How to Design a Leave Policy?

How to Design a Leave Policy?

Share and Get Free HR Docs

Leave from work garners renewed interest in work, enhances productivity, and engages better focus. While leave is compensated or paid, companies need to design policies that are employee-supportive. In the more substantial interest of the company, the leave component should highlight as we are dealing with people and people drive businesses and goals. Start-ups can begin fresh, but established companies with proper leave policy in place should renew their policies from time-to-time.


With globalization, companies have become very flexible in working options; work from home, sabbaticals, paternity leave, and roll-ons. In such a scenario, if your company leave policy is out-dated, you need to revamp to retain your employees.


A structured leave policy has a lot of weight to carry. We are not talking about just systems here, but people and their sentiments. Employees avail leaves for reasons that are not only personal or for pleasure but sometimes impelling. Structured processes mean simpler executions; hence, a leave policy that is not intimidating but employee-friendly is a need of every organization. As an HR person or a business entity, you need to consider some elements in designing a leave policy that brings a happy working culture and satisfied employees.


Leave policy should not be so tight-fisted that it suffocates your employees. Leave policy should be able to attract better human resources, generate a conducive working environment, and foster growth.


PTO or Paid Time Off as the world calls it is an articulate task considering various influencing factors-


How To Design a Leave Policy:

Company culture has a significant stake in the way its policies and processes are structured. Cultural boundaries define company goals, ethnicity, location, and how open or conservative a business is. Family businesses operate in a closed periphery, leading to traditional practices whereas, a corporate or an MNC will have very open and inviting policies.


1. Size of company – Start-ups v/s Medium & Large organizations

Your company could be a start-up, an SME, or an MNC; but the need for a good Leave Policy is never out of fashion. Leave policies for start-ups can be flexible, considering the ownership every person takes as well as the drive to launch the company in the next plane. SME’s would require a little push holding both conservative and flexible approaches. MNC’s need to have structured and location-specific leave policies. What works best in the United States does not appropriately work better in India. Culture is an important dimension that sensitizes and demarcates one company’s policy from the other.

Start-ups can have unlimited paid leaves, no sick or casual leave but, MNC’s should have a highly structured system and approach considering the considerable workforce.


2. Nature of Business

Leave policies should be designed considering the nature of business. Hence, finer elements of a policy should work around aspects like full-time, part-time, onsite & offshore employees.

For onsite employees like Software Developers, the client’s leave policies should sync with the parent company’s leave policy for ease.

A business that demands to work on weekends like retail chains and operations cannot have fixed leaves and therefore enjoys the benefit of leave on weekdays. Processes that require to work in double or extended shifts, a subsequent compensatory leave or compensation should be incorporated.


3. Global Perspectives

Globalization has positively benefited us. We have MNC’s representing different parent countries and cultures. Indian home ground has a host of festivities and holidays to name; however, companies need to incorporate the local holidays their parent company celebrates. Christmas is the most excellent example here. The US counterparts or clients have one festival that’s absolute holiday time. The European or Southeast Asian counterparts have their share of local holidays too. Therefore, major local holidays must be a part of the yearly leaves.

Also read: Top Highest Paying Jobs in India

Also Read: A Complete Guide to Documents Required For Company Registration in India


Eligibility For a Leave Policy

Eligibility as criteria helps in ascertaining, the sanctioning of leaves.

1. If an employee is eligible for leaves during probation?

2. Can an employee take leave while serving a notice period?

3. How many annual leaves is an employee entitled?

4. What is the quantum of leaves that can be opted at one time, and can it be approved?

5. For the sake of convenience, leaves should bifurcate under different segments for better management.


1. Statutory Leaves

State or country norms have identified some leaves as statutory in the interest of the working community. While government and private organizations differ in these mandatory leave policies, the former or latter both have their benefits. Leaves classified as Maternity, Paternity & Bereavement are governed by labor laws and are binding. These are paid leaves and should be a mandate in every company’s leave policies.


2. Maternity Leave

In India, under the Maternity Leave Act is paid leave for 26 weeks.


4. Paternity Leave

Nuclear families have led to the need for Paternity Leave. Facebook was the trendsetter to offer paternity leave to new fathers. Zomato followed suit and has introduced 26 weeks’ leave for new fathers. Indian labor laws provide a leave of 15 days at the time of childbirth or within six months of the birth.


5. Bereavement leave-

Being empathic can lead companies in building relations and sustaining employees. Bereavement leave applies to the death of a close family member. There are no concrete policies around it, but a minimum of 1-7 days of paid leave is valid. On humanity grounds, offering bereavement leave can help companies attach value to employees and their life. Though death is an unwelcome event, companies should act towards incorporating bereavement leave in their leave policies.


6. Sabbaticals

A refresher is sometimes the only option to bring in the best or retain the best. A sabbatical is long leaves opted for travel, further studies, or just a break. Sabbaticals are un-paid leaves as they stretch over a long period. The only assurance is retaining your job. Sabbaticals are not a very warm prospect, yet, in the Indian landscape, considering the nascent leave policies around it, a specific policy needs to be worked.


7. Roll-over Leaves

Every company has a leave policy that stretches across the year. E.g., Calendar year (1st Jan – 31st Dec) or financial year (1st Apr – 31st Mar). In the event when individual fixed leaves are unused within the year, they lapse. Some companies have a provision of reimbursing on the leaves, while most companies consider them lapsed. A roll-over of leaves can be a flexible provision where leaves can continue in the succeeding year. An employee who has gathered unused leaves implies the employee has been working more than the standards set. Companies can show a little sensitivity towards acknowledging this gesture by introducing this roll-over leave option.


Weekly/monthly leave and not consolidated

Some leaves are structured to be taken week-wise or month-wise to ease engagement & management.


Leave Policy Management

While leave policy formulation is essential, leave management is another crucial aspect. There are sentiments linked to leaves as there are salaries related to leaves. Significant discrepancies can arise if there are errors in employee compensation.

A full-proof leave policy supported by an efficient process means your significant worries are solved.  It is garnering the right practices to a service that links to results like salary, performance, and appraisals. Smaller organizations can pull-off the process manually, but the larger organization needs robust policies and leave management system.


1. Requisition Form

A form that classifies the purpose of leave and other details for the use of record-keeping is the requisition form.


2. Leave Approvals

The management or authority should approve the requisition form. In smaller organizations, there can be one authority, but larger organizations should have a couple of leave approval authorities in the hierarchy to ensure smooth functioning and easy and quick approvals.


3. Tracking system

Having a biometric attendance tracking system in place ensures the data is in place and retrievable for documentation as well as analysis of succeeding processes like salaries and appraisals.


4. Guidelines

Let the leave guidelines be bold and visible, and not something ambiguous.

All this said and done, the finest elements of the leave policy should be put in black & white and should in circulation amongst employees for a better and aligned process.


5. Industry Norms

Industry norms should be taken into account while devising leave policies. A fair amount of research on the policies and practices make you come up with a flexible product that ensures better employee retention. If you have surveyed the market and devised an excellent leave policy, you will undoubtedly retain employees as they check with their industry counterparts. A good leave policy also shows a company cares about its employees and will certainly attract the right talent.


Also, culture, location, diversity, ethnicity, define the detailed aspects of a company’s leave policy. What is essential is every organization should be able to maintain transparency between saying and practicing. HR or the management authorities should empathize with the idea that the request for leave is the fundamental right of an employee. Approving and availing the leave, understanding the need of the employee is a human factor primarily. Leaves foster productivity. Employees reset themselves after leaves and come to work refreshed. Make your organization a place that is employee-conscious, and your goals will surely fulfill.


Lastly, it’s the HR or the management authority that brings a personal touch to the entire event. How important are your employees to you and your organization should be the first question you should ask while designing a Leave Policy.

Join a Community of 75,000+ HR Professionals


    Share and Get Free HR Docs
    No Comments

    Sorry, the comment form is closed at this time.

    Get a FREE DEMO

      Download FREE

        1000+ Business Documents

          6 Month HR & Payroll Software

            Startup Deals

              Know More About 1800+ HR Documents

                Free Sexual Harassment Policy

                  Get Instant Access

                    Know More about Lifetime Plan

                      Gold Plan FAQ's
                      1. How will free consultation work?
                      We provide a 1-hour free call consultation every month. i.e. You get 12 hours of free call consultation in 1 year. It's up to you how you want to use the 12 hrs, and it can be done once, twice, up to thrice a month.

                      2. Will I get the 3 free customised policy as per my choice?
                      Absolutely Yes. You can tell us to customised any 3 policy which you want.

                      3. How often will I get the updated docs?

                      As the goverment introduces new labour law & regulation, we update the documents and notify you by email.

                      Download Brochure Gold Plan

                        Gold Plan Brochure 

                          Check your email for brochure.

                          3000+ READY TO USE HR DOCUMENTS

                          Make any HR Documents in a Minute

                            Start Your Free Demo Today!

                            Get flat Rs. 2000 on first purchase
                            Note: You’ll Only See This Offer Once!
                            UNLOCK DEAL

                            Your HR Partners for Lifetime

                            ✓ Lifetime Access To All HR docs
                            ✓ Free Updated Docs For Lifetime
                            ✓ 3 Free Customized HR Policies
                            ✓ Free Setup of Your HR Functions

                              Terms and Conditions apply
                              Click Me