Managing employee leave can feel overwhelming in the fast-paced business world, but staying on top of it is key to keeping your workplace productive and healthy. With the post-pandemic challenges businesses in Australia are facing, addressing leave liabilities has become more important than ever. In this blog, we’ll dive into the rising issue of leave liabilities and share practical tips to help you plan and manage employee leave effectively.

Today’s challenges

Leave liabilities refer to the financial obligations a company has towards its employees for their accrued leave entitlements, such as annual leave and long service leave. Post-pandemic, many businesses are witnessing a significant rise in leave liabilities. Although travel restrictions and lockdowns are over, their impact still lingers in the backlog of unused leave. Additionally, the shift to remote or hybrid work has blurred the lines between personal and professional time, leading employees to continue working through illnesses and caregiving responsibilities causing leave liabilities to skyrocket.

Adding fuel to the fire, a lack of proactive measures by employers to address leave accumulation coupled with inadequate systems or policies to encourage employees to utilise leave and you have the perfect storm.

This accumulation can have a substantial financial impact on businesses. According to a report by the Australian Human Resources Institute (AHRI), Australian businesses face billions in leave liabilities, which can strain cash flow and financial planning. The longer leave accrues, the more costly it becomes, as wage increases over time further inflate these liabilities. Ignoring this issue can lead to financial strain and operational challenges.

So, what can you do to mitigate this risk? You get proactive about planning and managing leave!

Planning Leave

Effective leave planning is crucial for several reasons:

1. Better Workload Management: Proactive leave planning helps ensure that workload is evenly distributed, preventing burnout and maintaining productivity. It allows for proper scheduling of tasks and projects, ensuring business continuity even when key employees are on leave.
2. Increased Employee Morale: Encouraging employees to take regular breaks and use their leave entitlements fosters a positive work environment. It demonstrates that the company values their well-being, leading to higher job satisfaction and retention.
3. Reduced Financial Strain: By managing leave liabilities proactively, businesses can avoid the financial burden of large, accumulated leave payouts. It also helps in budgeting and financial forecasting, providing a clearer picture of the company’s financial health.

Proactive leave management

Managing leave proactively, rather than reactively is the key to success. Here are some practical tips to help you get on top of your leave liabilities

1. Use Leave Management Software: Implementing leave management software can streamline the process of tracking and approving leave. It provides visibility into leave balances, helps in scheduling, and ensures compliance with company policies and legal requirements.
2. Create a Leave Policy: Develop a clear and comprehensive leave policy that outlines the procedures for requesting and approving leave as well as the circumstances when leave must be taken in place of remote working arrangements. Communicate this policy to all employees to ensure they understand their entitlements and the importance of taking regular breaks.
3. Encourage Regular Leave: Promote a culture where taking leave is encouraged and supported. Regular reminders and incentives can motivate employees to take their leave, reducing the accumulation of leave liabilities.
4. Plan Ahead: Encourage employees to plan their leave in advance. This helps in better scheduling and allows managers to prepare for periods of absence without disrupting business operations.
5. Monitor Leave Balances: Regularly review leave balances and address any excessive accumulation. Allow employees flexibility in taking leave, such as offering the option for shorter, more frequent breaks.

By adopting proactive leave planning and effective management strategies, businesses can mitigate the financial impact and foster a healthier, more productive workplace. By using tools like leave management software, creating clear policies, and encouraging regular leave, companies can turn this challenge into an opportunity for improved employee well-being and business success. Prioritise planning employee leave today, and watch your business thrive.

At BespokeHR, we’re committed to boosting your organisation’s performance and effectiveness by providing tailored solutions in people, culture, and employee well-being. Our services include leadership coaching and organisational capability development. Explore how we can help elevate your organization today.