Another year is rolling off the calendar in a couple of weeks! Expectantly, this would set off some alarm bells in the minds of all HR and Payroll Managers to take care of one of the first of a plethora of year-end tasks to be performed – which is Leave management. Usually, as a practice, most companies in India grant annual leave credits to their employees as per the calendar year – i.e., January to December.
Now would be a ripe time to draw the attention of employees towards reviewing their respective leave records to provide them an opportunity to either avail any unavailed leaves or to carry them forward to the next year. In some organizations, unavailed leave balance would lapse at the end of the year. Leave quota/rules depend on the Company policies and would not be similar in many organizations. Generally, employment contracts/appointment letters specify a certain number of days of leaves that an employee is eligible annually/monthly, etc.
What is the leave year-end process?
It is an annual exercise conducted by most companies at the end of the leave year. It ensures that all leave related details such as lapses, encashments and carry forward balances are in order. The primary output of the process when done correctly, is the accurate opening balance of leaves for all employees.
Step 1: Review attendance records
The task begins with the employees reviewing their attendance records for the whole year to ensure there are no gaps in marking their presence in office/coming in to work on working days and secondly, that they update their leaves availed as per the appropriate eligible categories (privilege or annual leave, casual leave, sick leave, public holidays, etc.). Once done, their Manager has to review and take appropriate action for the process to adjust and update leave balances.
Before you proceed with granting fresh leaves, make sure:
- There is no leave request pending for approval.
- You have made changes to the current leave policy with respect to the number of days that will be lapsed, encashed, or carried forward.
Step 2: Update leave balances
Once the updated unavailed leave balances (if any) are available to the employees, they can then decide to avail any further leaves before the end of the year or to simply carry them forward to the next year. Some organizations prefer their employees to avail of all their leaves before the year ends while some allow unavailed leaves to be carried forward to the next year (either all or up to some limited number of days, depending on their Company policy). Some organizations even allow employees to encash unavailed leaves through their payroll (again, either all unavailed leaves or a limited number of days only) while some would just lapse them at the end of the year. There are some remote cases where employees ignore to update their attendance/leave records in spite of reminders and end up with loss of pay (LOP). This situation can also happen if the employee has availed leaves in excess of his/her quota.
Depending on the action taken by employees, the Payroll Manager proceeds to download the data from the system as a part of the payroll input for any LOP for that month. With this, the exercise of the current year’s leave quota management is complete.
Step 3: Allot new leaves
The next step for the Payroll Manager is to ensure the employees receive their fresh quota of leaves for the next calendar year. This will happen either on the first day of January or immediately thereafter.
Needless to say, in the eyes of an organization, leaves are equivalent to money - though, in current times, vacation is seen as an investment in an employee’s wellbeing and health. Either way, it is imperative to maintain a very effective leave management system. In most organizations, it is difficult and cumbersome to maintain this data, update all transactions that are continuously happening and keep the employees updated, manually.
Automated Leave Year-End Process On greytHR
Modern HR & payroll software (like greytHR) today have the capability to automate this entire process from an end to end perspective and assist Payroll Managers to complete their Leave year-end task each year effortlessly. Additionally, the employees themselves and their respective managers will be able to track the leave balance at any point in time in the system. This would help in managing resources optimally for managers, as updated and real-time data is available on demand and anywhere. An important aspect would also be a significant improvement in employee satisfaction as all Leave policies are applied uniformly and transparently to all employees.
December end is fast approaching, and this particular task wins the mad race. It’s high time you start consolidating your employees’ different leave types availed, clear pending leaves and more.
Good luck with your leave year-end activities.