave of absence, it’s important to determine whether or not the break will become a recurring situation. If it is likely that an employee will need to take time off again in the future due to the same condition, you may want to require them to find a new solution.

Tips for modernizing your leave policies

Here are some tried and tested tips to help you modernize your employee leave policies:

Leverage PTO banks

There are a few different mechanisms for employers to offer days off to employees. Traditional vacation time is generally expected to occur in one or two longer periods. PTO, or paid time off, is an agreement that allows employees a certain number of days off per year— whether for illness, appointments, or other personal reasons that need not be disclosed. PTO is a simpler way to handle days away from the office because it combines most leave types under one category and offers increased autonomy to the employee.

A recent survey showed that 62% of employees report high stress and 41% mention workload as the main stressor.


Workplace stress can impair employee performance, which is costly for employers. PTO allows people to take a break without worrying about their finances. If employees choose to take a breather or if they need to attend an appointment without a hassle, they can do so and return to work feeling energized and respected.

Use leave management software

Manual leave documentation systems are time-consuming, expensive, and prone to errors. A software solution to implement your leave policy allows HR staff to track, plan, and share employee time off easily and transparently..

Your leave management system should have an all-in-one dashboard accessible to everyone. This way, managers can also have an overview of the team’s schedule, allowing for better scheduling of absences so projects can be completed on time.

Choose a cross-device functional leave system

When choosing a leave system, make sure it allows cross-device functionality and on-the-go access. A cloud-based leave and attendance management system is particularly critical for companies with remote employees, who need to access the system anytime and anywhere they may be. Consider whether it's convenient to request a vacation in a few clicks from your smartphone, as well as whether it's convenient to track the request later.

Ensure Compliance

One of the most important aspects of your leave management is compliance. It’s the employer’s responsibility to ensure labor legislation and laws are followed and that any data collected and stored is secure.

Build a modern leave policy

A demanding and competitive working culture has made business leave an essential program for most companies. As such, it is important to invest time in the development of a business leave policy that is effective and drives employee engagement.

Keeping employees happy and productive is challenging, especially given the many demands on their time. Employers must keep in mind that their staff have personal obligations such as childcare or eldercare that must be accommodated. They might need to take time off for an illness, life events, or other urgent matters.

An effective leave policy is a key to successful employee engagement. To create one, employers must consider the timing of the leave, the type and reason for the leave, when the leave ends, and the likelihood of the leave recurring. Alternatively, PTO is a simpler and easier approach. Either way, make sure your leave policy is convenient and accessible to all.

Author bio

Dean Mathews is the founder and CEO of OnTheClock, an employee time tracking app that helps over 15,000 companies all around the world track time.

Dean has over 20 years of experience designing and developing business apps. He views software development as a form of art. If the artist creates a masterpiece, many people’s lives are touched and changed for the better.

When he is not perfecting time tracking, Dean enjoys expanding his faith, spending time with family and friends, and finding ways to make the world just a little better.

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