By Cori Maedel

While vacation pay is a cost factored into a businesses’ budget, absences may not be. A survey by Hewitt Associates revealed that 69 per cent of employers have never even attempted to calculate the costs of absence, yet inconsistent administration and ineffective leave management is potentially costing millions of dollars every year.

For example, of those surveyed, an average of eight in every 100 employees experienced an absence around 42 days. For employers with 20,000 employees, that adds up to 67,200 days lost—the equivalent of 260 full-time employees not working for an entire year—or almost $13 million lost annually in productivity.

In another example, we recently spent many hours with a client reconciling their lieu time for their 100 plus employees. Because of an inefficient tracking system, their lieu time had become out of control. Records were inaccurate, everyone was confused as to what they were owed, and no one seemed to have consistent answers. Our evaluation revealed they owed their employees over $45,000.

Tracking absences therefore goes far beyond legal obligation. It is also a sanity-saver and makes a great deal of operational and financial sense. It’s easier said than done though, especially if your employees are spread over multiple provinces, each with its own employment laws, minimum standards and record-keeping requirements for basic entitlements such as vacation time and vacation pay.

While there’s no one practice or absence tracking system that suits all, records must be clear and accurate, and comply with the legislation governing your sector.

If an employee leaves the company, whether or not by choice, the employer has a legal obligation to pay any outstanding vacation pay. If there is a dispute over what was paid or if a claim is filed, the burden of proof is on the employer. Without clear and accurate records to back up their decision, the employer may face substantial fines as well having to pay any outstanding vacation monies.

Many of these complications can be avoided with employee leave policies that set guidelines for taking any kind of leave, as well as outlining statutory holidays and office closures. Don’t make the common mistake of trying to implement a “use it or lose it” policy though. Each province has minimum standards that employers must provide their employees, and it is the employer’s legal obligation to make sure their employees take this minimum time so that none remains at the end of the year. If they don’t take it, an employer is within their rights to schedule it for them.

Of course, employers are also welcome to extend the number of vacation days (or increase vacation pay) and many do so as a reward for service, but they aren’t obligated to pay out or carry forward these “extra” vacation days. This in itself adds an extra layer of complication to vacation tracking because employees for a given organization may be on a spectrum of vacation time and pay, based on the length of service and the number of days carried forward.

On this note, being able to track whether or not your employees have taken their minimum vacation requirements in a given year is another very important reason for accurate tracking. If employees are able to carry forward any of their minimum vacation time, and if they are given a raise in the New Year, they’ll receive vacation pay at a higher rate than in the previous year. If a company chooses to pay out unused vacation, and the employee has worked 52 weeks, they receive an additional two weeks’ pay rather than have it paid out within their annual salary.

Add to this the complication of tracking vacation time for new employees. If it is pro-rated during their first year (i.e. vacation time is allocated based on the time between their first day of work and the end of the organization’s 12-month vacation period), this too must be recorded. Without efficient tracking, it soon becomes very muddled.

Tracking leave therefore not only saves money, it also saves a great deal of confusion!

Although employment laws set out what details should be tracked and for how long, there is no set format for the actual tracking. There are many online tracking templates to use, should you wish. However, the most effective way is to use these only for inspiration and instead create a unique tracking system based on your needs, rather than trying to shoe-horn in practices to suit someone else’s spreadsheet.

If you have a large organization, you may find that using a web-based, absence-tracking application makes the most sense. You may even choose to outsource the service.

The advantages of using a web-based system include:

• Simplified absence tracking
• Centralized employee leave management data
• Massive cost savings
• Secure, clear and accurate records, with no ambiguity
• Web-based applications = no software installations
• Easy reporting and analysis of leave management statistics
• Automated steps means no more paperwork (saving time, paper and money)
• Minimizes human error
• Applications can often be customized for your leave policies and permissions

Difficulties of outsourcing your absence tracking may arise if the outsourced company is in a different time zone, causing a delay in deliverables or answers to your requests. In addition to this, before an outsourced company takes over the reins, you will need to reconcile all your absence records and may need employees to sign off on them before updating the new system. Should your current records be in order this needn’t be a large task, however, for some companies it can create quite a lot of work. (Ideally, if you can find an outsourced company that will do this as part of their service, it may save you a lot of time and money.)

Ultimately, however you choose to track your vacation, from beautiful hand-written records to intricate databases, just make sure the information kept is clear, accurate and complete, because efficient and effective record keeping will go a long way in protecting both the employer and the employee.

Cori Maedel is presenting How to Create & Implement Effective HR Policy in Surrey on October 24. For more information on this and other professional development opportunities, please refer to BC HRMA’s online calendar.

Cori Maedel is CEO of The Jouta Performance Group in Vancouver. For more information on Jouta’s products and services, including tracking employee leave, call 604.488.8885 or visit www.jouta.com.