Understanding the Cost of Poor Employee Leave Management In Your Business

Understanding the Cost of Poor Employee Leave Management In Your Business

Daniel Hall 23/03/2022
Understanding the Cost of Poor Employee Leave Management In Your Business

Every HR team must prioritize leave management.

Even though the process is usually overlooked, it can cost your company significantly. Do not assume that leave management is always a simple, straightforward process. It is more than recording employees' leave dates and keeping a register.

Leaves influence the ability of departments to meet deadlines and the general functioning of your business. Here are a few ways poor employee leave management can cost your business.


1. Taking Up HRs Time

When you don't have a proper leave management system, your HR department may spend too much time on manual tasks. This can waste a lot of their time and effort. This could be avoided with proper leave planning technologies.

Leave tracking software automates processes. Employees can use online portals to apply for leaves. These online portals send a notification to the appropriate reporting manager for approval. HR doesn't have to be involved in manual tracking processes.

2. Employee Burnout

If employees go on unplanned extended leave, the remaining team members could be left with more work. They may have to take on more overtime hours than normal in some instances. Working double shifts and not having enough time to rest are recipes for burnout.

Overworked employees are unhappy and unproductive. They are disengaged from work and may be unable to meet deadlines. They are likely to quit their jobs. If they leave, their absence strains the remaining employees. This creates a never-ending cycle.

3. The Money Factor

According to Labor laws, employees are entitled to a specific number of leaves per year. If there are any extra leaves, they fall under loss of pay (LOP). Manual leave calculations leave room for human error.

Wrongful leave calculations can end up costing you more than you imagine. If, for example, an employee takes four LOPs and you only record, your company may face long-term financial implications. A functional leave management system can save you the trouble.

4. Unhappy Employees

Your employees are the wind beneath your wings. If they are unhappy, the entire business will suffer. If your company handles leave management manually, you may be miserly about offering leaves. After all, it is a hectic process. Tracking leaves, performing financial calculations, and maintaining a register manually can be hectic.

If employees cannot get leaves when they need them, they may be disgruntled. They are likely to be unreceptive at work.

5. The Business Aspect

Poor leave management can affect the business side of things. Manual tracking slows down communication as only the HR team and managers know employees that have gone on leave. It could take long before the rest of the team is informed.

Lack of communication can harm your team as it causes a resource crunch. Poor distribution of work may influence productivity too.

6. Increased Risk of Non-Compliance

Federal and state laws have definite eligibility requirements for employee leaves. They are specific about the number of times employees must receive for certain leaves and whether those leaves will be paid.

The Family and Medical Leave Act (FMLA) demands for employers with over 50 employees to give eligible employees up to 12 weeks of unpaid personal or family medical leave annually.

You must be able to track time accurately to understand when different employees are out and how long they will be away. 

A good system will also ensure that eligible employees can access leaves. You may fail to comply with state and federal regulations without a clear process. FMLA-related violations can be very costly.

While leave management may not seem like an important aspect of your business, it is. Poor leave management affects several aspects of your business. 

It could cause employee burnout and waste a lot of your time. Adopting a proper leave management system is a great step towards business success.

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Daniel Hall

Business Expert

Daniel Hall is an experienced digital marketer, author and world traveller. He spends a lot of his free time flipping through books and learning about a plethora of topics.

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