Which Types of Leave Should Your Business Offer?

Andrew Buck March 21, 2022

Harvard Business Review reports that vacation time and flexible work hours are right at the top of the list when it comes to the most desirable benefits for job seekers. The only benefit more valued is better healthcare.

This tells us that, if your business wants to attract and retain the best people, you need to get serious about your employee leave policy.

One vital part of your leave policy is deciding which types of leave you’re going to offer to your employees. Do you keep it simple, or do you split up your leave policy with leave types for every different occasion?

Read on to learn more about different kinds of leave and which to offer in your company.

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Two Approaches to Your Leave Policy and Types of Leave

First, there are two ways you can approach your leave policy, in regards to different types of leave and how you handle them in your leave management system.

1 – Treat all leave types separately

First, you can separate each leave type, with a separate allowance for each type.

Each time someone applies for leave, they’ll apply under a particular type of leave, such as vacation time, sick leave or any other type.

Generally you’ll also have a separate number of days allowed for each type. For example, you might let team members take up to 15 vacation days a year. If someone takes a sick day or a mental health day, this doesn’t get take out of their vacation day allowance.

This is the standard way of doing things, but it does take a little work to track, and to ensure your employees clearly understand how everything works.

2 – Unlimited PTO

Another option is to go with unlimited PTO. This means you need to worry less about every individual type of leave, as there is no hard limit on how many days someone can take off.

You might still track different types of leave, and ask employees to choose one when they apply for time off. However this is more of a formality, and a way of identifying sick leave trends that may need addressing. Generally, you’ll simplify your leave request form anyway, and provide just a few different types of leave, like paid time off, unpaid time off and sick leave.

Further Reading:

Learn more about Unlimited PTO, the pros and cons, and if it’s right for your business.

Different Types of Leave to Consider for your Leave Policy

Unless you choose the simple option of an unlimited leave policy, you’ll need to put some thought into the different types of leave you’ll offer your team, to make sure it stacks up with the expectations of 21st century employees.

Here are some leave examples of different leave types, to get you started:

Vacation/Annual Leave/Paid Time Off

Vacation time or annual leave is paid time off for your employees for any reason they wish. 

It could be that they take time off to spend with their friends and family, or because they’re feeling unwell or burned out, and they need some time to recharge and rejuvenate.

Typically this is paid time off, meaning your staff is still making regular wages even if they’re not available for work. Your time off policy would state how many paid vacation days each of your employees gets each year. 

There are no minimum vacation days for employees required by law in the United States. But other jurisdictions, like the European Union, mandate that employers provide a minimum number of paid vacation days.

So, be sure to check your locality (or any others where you have employees) to find out if there are minimum paid time off requirements. 

Further Reading: How much PTO is average in the US?

Public Holidays

This is pretty straightforward. Public holidays are big holidays where all public sector employees, and some private, get the day off. 

Some examples of public holidays in the United States are the big ones like Labor Day, Memorial Day, etc.

Of course, there are the big holidays like Thanksgiving and Christmas day when virtually everyone, except some essential service employees, gets the day off.

But as a private company, you’re not legally required to remain closed on public holidays (also known as federal holidays) in the USA. 

But if you have an international team, or you’re based outside the USA, the rules might be different. 

Once again, be sure to check local regulations about public holidays to make sure you remain compliant with paid time off laws.

Check out a full list of all public holidays around the world in our public holiday calendar.

Sick Leave

As the name suggests, your employees will take sick leave days to recover from an illness or injury.

In the U.S. you’re not legally required to provide paid sick days. But your employees might use some of their paid vacation time to recover from illness or injury.

Many companies do, however, provide unpaid sick days. And if sick leave isn’t used by an employee, then it can be carried over to the next year.

Family and Medical Leave Act (FMLA)

If your company is subject to the Family and Medical Leave Act (FMLA), then you might have to provide 12 weeks of unpaid leave for specific medical conditions.

You’re only subject to FMLA if you meet ALL of the following criteria.

If subjected to FMLA, then you’ll have to provide up to 12 weeks of unpaid leave to eligible employees for the following, among other requirements.

Check out the U.S. Labor Department website for full details on FMLA.

Maternity Leave

Maternity leave is the time that a new mother will take off from work to bond with her new baby and rejuvenate after pregnancy. 

The leave period can start before giving birth or after, depending on the individual. 

Unless your company is subject to FMLA (see above), you’re not required by law to provide maternity leave in the U.S. 

But it is an extremely important time for people with new families. You can expect that your employees who are planning to have a family would want maternity leave as a benefit.

The typical length of maternity leave in the U.S. is between 6 weeks to 3 months. It can be paid or unpaid depending on your time-off policy.

Further Reading: Maternity Leave Laws in the US and around the world.

Paternity Leave

It’s not just new mothers that need to look after and bond with the new baby. It’s the new father as well.

Having the father available to look after the newborn can also help the mother recover quicker after pregnancy.

Like maternity leave, paternity leave is becoming increasingly common and popular in the workplace across the U.S. 

Further Reading: should your business offer paid Paternity Leave?

Bereavement Leave

The loss of a loved one can happen to anyone, and it can be an extremely difficult time for all of us.

Bereavement leave is the time your staff would take a leave of absence to mourn and deal with grief in such a situation. The typical bereavement leave length is around a week. 

If you’re in charge of HR, you need to plan for these unfortunate situations and have contingency plans in place for unexpected absences.

Time Off in Lieu/Compensatory Leave

Time off in lieu or compensatory leave is when you provide time off for an employee that has worked overtime, instead of paying them more for their time.

Along with more vacation days, flexible work hours also rank among the top when it comes to desirable benefits for job seekers. 

So, if you offer time off in lieu (TOIL), it could be another perk you can mention during the recruitment process to attract the best employees.

TOIL is rapidly gaining popularity in the workplace as a solution for managing overtime.

Personal Leave

Personal leave is kind of a catch-all type of leave that can include several other leave types already mentioned above. 

If you have a small team, and feel like it doesn’t make sense to categorize many different leave types, you can include many of them under personal leave.

Here are some examples.

You can also provide personal leave to team members that are pregnant but don’t meet the criteria for FMLA.

Unpaid Time Off

Unpaid Time Off (UTO) can cover any types of leave that are not covered by your time-off policy. 

There could be several miscellaneous situations in your employee’s lives that are not covered by your leave types, such as attending graduation, the funeral of a friend, or time off needed to move houses, just to name a few.

You could also offer UTO as an addition to paid time off. For example, if an employee’s paid leave days don’t cover their entire vacation, but you want to grant them additional days, you can provide the additional days under unpaid time off.

How to Know Which Leave Types to Offer In Your Business

Some leave types are standard, some not so much.

Virtually every business offers paid time off (they might call it annual leave or vacation time, depending on the location) and sick leave.

Not so many offer personal days, bereavement leave or time off in lieu, however.

The easy way is to lump everything together under an unlimited PTO policy. However, this requires some trust and management to avoid abuse.

Otherwise, it’s best to err on the progressive side, and be open to different situations employees might need time off or a leave of absence.

Doing so will attract more talented people to your team, as well as helping you retain your existing team members, and keep them healthy and productive when they’re with the company.

Most Common & Important Types of Leave: Final Thoughts

The types of leave days available to your employees are a vital aspect of your company’s time off policy. 

Members of today’s workforce are looking for progressive, flexible companies that are care about their employees. That means considering the different reasons your team members may need to take a leave of absence, and being open to their needs and desires.

When you care about the wellness of your team, they’re more likely to stay healthy and productive at work, and go the extra mile to help you grow your business.

Along with deciding which types of leave to include in your team’s leave policy, make sure you use a leave tracker like Flamingo to manage time off requests and keep everything running smoothly when employees are out of the office.

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