Leave Accrual Processing

What is “leave accrual processing”?

Leave accrual processing refers to a method that an organization’s HR team uses to monitor the leave awards and balances of employees. Typically, an employee accumulates leaves based on their tenure or their length of service to the company. Leave accrual processing varies from company to company. It largely depends on the leaves policy and time-off plans in place. 

Why is leave accrual processing important? 

Once a company offers leaves to their employees, it is their responsibility to stay on top of it. Meaning, they must be prepared for any employee to request time off. This is where leave accrual processing comes in. Organizations need to be updated on the leave awards and balances of the workforce. By keeping leave accruals updated at all times, the employer has real-time information on how many leaves an employee has used and how many more they can request. Generally, the responsibility of monitoring this falls on a company’s HR team. 

For start-up companies, it is common to manually record the used and unused leaves of employees. However, as the business grows, monitoring and maintaining all records of leaves, time off, sick days, and leave requests of each employee will prove to be a challenge. Manual work is not only laborious and time-consuming, but it is also susceptible to human error. That is why most companies opt to merge leave accrual processing into their human resource information system (HRIS). This helps maintain updated and accurate records. 

What is the significance of a Human Resource Information System (HRIS) in leave accrual processing? 

Using Human Resource Information System (HRIS) in processing leave accruals automates the method. With this, no longer do HR team members need to manually pull up records, count the leave balance, input new requests, and consolidate information. An HRIS takes these manual tasks off HR’s plate so they can allocate more time doing other responsibilities. It also gives assurance that leave accruals are always updated and accurate. 

Also, having HRIS in place allows employees to receive access to their leave records. Employees will know how many leaves they have used and how much time off or leave requests they can still avail. Through the transparency of records, miscommunication and confusion are prevented, minimizing conflicts with HR and employees. 

What are the different leave types? 

When an employee requests to take a leave, it is not just entitled “leave.” Leave can come in many forms which an organization must define and record. The types of leave can be input in a company’s HRIS. 

There are different types of leaves that employees can take. The kind and number of leaves offered to employees are at the discretion of the employers. 

• Sick leave: employers can offer paid or unpaid leave for health-related needs, short-term or long-term. 
• Bereavement leave: this is a leave category that gives employees some time off work following the loss of a family member or any loved one. It is also known as “compassionate leave” or “grievance leave”. There is no law that requires employers to give this kind of leave but most employers generally do. 
• Disability leave: as per the Americans with Disabilities Act (ADA), disability leave is a type of leave that is taken by an individual as a reasonable accommodation for a disability. This can be taken by employees who have a physical or mental impairment that limits major life activities. The ADA applies to employers, including state or local governments, with 15 or more employees.
• Family and Medical Leave Act (FMLA): this is a federal law that allows employees 12 weeks of unpaid leave per year for specific reasons such as a serious health condition. They can also take this leave to take care of an immediate family member with a serious health condition. The FMLA law applies to private employers with 50 or more employees. 
• Medical leave of absence: this kind of leave can be taken by employees who are addressing medical conditions which hinder them from performing their work tasks. The FMLA has specific guidelines for medical leave qualifications. 
• Military leave from work: this is a type of leave for employees who need to fulfill active or inactive duties in the U.S. military. Employees who request a military leave from work are guaranteed by law to be reinstated in their former position in the company upon their return. 
• Leave of absence: this is a leave that employees request if they need time off for any life circumstance. A leave of absence can be paid or unpaid and may include any of the reasons on this list. 

Paid time off (PTO)

: PTO is time away from work that is compensated by employers. This includes paid vacation days, sick days, holidays, or any time off for personal reasons.