The Philippine labor code provides that "every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay". This is the minimum requirement of the law on this benefit. If you are managing a company that competes for people with other companies, this is one benefit that you need to look into. A lot of companies provide 15 days vacation leave, 15 days sick leave, between 3 to 7 days emergency leave credits, not to mention birthday leaves and bereavement leaves. All other things being equal, if you offer lower leave credits, this could be a cause for disappointment and may cause some candidates to decline your offer. But as sure as businesses are diverse,Considerations for implementing leave policies are also diverse. If you are reviewing your existing policy or looking to create a new one, you might find the following suggestions useful.
Before considering the number of leave credits you will propose to management for approval, you will need to consider the impact of leaves to the business you are in because not all businesses are created equal in this aspect. Some companies can afford to give more leave credits because the occasional absence of employees have less effect on the bottomline. Other companies on the hand rely on the presence of employees for productivity and profitability. Let me cite some examples. In some retail companies, other employees can cover for other employees while they are absent. The impact would be in the increase of burden to the present employees, nevertheless, the work still gets done. Some companies already factor-in force majeures in manpower planning hence, the cost of leaves is the slack they create in anticipation of these eventualities. The impact is smaller compared to other companies say in the medical transcription business for example where the absence of one employee on a given day can be computed in specific amount of income opportunity lost. Another example would be companies employing consultants paid by the hour. This should be considered in deciding the number of days you can allow your employees to take a paid leave of absence. If you cannot afford to be competitive in giving leave credits, don't worry, you can always augment your benefits in other ways for as long as the employees understand why and how you are still competitive even if you offer lower leave credits.
VL/SL/EL Vs. Service Incentive Leave
If you are implementing the former, I don't know if you notice that some employees who ran out of VL credits all of sudden become sickly. Need I explain why? This I believe is the beauty of not categorizing your leave credits. In my company we give service incentive leaves(They are more than five by the way). It is up to the employees how they want to use them. This way they don't need to lie about being sick if they run out of VL leave credits. However we have a policy about availing them properly. If they are using the SIL to take a long vacation they need to seek approval from their supervisors at least one week in advance. There are also seperate rules for SL and EL.
To convert or not to convert
What is the essence of providing leave benefits? Answer, to offer employees opportunities to take respite from work, to rest and return to work refreshed and envigorated, so why motivate them to encash their leave credit? Business need maybe, or maybe because the leave credits are awfully many, they can't use all of them up. What ever the reason, I'm personally against allowing the employees to convert all of their leave credits to cash. If you allow them to do that, they will take a vacation right at work. I had several schemes in my previous companies. In one company, we only allow them to convert 5 leave credits to cash. the rest they must take. We even schedule the leaves of employees who are notoriously work-a-holic. In one company, we allow up to 50% because we give more leaves. The key here is to make sure that the main purpose of this benefit is not defeated. You might also want to consider increasing the amount of leave credits as employees pile up tenure in your company. This can help in employee retention.
If you don't agree with me on the Service Incentive Leave and want to keep your leave categories, fine! Here's a way to dissuade employees from malingering. Convert unused sick leave credits to cash and call it Health Bonus. This is not original. We had this in one of my previous employers.
Stick to your policy
A properly written leave availment policy details the procedures for availing and the implication of nonconformance. A lot of times this is ignored and it's mostly management's fault. If the policy says that VL notice should be given one week in advance, make sure it happens. If employees are required to give medical clearance after a prolonged sickness, make sure it happens. Otherwise the policy will become a joke. The supervisors and managers should be aware that they can approve and disapprove leaves as the circumstance warrants and in fair consideration of the employee's situation. I have encountered situations when managers take this things for granted at the expense of productivity.
When employees' resign, do you allow them to take terminal leaves in lieu of the 30-day notice? I suggest that you should have a policy that clearly indicates that this is not the norm. That company reserves the right to require the employee to report for work and go through the turnover process for the whole duration and that allowing employees to take leaves of absence during the notice period is the prerogative of the company after considering the exigencies of the business. What happens to unused leaves, you might ask. You can always convert them to cash.
That's all for now... My mind just went blank. If you have additional suggestions or comments, please feel free to write some comments below. If you need help in putting together a policy, let me know... my rates are very reasonable... wink, wink.
See you next post.