Creating Your Employee Leave Policy: All You Need to Know

Andrew Buck March 9, 2022

A company’s employee leave policy serves an important purpose. This policy sets a clear expectation with employees as to what’s allowed and what’s expected with paid time off, and creates a foundation that allows employees to maintain a positive work-life balance.

A lot goes into putting leave policies together. It needs to be clear and easy to understand. It should be fair and inclusive. And the types of leave in the leave policy, along with the entitlement for each, need to conform with any labor laws relevant to the business.

Read on to learn everything you need to know to set up a leave policy for employees in your business.

Further Reading: Paid Time Off Laws You Need to Know in the United States and Around the World.

Why You Need a Leave Policy for Employees

Leave policies let employees know exactly what’s allowed, and what’s required, in relation to paid (or unpaid) time off.

The policy sets clear expectations. People can plan ahead, knowing how much leave they’re entitled to, and what they need to do to ask for time off.

If managers need to decline leave for any reason, the leave policy is there to cover them. It protects against accusations of bias or unfairness, as it’s a standard set of rules that applies to everyone equally.

Your leave policy also gives potential new hires information about how leave works in your company. As one of the most sought-after employee benefits, vacation time and paid time off is a valuable carrot to dangle in order to attract new talent.

Types of Leave to Include in Your Employee Leave Policy

What leave types should be part of your leave policy?

Outside of what’s required by law, this is up to each individual company to decide.

Bear in mind that it’s beneficial to be generous with leave and paid time off. If your leave policy is overly restrictive with how employees can take time off, and for how long, you run the risk of burning out your team, losing key staff, and losing out on new hires.

Offering ample amounts of paid time off actually helps your business, by keeping your team members healthy, happy, and productive.

To specifics: what types of leave should you be offering?

Here are some to consider.

You may not need to provide every single type of leave in your business, and each leave type may not need a separate heading in your leave policy.

These leave types may be paid or unpaid, which should be spelled out in your leave policy.

FMLA and your leave policy

You’ll need to consider local labor laws when putting your leave policy together.

If your business operates in the US, you’ll likely need to abide by the Family and Medical Leave Act (FMLA).

The FMLA requires that eligible employees can take unpaid leave to care for an immediate family member, newly adopted or newborn child, or for employees suffering from serious health conditions.

FMLA leave is not required to be paid, but it does mean that the employee’s job is protected – they are entitled to return to their regular job after the leave is finished, and they’re still entitled to their regular benefits.

You’ll want to make sure your employee leave policy covers, at the bare minimum, what you’re required as per the FMLA. You may have additional or similar legislation to follow if your business operates outside the US.

Read more about FMLA here.

Other Key Details Leave Policies Need to Have

Along with the various leave types you choose to offer in your business, your leave policy will need to include details such as:

Consider all these questions when putting leave policies together. It may be hard to enforce any rules that aren’t clearly stated in your leave policy, so try and think of as many edge cases and potential issues that may come up.

You may also have a separate time off request policy, which explains the steps an employee must take when asking for time off. Alternatively, you may choose to include this as part of your overall employee leave policy.

How to Create a Fair Leave Policy for Remote Teams

Remote teams may find it challenging to set up their leave policy in a way that’s fair, equal and easy for every employee, no matter their location.

That’s because some people may be in areas with drastically different labor laws, or may observe different public holidays.

Thus you run the risk of having some employees entitled to more leave, or more paid public holidays, simply because of where they live.

In addition, there can be some administrative difficulties, which may unfairly affect employees in certain areas.

Here are some things to consider if you’re setting up a leave policy for a remote company:

Ensure everyone has equal leave entitlements

You should aim to based leave entitlements on position, rather than where an employee lives.

For example, you may have an employee living in New Zealand, and another in the United States. Labor laws may dictate that the minimum number of leave days for one of these employees is higher than the other.

But this may be seen as unfair – arbitrarily, one employee is treated better than the other.

This is assuming they do the same job and would otherwise have the same benefits package.

While making sure you don’t break any labor laws, make your leave entitlements consistent across the board. So in this case, if the minimum leave entitlement in New Zealand is higher than the US’, raise the leave entitlement for US staff to make it even.

It’s alright if some people are entitled to more or less leave if it’s earned – i.e. due to service time or a different position. But aim to avoid discrepancies between staff in different countries.

Provide “floating” public holidays

Public holidays can also end up feeling quite unfair.

Different countries have a different number of paid public holidays. So, again, an employee in one country may feel like they’re worse off than others, assuming each employee is given the public holidays from their own country.

One person may get 12 paid public holidays, while another only gets 3. This is a big difference.

Floating holidays are a great solution to this. Floating holidays are paid days off that an employee can take on a day of their choosing.

These can act as a substitute for public holidays for employees whose country has fewer national holidays than others.

Figure out who in your company has the most public holidays in their country. Then, give everyone in the company a number of “floating holidays” equal to that number.

That allows everyone to take a paid day off for their own public holidays, as well as additional days off to match other employees.

Set up an asynchronous leave management system

Remote teams work better when they work asynchronously. This means communicating in a way that doesn’t happen instantly, like it would with a face-to-face chat or a video call.

This relates to leave management practices too. If you require everyone to ask their manager for leave in a real-time chat, this may disadvantage employees in certain time zones.

You may find that people in these time zones take less leave. They may experience higher rates of burnout and lower happiness as a result.

An asynchronous leave management system is a must. If your team uses Slack, Flamingo is the perfect tool for this.

Flamingo lets employees request a leave of absence directly in Slack. Managers can review and approve leave in Slack as well.

It doesn’t require any real-time conversations. Everything is automatically synced with your company’s vacation calendar. It also lets employees access their leave policy within Slack, at any time.

Flamingo is the easiest way to manage leave, whether your team is remote or not. It’s free to try, and stays free for small teams. Try it out to see how it can make your company’s life easier.

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Final Thoughts on Leave Policies for Employees

Whether you’re starting a new business, or looking to improve HR practices in an existing company, think about how your leave policy works.

It should be clear and easy to follow. It should follow all applicable labor laws and national holidays for employees in your business, while remaining fair and consistent for everyone.

Also think about the types of leave in your leave policy. There are many different reasons for someone to ask for a leave of absence. Consider if these needs their own section in your employee leave policy.

Once you’ve done all that, make sure you’ve got a leave management system to keep your business running smoothly whenever someone takes time off. Slack teams, big or small, can try Flamingo for free, and see how easy it is to manage absences.

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