Should We Convert Unused Leaves to Cash to Reduce Unnecessary Leave Requests? Seeking Insights and Proposals

Good day everyone.

I'm currently creating a proposal to convert unused leaves (Vacation and Sick leaves) to cash at the end of the year. The current company policy only carries over unused leaves to the following year. However, I have noticed a rise in the number of "unnecessary" leaves being taken by our employees, leading to an increase in lost man-hours.

I want to understand the pros and cons of converting unused leaves to cash at the end of the year. Will this help in reducing the number of "unnecessary" leave requests? If you already have a proposal for this, may I request a copy.

If you find that absenteeism is very high due to non-encashable leaves, you can consider implementing a leave encashment policy. It would be beneficial to establish a cutoff point, for example, 50% or even 75%, to be encashed while the remaining leave can be carried forward. This approach would help in reducing leaves taken on loss of pay as well.

Regards,
Madhu.T.K

Thanks for your reply. I'm still in the process of creating a proposal for this policy, and I need the pros to justify this new policy. I will be submitting this proposal to higher management, and I'm sure they will be looking for the cost-benefit analysis for this policy.

Your forum has been most informative. Now, I would like to ask how could I compute for an employee's incentive leave if he's eligible only by December? Obviously, he cannot consume all leave for that month. So, how do I go about the computation, and how many leaves can he avail for December only since by January of the next year, there will be a new set of leaves again? Thank you.