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Leave requests

How to Manage Leave Requests & Holiday Pay: Part One

Published on
January 31, 2024
Leave request and holiday pay 1
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Managing leave requests and holiday pay is essential for any organisation with regular contracted employees. Providing workers with time off for personal and family reasons, as well as for paid holidays, is not only required by law, but it also contributes massively to employee satisfaction and productivity, resulting in better outcomes while at work. This is why holiday pay is such a critical component of leave management. 

However, calculating this sum accurately is somewhat of a challenge for many employers. The owing amount varies depending on the employee's employment status, length of service, and knowing in advance the number of days the employee intends to be away.

Correctly filing holiday and leave pay

In New Zealand, the payment rate for annual holidays is calculated with regard to the start date of the leave period (even if the payment is spread over more than one pay period). A submitted leave request helps define the date the leave begins, while subsequent changes that interrupt the leave, such as unplanned work, can be captured in order to comply with the Holiday Act. A tool such as TimeFiler can help ensure that leave interruptions are recorded and leave time rescheduled, notifying the appropriate authorities to do so.

Failing to provide the correctentitlement can result in financial penalties and legal disputes. Furthermore, managing leave requests effectively can help organisations better retain staff long-term and minimise the impact of employee absences on their operations.

This blog will explore the best practices for managing leave requests and holiday pay, including setting up a leave request system, tracking pay accurately, communicating leave policies to employees, and integrating timesheets with leave and payroll.

By implementing these practices, employers can ensure compliance with labour laws, enhance employee experience, and minimise errors and discrepancies in leave management.

Setting Up a Leave Request System

Implementing a digital leave request system is crucial for efficiently managing the inflow of requests and accurately calculating resulting holiday pay. A digital approach can streamline the whole process, allowing employees to submit their holiday leave requests online. 

For one, a digital system allows for the recognition of different leave types, which have to be added with each application. But that’s not all.

An effective leave management system should require a few steps first, beginning with getting an employee’s authorisation before any leave balance is deducted. The leave request then stands as an explicit record from the employee of their request to be away and for their leave to be deducted from their balance of days. The request has to be given time to be approved, and is often dependent on the time submitted and how many other applicants asked for leave also. A ‘first in, first served’ policy is often deployed to avoid any favouritism. 

Employers and managers expect to be able to do this online, and while this is simple from a technical perspective, it takes some payroll nuance to figure out what to pay each person. Here, recourse to the employee’s roster may be the best answer, particularly if public holidays or any other circumstance dictate different pay.

This is an area that TimeFiler, as a digital leave request, timesheet and rostering system, particularly excels at. Integrating the leave request system with the roster, TimeFiler provides accurate compensation records for both employees and employers. This integrated approach simplifies the management of leave requests and ensures the accurate calculation of holiday pay and other leave entitlements, although it doesn’t leave out all the work for payroll. It just makes tracking payment conditions and noting occurrences much easier.

Managing Leave Requests Efficiently

Efficiently managing leave requests requires a well-defined process. Clear guidelines and timelines for requesting holiday leave help employees understand the procedure and expectations.

Automating the workflow and implementing an approval hierarchy ensures that holiday leave requests are processed promptly and accurately. Handling overlapping or conflicting leave requests becomes more manageable with a clearly defined policy and effective communication with employees. Such a system can be implemented using a range of software suites, although one single system like TimeFiler can cross-check all leave requests on the employee side of the app, which are filed and stored on the administrative side for ease of access.

Balancing operational requirements and employee satisfaction, efficient leave request management enables smooth operations and proper compensation for holiday pay.

This subject is something of a haul, which is why we’ve split the topic into two blogs. So when you’ve finished reading the first, check out part two here.