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Five reasons why leave management is important
When it comes to handling and recording employee leave, it might be easy to take the "It will be right" approach. But there are some excellent explanations for why you should carefully manage, track, and pay leave.
Proper leave management means your business can function more successfully, meet your employees' time-off needs, and satisfy your legal obligations.
Several recent, high-profile cases of prominent New Zealand employers not staying on top of leave and holiday pay. The Ministry of Business, Innovation, and Employment- MBIE (Who is responsible for motoring the Holidays Act) - have emphasized the seriousness of non-compliance can be.
1. It is the law!
It is of great importance to keep track of leave, and accurately paying your
employees will keep you on the sport-on with the law.
As per the Holidays Act 2003, all New Zealand employers must keep accurate records of every employee's daily hours and the pay for those hours and the leave accrued, entitled leave, and leave taken.
The law ensures that all employees get the paid leave they are legally permitted
to:
- Annual leave (at least four weeks a year after every 12 months of employment).
- Public holidays (up to 12 holidays each year, if they are days, they typically work).
- Sick leave (up to 10 days each year, if they are days they would usually work)
- Domestic Violence Leave (up to 10 days each year)
- Bereavement leave (usually after six months of continuous service).
- Parental leave Is a mixture of paid and unpaid leave depending on the employees' entitlement.
When leave is taken, the Holidays Act stipulates how this must be paid for each type of leave. However, each type of leave has a distinctive payment method, so you cannot assume a one-size-fits-all method.
As we have seen in recent years, computation for annual leave payments has triggered quite a few problems for Kiwi businesses. As a result, several big and small businesses have been trapped in underpaying employees for their leave taken.
Keeping precise tracking of leave taken and holidays accrual will eliminate or minimize leave entitlement and payment calculations mistakes. As a result, your
employees will get the right amount of leave and pay. In addition, your business will evade having to pay incorrect retrospective calculation of leave taken, or worse, being fined from the Employment Relations Authority (ERA) or a Labour Inspector and ending up in the media.
Every business needs to know their legal obligations that are available
at Business Government New Zealandhttps://www.business.govt.nz
2. The bottom line
Good follow-up on leave and management can lead to a reduction in costs. Paid time-off has a substantial financial impact on a company's bottom line.
Temporary workers and contractors can cost extra than your regular employees. Or, if your current active employees could provide cover, you may even have to pay overtime.
Other indirect costs and effects include a potential drop in the quality of goods or services due to understaffing, fatigue, or less-skilled replacement workers, leading to a decline in customer satisfaction.
There may also be additional administration costs, time management to find appropriate replacements and bringing them up to speed, maintaining team confidence, etc., and possible safety issues with a replacement or overworked staff.
The additional financial consequence is that failing to manage employees' leave correctly allows employees who accrue weeks or years of leave, is a business liability. If these employees are terminated, the paid-out will be a vast lump sum.
Unpaid leave is recorded in the company's books as debt and could cause a setback if you sell the business.
3. Proper leave and holiday planning
Accurately planning with your team members' leave means you can plan absences in advance to ensure you have sufficient coverage, rather than having to struggle and risk getting caught short.
While there is nothing one can do if many employees fall sick simultaneously, planning
for annual leave and holiday cover will help reduce work stoppages, ensuring there is no drop in efficiency and continuing to meet its commitments and deadlines.
It will also mean there is no setback in team confidence. For example, no one wants to be regularly asked to do extra work because the company forgot to plan holiday cover properly.
Using a professional leave management service or software will make keeping track of
leave easier and more precise. As a result, management will spend less time supervising
and responding to leave requests. In addition, the system will maintain correct company-wide records, so you can quickly check leave totals and establish legal compliance.
4. Employee confidence and wellbeing
If your team members know they receive their correct leave entitlements, they will have more faith and trust in the business. This means happier, more engaged employees who are driven to be productive and help the business prosper.
Your employees also want to ensure that the business is well organized. If leave is poorly managed and many employees take leave simultaneously, the remaining employees may have to do extra work to cover. This could lead to bitterness if it happens regularly, and the damage will be even more major if it turns out you have not calculated your employee's leave or holiday pay properly.
Many advanced, modern leave management systems allow employees to see their leave
balances and request leave electronically. This gives clarity, and the automation also reduces admin for the business.
5. Reduced absenteeism
Taking leave is necessary. It helps is promoting good physical and mental health in the workplace and increase people's work-life balance, lowering stress and unscheduled days off.
Absenteeism can have a significant effect on any business. For example, the 2017 Wellness in the Workplace Survey found that in 2016, that New Zealand businesses lost an estimate of 6.6 million days of work due to absenteeism
which cost approximately $1.51 billion.
If you don't have the precise tools to track leave, especially sick leave correctly, you may not know how many days in a year the employees are taking and how much your
business is affected.
Effective leave management systems can give you a good understanding of leave patterns
across the business, and if there are problems, you have the chance to work on a resolution with your employees.
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