Leave management system: Understanding its basics

  • Last Updated : February 26, 2024
  • 5 Min Read
Understanding the basics of leave management system

As working individuals, we may take time off for several reasons. Leave time helps us strike a balance between professional and personal responsibilities, and it can lower our work-related stress. Most organizations are required by law to provide a set amount of leave to their employees. For instance, the Factories Act mandates that organizations in India provide 12 days of earned leave to every employee who has worked for 240 days a year.

Every organization should establish a comprehensive leave policy that elaborates on the different types of leave that employees are entitled to, as well as how employees are expected to use each leave type. It's also essential to streamline the process of managing employee leave requests. This is where an employee leave management system truly shines.

Let's explore what a leave management system is and how it can help HR teams overcome some of the key challenges related to employee leave management.

What is a leave management system?

A leave management system is a comprehensive HRMS tool that enables organizations to track their employee leave requests online. A leave management system can help your organization define employee leave requirements, approve leave requests, and manage holidays in a way that aligns with your organization's leave policies. If your organization has a global presence, you'll be able to add unique leave types and customize leave policies for each location. The leave management system also empowers your employees to check their leave balances, apply for leave, and access their upcoming holiday list with a few clicks.

Understanding the different functionalities of leave management system

An HR leave management software centralizes all data pertaining to employee leave in a single online location, and it analyzes this data to provide useful reports. This also helps support accurate payroll calculation. As every step in the leave-tracking process is securely stored in leave management system, you'll face no troubles while ensuring compliance with labor laws. Plus, most leave management solution come with a mobile application to help organizations manage leave approvals right from their smartphones or tablets.  

What leave-related challenges are HR teams facing and how can a leave management system help?

  • Tracking leave applications

When leave is managed manually, employees end up submitting their leave requests on paper or through emails. When the incoming requests start to build, it becomes overwhelming for the approvers, and they may even miss a few. This negatively impacts the employee experience. Manual leave management could also mean that leave records are not always documented properly, which leads to a higher chance of your organization facing compliance issues.

With leave management software, employees can apply for leave in just a few steps by selecting their leave type, duration, and reason for their leave; then, this information will go directly to their reporting managers for approval. Upon approval, employees can be notified instantly. All leave requests are documented in the system, and daily leave status reports give managers and HR teams a quick overview of who's present and who's absent.  

  • Difficulties in enforcing leave policies

When there's no system to manage employee leave, employees are less aware of the amount of sick, casual, and earned leave they are entitled to. This will cause several issues, ranging from increased absenteeism and lack of transparency to lowered productivity and poor well-being.

An employee leave management system allows HR teams to configure their leave policies so that there's consistency in organization-wide leave practices. For instance, teams can create different leave types like sick, casual, earned, and define how many of these leave types each employee is entitled to. Based on their leave policies, they can have employees accrue leave days, carry excess leave forward to the next year, and even cash in pending leave at the end of the year. Employees can check their leave balances and holidays right from the leave management solution.

  • Inaccuracies in payroll calculation

Employee leave data is necessary for payroll calculation when it comes to paid and unpaid leave. Sometimes, employees may take more leave than their regular entitlement, leading to a loss of pay. Or, sometimes, they may be eligible to cash in their leave. When such aspects of leave are not tracked and documented properly, it results in payroll calculation errors. This negatively affects employee morale and their trust in your organization.

Since a leave management system documents all leave data, it can generate intuitive reports that provide information about loss of pay, total working days in a month, payable days, and cashed-in leave days for each employee. This can make payroll calculation a breeze.

What are the key features to look for in a leave management system?

Here's what you'll need to effortlessly manage leave requests at your organization:

  • Centralized leave tracking

A centralized leave tracker lets employees apply for leave and view approvals at any time. It also documents leave information in a single space that can be accessed from anywhere with suitable permissions. Plus, a synced calendar view helps your HR team visualize and manage overlapping time-off requests.

  • Customizable leave policies

A leave management system should help your organization customize its leave policy. This includes the number of sick and casual leave days offered to employees, whether these days are credited all at once or periodically, and the permissions employees have when applying for leave if they exceed their leave balance. The system should also offer a way to customize leave policies for specific employees, as this is useful for those who have unique situations. In addition to this, there should be an option to customize policies for different locations if your organization has a global presence.

  • Employee self-service portal

Leave management system should give your employees better visibility and control over their leave days. They should be able to view all their leave information and easily apply for leave. It should also be easy for them to track the status of their leave requests, cancel existing requests, keep their team members informed about their time away, apply for compensatory off, view the upcoming holiday list, and see which of their colleagues are away.

  • Automated reminders and notifications

An employee leave management system should keep your HR team and your employees on the same page. It should offer automated notifications whenever an employee submits a leave request, as well as automated reminders to the approving manager until they approve or reject the request. Similarly, employees should be notified with automated emails whenever their leave request is approved or canceled.

  • Integration with HR and payroll systems

The leave management system that you select should integrate seamlessly with your existing HR and payroll systems. For instance, if an employee doesn't mark their attendance in your HR system, the leave management solution should be able to automatically convert that missed day into leave time. Similarly, it should work closely with the payroll system for a seamless flow of leave and loss-of-pay data. Both of these integrations can simplify compliance efforts for the organization.

Wrapping up

A leave management system can turn the tedious task of managing employee leave into a simple, easy, and effective process. We hope this blog post gave you an insight into the different challenges associated with leave management and the basics of a leave management solution!

Zoho People, our HRMS, comes with an intuitive an employee leave management system that can automate a variety of leave-related tasks, including collecting leave requests from employees, managing approvals, letting employees check their leave balances, sharing holiday calendars, and a lot more! Learn more about Zoho People's leave management software


1. Factories Act 

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  • tarika

    Content Specialist at Zoho People

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