The 10 Challenges of Managing Annual Leave for Employees 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 beg to shift from spreadsheets to the cloud when it comes to annual leave management, then you have to listen.

Let's go through all the 10 challenges one by one:

1. Annual allowances

Probably one of the most challenging ones. Each employee has several contractual vacation/PTO days yearly. However, some employees get +1 or +2 days since they have 5 years already been in the company or negotiated their contracts when they joined. 

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, it can have 20 days or even more. 

2. Multiple types of leaves

In some countries, there is PTO, Vacation, Paid Time or Personal Time, 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.

3. Annual leave calculations

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

Marta takes 14 calendar days of Vacation from 18 to 31 August included. In that period, there is a public holiday on 27 August, and 2 weekends (21–22 and 28–29 august). How many Vacation days Marta request? 



The answer is 9 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.

4. New hires and employees departing

A. New hires (Annual leave entitlement calculation)

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.


Please note: Within LeaveBoard, the fiscal start year can be configured as you wish. 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

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.

Let's say Frank Rosevelt leaves the company on 30 September 2021. With the new report, we know that he has earned 11 days till this date, however, he has used 3 Vacation days. This means we need to pay him the difference 11–3= 8 days in the last paycheck. ⤵

5. Annual planning

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 12 days out of 15, and he still has available 3 till the end of the year.

6. Yearly carry-forward

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. 

Read more about the Carry forward functionality.

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.

7. Multiple geographies

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
  • tracking other working days (Ie: the Middle East vs. the United States)
  • 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.


8. Multiple public holidays

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. 


9. Enforcing allowance use

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.

Start to leverage such policy 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.

10. Updating calendars

Once you know that someone is off, as an office assistant or HR manager, you need to ensure that everyone is 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. 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.

Let's recap the 10 challenges of dealing with annual leave:

  • Annual allowances
  • Multiple types of time off
  • Annual leave calculation
  • New hires and Employees departing
  • Annual planning
  • Yearly carry forward
  • Multiple countries
  • Different public holidays
  • Enforcing allowance
  • Updating calendars

Conclusion

If you face these difficulties, you know there is a better way to deal with these challenges. When your existing solution cannot address such 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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