Monitoring Time Off Allowances & Leave of Absence

Instructor: A. Casey Carr-Jones

Casey Carr-Jones holds a Bachelor's degree in English & Psychology. She is currently a PHR-certified Human Resources Consultant.

The majority of companies have time off as an employee benefit. All companies need to manage leave of absences. This lesson details how to establish a policy for time off, and reviews ways to track both time off and leaves of absence.

Time Off

Rick is a new employee at a technology company. On his first day, his manager explains that he is eligible for three weeks of paid time off and that he accrues 1.25 days every month. Confused, Rick refers to the time off section in the company handbook to ensure he understands the policy.

Fortunately for Rick, the time off policy is clear and concise and he can determine the differences between this company's policy and his previous company's policy.

Although practices for managing time off and leaves of absence can vary from company to company, the general methods for doing so is the same across the board and setting out a clear procedure is key to managing this process effectively. Defining categories of leave and methods of tracking time off and leaves of absence is important to this process.

Categories of Leave

There are two categories of leave: Category 1 is only taken very occasionally and Category 2 is time off. The expectation is the majority of employees will use all of the time granted during the course of a year.

Category 1 includes:

  • Jury duty leave - time off taken to serve on a jury
  • Disability leave - time off for health reasons, may be paid or unpaid
  • Family medical leave - time off for health reasons of that employee or a spouse or family member in their care, covered by job protection under the Family Medical Leave Act, includes maternity leave

Category 2 includes:

  • Vacation
  • Personal
  • Sick
  • Paid time off (PTO) - a program where the employee is granted a bank of hours, which is a combination of vacation, personal, and sick days, that allows the employee to use the time off as they wish
  • Holiday pay

Establishing Policies for Time Off

Creating and communicating time off policies are essential to running an effective time off program. When establishing a time off policy, organizations should take into account granted versus accrued time, tiered versus flat policies, and what to do with unused time.

Policies that grant time means that the employee receives the full annual amount of time off at the start of the year. Accrued time means employees received a certain number of hours at a time, and not all at once.

Flat policies mean that all employees receive the same number of days off every year. Tiered policies grant different amounts of time off to different employees, and this is usually based on tenure. For example, an employee who has worked at an organization for 2 years receives less annual time off than an employee who has worked there for 10 years.

What employers do with unused time can depend on the state where the employee works. Some states, like California, mandate carry-over, which means any unused time is rolled over to the next year's allowed bank of time off. Some employers opt for a 'use it or lose it' rule.

Tracking Time Off

Tracking time off requires the ability to submit, track, and approve or deny requests. It is most often done manually or through a payroll system, or through time-tracking specific software.

In the manual method, employees notify their manager and receive approval either in person, by email, or by completing a form. The manager, payroll employee, or HR tracks these absences through an excel spreadsheet and submits to payroll regularly so the proper balance deductions can be made.

Tracking and approving time off through a payroll or time-tracking software is an efficient way to manage time off. Employees can electronically request days off, and HR and managers can regularly review balances and attendance history.

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