Leave Management Process in India- The Complete Guide

Leave Management Process in India - The Complete Guide

As a HR professional, one of your core responsibilities is the leave management process. Your role is to manage and motivate employees to give their best productivity levels to the company. Giving employees leaves is one factor that helps them recharge their batteries. 

You are wondering where you will start. Well, you have come to the right place to guide you about the leave management process. We will try to give you a glimpse of the activities that an HR must perform for hassle-free leave function.

Type of Leaves

Your first task is to classify all the types of leaves the employees are entitled to. Thus, you will have a clear view of the steps to take ahead. These leaves are state-ordained, which means they have statutory compliance behind them. Therefore, you must keep a tab on them to avoid penalties. 

#1. Earned Leave (EL) or Privileged Leave (PL)

An earned leave or privileged leave is basically the same thing. Your employees are rewarded a certain amount of leaves for a defined period of continuous labour. Are you confused? Let us give you a brief explanation.

The Factories Act applies to earned leaves. Your employees are entitled to one leave after 20 consecutive business days of work.

On the other side, for four months of attendance, five privileged leaves are allowed under the Shops and Establishment Act.

Employees can also cash in their ELs or PLs. However, it is subject to your company’s policies. Unused PLs can also be carried over to the next year.

#2. Casual Leave (CL)

In an emergency, an employee may choose to take casual leaves. It can involve parent-teacher conferences, family medical emergencies, or anything else. CL can last anywhere between a half-day to almost seven days. Unlike a PL, a CL cannot be cashed and has a one-year expiration date.

#3. Sick Leave (SL)

An employee can take a sick leave if they have medical problems. They get twelve paid sick leaves per year. You have to ask for a medical certificate if the leaves extend for more than two days. Similar to casual leaves, sick leaves also expire in the current year and are not carried forward. 

#4. Leave Without Pay (LWP)

If the employee has used all their leaves but still needs more, they are given leave without pay or LWP. These are unpaid leaves that heavily depend on a company’s policies and management’s approval.

#5. Compensatory Off or Comp Off

Some employees are required to work during holidays, for example, people in sales and security systems. These employees are entitled to additional leave on working days to compensate for their efforts. 

These leaves are known as comp offs or paid leaves. You must account for these comp-offs for the respective employees.

#6. Maternity Leave 

As the name suggests, maternity leaves are awarded to pregnant women and new mothers. It comes under the Maternity Benefit Act.

Women employees in India are entitled to 24 weeks (6 months) of paid leave for pregnancy if they worked for at least 80 days in the 12 months before the delivery date. However, after the first two children are born, the eligibility period is reduced to 12 weeks.

#7. Paternity Leave

Paternity leaves are endowed to new fathers. It depends on the company’s policies and can range from two days to fifteen days. 

Government employees can take a maximum fifteen-day leave, but the rules in the private sector are not defined.

#8. Bereavement Leave

Bereavement leaves are granted when there is a death in the employee’s family. The employee can perform last rites, grieve and attend legal obligations during this period. Although there is no fixed law to specify bereavement leave, many companies allow employees a week off.

#9. Marriage Leave

Employees may be allowed between one and fifteen days of leave, with most employers providing three days. Furthermore, this leave can only be used once (first marriage at most companies) during an employee’s whole job time.

Routine HR duties in Leave Management Process

Now that you have the different types of leaves, let’s move ahead to the admin work for managing these leaves. These tasks must be done following your company’s leave policies. 

Make a Holiday List

Your first task is to separate mandatory holidays from leaves. This is possible by making a holiday list of the year. Here is how you should proceed:

  1. List out the holidays that are related to festivals and state events.
  2. Check for the inclusion of holidays listed under the Industrial Establishment (N&FH) Act. 
  3. The next step is to count the holidays from weekends.
  4. If any festival comes on a weekend, you must take note of it. 
  5. Inform the employees through a notice board or personal mail. 

Create Leave Lists for Employees

After setting the holiday list, it is time to create leave lists. Leave lists can differ for employees based on their position and job role. Besides, if you are working in a large -sized company, you need to designate bulk leaves. Here is how you can go about making leave lists:

  1. Assign similar leave types to employees in the same job roles.
  2. Construct prorated leave policies using days, months, and other round-offs.
  3. Communicate the frequency of leave approvals, for example, weekly, monthly, and yearly.
  4. Confer comp offs to eligible employees. 
  5. Set out policies regarding half-days and overtime.

Set a Leave Approval System

The most significant task is the application, approval and rejection of leaves. You can either take assistance from a cloud-based service or use Excel Timesheets. In our opinion, cloud-based systems are better. For a smooth process heed the following steps:

  1. Designate leave approvals to the concerned manager or senior HR.
  2. Check for eligibility.
  3. Take note of when and who takes the leaves.
  4. Store the necessary documents in place. These documents may be medical certificates, leave applications, and maternity leave forms.

Assemble Leave and Attendance Reports

Reporting and analysis are critical parts of HR duties. Reports aid in performance management, turnover analysis, configuring leave years, etc. Here is what your attendance reports tell you:

  1. Statutory compliance is observed.
  2. Employee well-being is maintained.
  3. Productivity levels are judged.
  4. Accuracy for payroll processing.
  5. Company policies are up to the mark.
  6. Plans and execution for the next year. 

We wish you all the best as an HR to undertake the leave management process. Efficient leave management increases employee satisfaction. Consequently, you reach the ultimate goal of your HR role.

Paysquare’s Leave Management System

Paysquare has a formal, cloud-based leave management system which is integrated with payroll engine. Our automated system records and lists all eligible leaves for your employees. Leave approvals are also easier, giving you enough time to focus on other core HR responsibilities. The entire leave accounting would also be part of paysquare’s deliverables. Consult Paysquare to get assistance in managing integrated leave and payroll systems.