To optimize a leave management system, move requests and approvals into one digital tool, write a clear leave policy, define every leave type the company offers, and build in the legal minimums that apply, such as the US Family and Medical Leave Act or the UK’s 5.6 weeks of paid holiday. Then keep accurate records and review the process regularly.
Key Takeaways
- A leave management system is the policy, workflow and software a company uses to request, approve, track and pay for time off.
- Digitizing requests, balances and approvals removes a major source of payroll errors and double-booked absences.
- In the US, the FLSA does not require paid vacation or sick leave, but FMLA gives eligible employees up to 12 workweeks of unpaid, job-protected leave in a 12-month period.
- UK workers are entitled to 5.6 weeks of paid holiday a year (28 days for a five-day week), and the EU Working Time Directive sets a floor of four weeks.
- FMLA leave records must be kept for at least three years.
Businesses in a host of sectors will find that proper leave management will be important to their productivity in several ways. The only downside is that it’s not always as simple a task for companies to create an efficient management process.
If you want to avoid some of the hassle, we’re going to give you a helping hand in creating a good system for your employees.
How can you improve leave management in your company?
Most will find that, when it comes to creating an efficient leave management system, the best thing to do is make the processes involved as straightforward as possible. The four steps below cover the essentials: digitize requests and approvals, keep the process simple, define every type of leave the company offers, and watch for the most common failure points.
Digitize the process
Moving leave requests off paper forms, email threads and spreadsheets into one digital system is usually the biggest single improvement. A digital system gives employees a self-service request form and a live view of their balance, gives managers one approval queue and a team calendar that shows overlapping absences, and gives HR and payroll a single record of every absence.
Many HR, payroll and time-tracking platforms include leave modules, so check what your existing software already offers before buying something new. If it does not cover your needs, the next option to evaluate is a dedicated leave management system.
Create a clear, easy-to-use system
Another important factor is ensuring that your process is as easy to read as possible. While digitizing the system can help with this, there can be other factors to consider.
Try to create a simple form from start to finish, and ensure that everything is right there for your employees to see. Once the system is running, ask employees and managers where they get stuck and adjust the form or the approval steps accordingly.
Consider what types of employment leave there are
It will often be a good idea to account for different types of employment leave when trying to implement a better management system.
Since there are quite a few reasons why a worker may want time off, it’s simply best to know what to expect and how you can better prepare for it. Common examples include the following.
- Bereavement.
- Parental leave.
- Sick leave.
- Vacation leave.
Understand the issues to avoid
There are often a variety of problems that are common among poor leave management systems. To make matters worse, it may not always be a simple task to identify them if you don’t know what to look for – which could cause you issues later on. With this in mind, here are a few examples of the most common problems.
- Payroll errors.
- Complex and/or outdated systems.
- Unclear leave policies.
- Lack of communication.
- Not using a leave management system at all.
Last but not least, we’d advise you to consider utilizing a tool to help you further optimize your current setup. At https://tracktime24.com/, you’ll find that there’s going to be software that will help you out – as well as quite a few other tools that will be useful for your business.
There are a variety of things that leave management systems can do for you, especially in terms of optimization.
What Is a Leave Management System?
A leave management system is the combination of a written leave policy, an approval workflow and a record-keeping tool that a company uses to handle employee time off. It covers how employees request leave, who approves it, how balances accrue and carry over, and how absences reach payroll.
Most leave management software includes these core features:
- Self-service requests from a web page or mobile app, with the employee’s remaining balance shown before they submit.
- Approval routing to the right manager, with a backup approver when that manager is away.
- Accrual rules that add leave per pay period or per hour worked, apply caps and handle carryover at year end.
- A team calendar that shows who is off, public holidays and any blackout dates.
- Payroll integration so paid and unpaid absences flow into pay without re-keying.
- Reports and audit history for balances, absence patterns and legal record-keeping.
Leave tracking often sits next to time tracking; the guide on how an employee time tracking app saves time and money covers that side.
Which Leave Laws Should the System Account For?
A leave management system is only as good as the rules built into it. The legal minimums differ by country, and in the US by state and city, so confirm the rules for every location where the company employs people. The table below summarizes the main national baselines as of September 2026.
| Jurisdiction | Rule | What it requires |
|---|---|---|
| United States (federal) | Fair Labor Standards Act | According to the US Department of Labor, the FLSA does not require payment for time not worked, such as vacations, sick leave or holidays. Paid time off is a matter of agreement between employer and employee. |
| United States (federal) | Family and Medical Leave Act (FMLA) | Up to 12 workweeks of unpaid, job-protected leave in a 12-month period for eligible employees, with group health benefits continued; up to 26 workweeks in a single 12-month period for military caregiver leave. |
| United Kingdom | Statutory holiday entitlement | According to GOV.UK, almost all workers get 5.6 weeks of paid holiday a year, which is 28 days for a five-day week; statutory paid holiday is capped at 28 days. Employers may count bank holidays within that total. |
| United Kingdom | Statutory Sick Pay (SSP) | GOV.UK lists SSP at £123.25 a week or 80% of normal weekly earnings, whichever is lower, paid by the employer for up to 28 weeks. |
| European Union | Working Time Directive (2003/88/EC) | At least four weeks of paid annual leave each year, alongside limits on weekly working time. |
US state and city laws, especially on paid sick leave, often go beyond the federal rules, so check the labor department for each state where staff work. For a state-level example of how employment rules differ, see the guide to employee rights in California regarding meal and rest breaks.
Who Qualifies for FMLA Leave?
FMLA applies to private-sector employers with 50 or more employees in 20 or more workweeks in the current or previous calendar year, and to all public agencies and local educational agencies regardless of size. According to the US Department of Labor, an employee is eligible after working for the employer for at least 12 months, with at least 1,250 hours of service in the 12 months before the leave, at a location where the employer has at least 50 employees within 75 miles.
Qualifying reasons include the birth, adoption or foster placement of a child, caring for a family member with a serious health condition, the employee’s own serious health condition, and qualifying military exigencies. A leave management system should flag FMLA-eligible requests so HR can designate them correctly.
How to Write a Leave Policy the System Can Enforce
Software cannot fix a vague policy. Before configuring any tool, write down the rules in plain language and make sure every employee can find them.
- List every leave type the company offers, such as vacation, sick, bereavement, parental, jury duty and unpaid leave, and state whether each is paid.
- Set the entitlement and accrual method for each type, for example a fixed annual allowance or an amount earned per pay period, and meet the legal minimum in each location.
- Define carryover and payout rules for unused leave at year end and when someone leaves the company, checking local law first.
- Set notice periods for planned leave and a simple same-day process for sickness and emergencies.
- Name the approvers and a backup for each team, plus a time limit for responding to a request.
- Publish blackout periods, if any, well in advance so employees can plan around them.
- Explain how leave reaches payroll, including how partial days and unpaid leave are handled.
If payroll is also being set up or replaced, the guides on setting up payroll for a small business and finding the best payroll software cover the payroll side.
Record Keeping: How Long to Keep Leave Records
Accurate records protect both the company and its employees. Under the FMLA regulations (29 CFR 825.500), US employers must keep FMLA records for no less than three years and make them available to the Department of Labor for inspection.
Those records must include the dates FMLA leave was taken, the hours of leave when it is taken in increments of less than a full day, and copies of written leave notices exchanged with employees. A digital leave system that timestamps every request, approval and change makes this much easier than paper files.
Manual Tracking vs. Leave Management Software
| Task | Paper forms or spreadsheets | Dedicated leave software |
|---|---|---|
| Submitting a request | Email or paper form, easily lost | Self-service form with balance shown |
| Checking balances | HR recalculates by hand | Balances update automatically with accrual rules |
| Spotting overlapping absences | Manager checks separately | Team calendar shows conflicts before approval |
| Passing absences to payroll | Re-keyed, a common source of errors | Exported or synced to payroll |
| Legal record-keeping | Scattered files | Searchable history of requests and approvals |
Small teams can run a well-designed spreadsheet for a while, but once a company has several approvers, locations or leave types, dedicated software is usually easier to keep accurate. Leave is often one module inside wider HR software; see the benefits of HR onboarding software for how these tools fit together.
Checklist: Reviewing an Existing Leave Process
- Can every employee see their current balance without asking HR?
- Does every request reach a named approver, with a backup when that person is away?
- Are all leave types in the policy also set up in the system?
- Do the accrual and carryover rules match the written policy and local law?
- Do approved absences reach payroll without being typed in twice?
- Can HR produce three years of FMLA leave history if the company is covered?
Frequently Asked Questions
Is paid vacation legally required in the United States?
No federal law requires paid vacation in the US. The US Department of Labor states that the Fair Labor Standards Act does not require payment for time not worked, such as vacations, sick leave or holidays. Some states and cities have their own paid leave rules, so check local law.
How much annual leave are UK workers entitled to?
According to GOV.UK, almost all UK workers are entitled to 5.6 weeks of paid holiday a year, which is 28 days for someone working five days a week. Part-time workers with regular hours get a pro-rata amount, for example at least 16.8 days for a three-day week.
What is FMLA leave?
FMLA leave is unpaid, job-protected leave under the US Family and Medical Leave Act. Eligible employees of covered employers can take up to 12 workweeks in a 12-month period for reasons such as a new child or a serious health condition, or up to 26 workweeks for military caregiver leave.
How long should employers keep leave records?
US employers covered by the FMLA must keep FMLA records for no less than three years, including leave dates, hours for partial-day leave and written notices. Other records may have different retention periods under state or national law.
What should a leave policy include?
A leave policy should list each leave type and whether it is paid, the entitlement and accrual method, carryover and payout rules, notice periods, approvers, any blackout dates, and how leave is handled in payroll.
