Top 10 Challenges of Annual Leave Management and How to Overcome Them

Annual leave creates a lot of frustration in many companies. Many times is a chore that HR managers what to avoid dealing with it. It's a task that operations lead to discover the best solution. And it's something that accountants rely on when paying the salaries of the employees. When your people seek approval to shift from spreadsheets to the cloud when it comes to annual leave management, then you have to listen.

Annual leave management represents the administration of the paid time off from work granted by employers for employees within a working year through various processes, procedures, and tools.

Let's go through all the 10 challenges one by one and discover how an annual leave manager can help you take better decisions and simplify, automate and facilitate the entire process:



1.

Annual allowances records

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The administration of annual leave records is probably among of the most challenging ones. It takes a lot of time, attention, it's very repetitive and error prone.

Each employee has several contractual vacation/PTO days yearly. However, some employees get +1 or more PTO days after five years in the company or negotiate their contracts when they join.

Another challenge with allowances is that it is not only for one type of time off but also for others. Some people have maternal/paternal leave. In multinational firms, one employee gets 10 days in the US. However, in Europe, employees are entitled to 20 days or even more.

Employee Annual Leave Allowance



2.

Track multiple types of leaves

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In some countries, there is PTO, Vacation, Paid Time or Personal Time, Holiday, and Sick, Unpaid, Training, Work From Home and Work from the office, and Mission. Tracking so many types of requests could be confusing since some of them have to be considered for payroll other for the correct working of your business.

LeaveBoard allows practically to track any annual type of time off with ease.

Overall annual leave policy settings



3.

Annual leave calculations

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Calculating the number of days without making any errors is challenging. Let's look at a specific example: 

Marta takes 10 calendar days of Vacation from 18 to 28 February included. In that period, there is a public holiday on 22 February (in light blue), and 2 weekends (19–20 and 26–27 February). How many Vacation days Marta request? 


Selecting the interval in the time-off form. You see exactly the weekends, the other days booked, and public holidays.


The answer is 6 days. However, this is just one example. Think about calculating manually about 200 such requests. It's not fun, it doesn't provide value to the company or to the employee in the sense of making it better, however, it's a churn that can be automated so that it's instant, it's accurate, it's tracked easily, and contributes to the overall employee experience within the business.

IMPORTANT

The online time-off request form of the annual leave manager has multiple automations:

  • Automatic entitlement calculator
  • Leave of absence period calculation
  • Instant system validation
  • Overlap notifications
  • Enforce company leave policy rules
  • Sends automatically an email notification to the manager for approval.

Tip: With the online book time-off form you can also book annual leave requests on behalf for your colleagues.

Book time-off form. Automatic calculations of the entitlement and the number of days booked, plus highlighting the peers who will be out in the same time.



4.

Managing annual leave for new hires and employees departing

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A. New hires

Prorate time off for new hires

Since the allowance is calculated for a full year, let's see what happens if we have a new hire, Francisco, joining on 1 July. When Franco joins the business, we need to calculate the allowance again for him. This value is not the yearly amount (like he would start 1 January, but less). If the allocation is 10 days yearly, then we shall allocate to Francisco only 5 days. Things are getting more complicated when we need to calculate the entitlement for someone joining, let's say on 12 September. 

LeaveBoard has another automation that comes as a helping hand. Within the leave policy settings, you can "adjust allowance on employment date" - or prorate the number of vacation days an employee is allowed based on the employment date for that year. And in the next year, they will get the default number of days per year.

Annual leave policy settings. By enabling the "Adjust leave allowance on employement date" the system will automatically prorate the entitlement for the ongoing year for the new hire.


Please note: Within LeaveBoard, the fiscal start year can be configured as of the company policy. In some countries is the 1st of April, however, in most is the 1st of January. This means that the annual reset of the allowances for all employees will take place on that date, and not on the date of employment for each employee. If you find this difficult to understand, please reach out to one of our experts, to see the benefits.

B. Employees departing

Accrued PTO calculation till departure date

As an HR Manager, you know that you need to hire people but also to them go. And when people resign, administrative aspects need to be accurately handled. More specifically, how do you calculate the number of Vacation days earned from the beginning of the year until the last day of the contract for that employee? Well, it's quite a challenge that we believe you don't want to deal with any longer. 

With LeaveBoard, with the new allowance leave days earned functionality, you can check how many days an employee has earned up to a specific day. If you divide this amount with the days of vacation used up to that date, then you have the number of days that your organization owes him and shall pay within the last paycheck.

Vacation policy settings. By enabling the "Show earned allowanance" the column Earned will be available in the annual leave report.

Let's say George Wayne leaves the company on June 30, 2022. With the new report, we know that he has earned 6 days till this date, however, he has used 3 Vacation days. This means we need to pay him the difference 6–3= 3 days in the last paycheck. ⤵

The earned vacation days (the accrued entitlement for the employee) - up to a specific date.



5.

Annual planning

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Annual planning is one of the most common situations that HR managers need to address. Every year employees need to schedule their vacation days so that within the business, department, or team - depending on the size of the company, there is continuity. The activity usually is done in one XLS sheet that is sent from one member to another. However, it takes a lot of time, and many times the days added to the planner, are in reality, others, and there is also a duplication of activities because:

  • on one side, the employees first plan and get approval for what they planned or are asked for being flexible and reschedule, and 
  • on the other side, once the planning is finalized, they have to request PTO to select vacation days officially. 

It wouldn't be more effective to book from the beginning the days that you need, and do it in such a way that your request doesn't overlap with the other colleagues from the team, and have at any time, the latest version of your shared PTO calendar available online? And even more, if, as an HR manager, you want to monitor if all your employees submitted their requests, then you can check this directly from the annual PTO/Vacation report.

Another question that we often get is how do you monitor that your people have booked all the days until the end of the year? Well, again, the annual leave report is here to help. If you look in the above graphic, you see how many days of vacation the employees still have available, and that Neil has used 5 days out of 15, and he still has available 10 days till the end of the year.

BEST PRACTICE
Another tool to help employees to plan their annual vacations, is the vacation calendar in which each coworker will see who is off and when, and they will be able to make informed decisions regarding their requests, in order to keep continuity within their team. More on this at point 10.

Team vacation calendar

Annual leave report shows who didn't book any day off this year.



6.

Yearly carry-forward

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How do you do the transfer from one year to another? With LeaveBoard, it's just one click, and you will be able to transfer the remaining Vacation days from this year to the next. And you can select the maximum number of days carried. 

Handling this procedure manually is not very difficult. However, it can lead to many errors if not handled correctly. Plus, when you don't have traceability, it's difficult to know how many days you have carryed, how many from your yearly allowance, and if you have received 1 extra day because of overhears, it's hard to know where they come from. With LeaveBoard, things are more straightforward.

Read more about the Carry forward functionality.

For each employee you can customize the annual leave, and see the yearly entitlement and annual modifications and carried forward leave allowance.



7.

Multiple geographies

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When your business has subsidiaries or branches or only employees in different countries, your HR department has a more complex job, as this requires the following checks:

  • the time-off policies in that country
  • public holidays in that location
  • the coworkers associated to the office
  • tracking different working days (Ie: the Middle East working days Sat-Thu, vs. the United States where the working days are Mon-Fri)
  • marking the different numbers of vacation days (Ie 10 in the US vs. ±20 in Europe).

Being able to streamline all these processes with spreadsheets is practically impossible, as the requirements become complex.

LeaveBoard allows customizing the yearly allowance for each employee. A powerful core HR system handles multiple automation so that everything is centralized. The system becomes a facilitator practically for each employee to make better decisions and be more effective regardless of the needs.

Employee directory: Setup your teams, approvers, locations, employee details, check HR analytics and more. No org structure is too complex.




8.

Multiple public holidays

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Each country has a different set of public holidays. These public/bank days mainly change from year to year, and practically employees don't work during those days. Some countries have few such days; others have more. How can you keep track so that you're aware when the following public holidays will occur and that when an employee books some time-off, those days are not considered the same way as if he would book during the weekend? Well, LeaveBoard has a database with public holidays from more than 50 countries and growing, which helps precisely this-ensuring transparency, accuracy, and particularisation according to the needs of each company. 

Import public holidays to your office.




9.

Enforcing allowance use

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If an employee wants to book 5 days, however, he has only 3 days left? 

Does he need to check with you as an HR manager if he can do it? In this case, you need to check in your file his existing allowance, and if your policy is looser, you might be able to book the 5 days and go negative 2, meaning that next year you will get 2 days left. 

To calculate this, check the files and discussing with the managers takes precious time. You might even consider questions like what happens if that employee doesn't work any longer with you next year? Such situations might cause some trouble with payroll and compliance.

With LeaveBoard with one rule automation, you can enforce allowance validation, so if an employee tries to book more days than it's allowed, it will not be able to do so.

Tip: Start to leverage such policy, rules, and processes automation so that you and your workforce have a better experience, make fewer errors, and leverage the benefits of digital HR transformation.

Powerful tools not only facilitate employee and annual leave management but also boost productivity and effectiveness.

Book time-off form. Policy validation by the system so that the request doesn't get register if the employee wants to book more thays than the allowance.



10.

Updating calendars

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Once you know that someone is off, as an office assistant or HR manager, you need to ensure that everyone (especially team leads) are aware of this request. There are companies where they add their vacations into a shared calendar. However, this is laborious since it requires multiple steps, and there are times when the employee needs to do it once in their calendar, and then the shared one.

LeaveBoard updates everything instantly. Having access to team time off calendar for cross-reference that is updated with each request is a huge win.

Once the employee has added the request, it is visible within the Company / Team / Office / Department / Subsidiary Vacation Calendar. And for of you who want more: you have an annual vacation calendar view for you as an employee, where you can see all your personal requests (PTO, Sick, Casual, Training, WFH). You have this one also. Additionally, as Manager if you will know instantly which requests are approved and which ones are pending. Lastly, you can synchronize the absences from LeaveBoard to your Google/Office365 calendar automatically.

Shared attendance calendar, and annual leave calendar



+1 CHALLENGE FOR HR MANAGERS SOLVED

11.

Download monthly leave reports in Excel for payroll

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Need to know how many days your employees booked last month?

With spreadsheets, you need to record them manually, and this might lead to errors. Since accountants will add these details will be added to the payroll system, they must be accurate. Moreover, the system allows you to download them at any moment you need so that you can share the report with your CFO or CEO.

And there are more advantages of the system that will help you with monthly reporting:

  • It is possible to filter by leave type (PTO, Sick, WFH, etc.), team, month, location, or approver.
  • Know the status of each request (pending, approved), and if you have admin access, you can approve on behalf of the pending ones.
  • The reports update instantly when the employee books them, so you will never miss a PTO day before closing the monthly situation.

Monthly leave report: Know who, when, why and how many days of PTO or Sick leave each employee took monthly


SUMMARY


Let's recap the 10 challenges of annual leave management:

  • Annual allowances records
  • Track multiple types of time off
  • Annual leave calculation
  • Pro-rata for new hires and accrual report
  • Annual planning
  • Yearly carry forward
  • Multiple countries
  • Public holidays for every location
  • Automated rules and policies such as enforcing allowance
  • Calendars updated instantly.

These are just some of the elements that are at the top of our customers need. Among others we would like to mention:

  • Streamlined email notifications to managers and employees
  • Multiple access, permissions and privacy levels
  • No headaches approving and tracking leave requests
  • Use it from your laptop or from your smartphone
  • Easy setup, and free implementation support
  • Centralized employee directory
  • Make leave of absence visible
  • Error-free leave balances.

Benefit from speed, automation, simplicity, wellbeing, and business continuity by using a annual leave management software.

Conclusion

If you face these difficulties, you know there is a better way to address the how to manage annual leave question. When your existing solution cannot address such as automation, granularity of personalization, you need to review your tools. And you are looking for a new annual leave management solution. You know we have one that addresses your needs, and you can try it for free. And if you still have questions for us before trying it, you can schedule a call with our HR experts for more info.

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