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Updated on May 28, 2023
Leave accrual processing is a method of using established organizational policies to calculate, track, and record an employee’s accumulated balance of hour-units, awarded incrementally, and available for the employee to request as permissible absence from all work duties.
While it can include unpaid leave, the majority of leave policies establish guidelines regarding the accrual and use of paid time off, or PTO. Typical examples of PTO include vacation days, personal time, and sick leave, but may also include jury duty, volunteer, parental leave.
Rules dictating the amount of leave an employee is awarded, as well as any terms or restrictions around retaining and using leave, are commonly based on criteria such as employment status, worker classification, and tenure, but may be based on any established organizational policies that dictate how time off is accrued, retained, and used.
By having a process for leave accrual in place, employers make it easy for employees to understand how leave is awarded and used, and how to see their leave balance. But establishing an unambiguous leave policy really benefits employers most, as it reduces confusion and prevents second-guessing (or potential disputes) over leave balances.
Kristen Fowler, Vice President of Human Resources and Practice Lead at Clarke Caniff Strategic Search, has experience assisting businesses in setting up procedures for accruals and agrees that having a system in place is a good idea. “In my experience, having a clear and consistent process for leave accrual processing is important for ensuring accurate tracking of employee leave balances, avoiding disputes and grievances, and complying with labor laws and regulations,” she says. “Providing clarity helps with employee morale and satisfaction over the long-term, too, because everyone knows where they stand. There is no favoritism.”
Furthermore, by combining leave accrual processing with human resources software, employers are able to cross another task off their “to-do” list permanently, as most software tabulates an employee’s leave balance as they earn it, and will even adjust for upcoming leave that’s already been approved. Plus, these platforms typically have self-service employee portals that save everyone a lot of back-and-forth over email since employees are able to:
So how do you keep your company’s stakeholders up-to-date on how leave accrual processing works? First, make it a point to clearly communicate leave policies using the tools at your disposal. For example, most employers include guidelines on how employees accrue and request time off in a section of their policy handbook, or at the very least, in a regular company-wide email.
The key is being consistent and transparent, so there are no questions about how the policies work, or to whom the rules apply. Once more, we asked Fowler to share her insights. “Employers can, and should, communicate their leave accrual policy to employees through the employee handbook, HR software, or other means such as company-wide emails or team meetings,” she says. “It’s important to announce the process publicly, again, to ensure fairness and clarity.”
Lastly, while the Fair Labor Standards Act (FLSA) doesn’t weigh in on time off policies, employers should research any laws where they do business. It can also be a good idea to “consult with legal counsel and stay up to date on labor laws and regulations to ensure their leave accrual processing policy is compliant,” says Fowler, adding, “Regular auditing of the policy and employee leave balances can also help identify and address any compliance issues.”
In closing, no matter the leave accrual process, employers should provide employees with access to a transparent policy, and should periodically review the leave accrual processing to make sure everything is running smoothly.
“Keeping track of time off was much less complicated with just a handful of employees, but with the team tripling in size in the last year, it made sense to implement a leave accrual processing system to reduce the time the human resources team was spending on PTO-related questions.”
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