Leave balances left on your balance and are a liability on your business. I cannot emphasis enough how important it is to manage your employees’ annual leave, alternative leave, and time in lieu.
When your employee leaves your business, whether it is a resignation, redundancy, or summary dismissal, the cash impact to pay out all the leave is enormous to your working capital.
Ways to manage high leave:
- Keep leave under 20 days and reflect this in your leave policy
- Anyone with high leave should be put on an agreed leave plan to reduce their leave e.g., a half-day of leave every Friday or full day once a month
- Agreed on leave over close down periods like Christmas or after if practical