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Table Of Contents

The Impact of Leave Policies on Employee Retention

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Table Of Contents

Having a superb leave policy is one of the strongest trump cards you can pull to attract top talent and boost employee retention as well.

Time and time again, research proves that employees from all walks of life value having a good work-life balance as much as they appreciate high salaries and good leadership. In addition to the remote work guarantees, generous leave policies ensure employees can rest well, be productive, and remain present in their personal and professional lives equally.

In the article below, we will explain what kind of leave policy strengthens employee retention, and what are the core elements of the best leave policies.

The Four Cs of a Great Leave Policy: What Does It Take to Make One?

In its essence, an ideal leave policy is:

  1. Competitive;
  2. Customizable;
  3. Compliant.
  4. Compassionate;


A competitive leave policy is made by examining the competitors’ active job ads and matching their efforts with something better or equally as good. 

You may think this has little to do with employee retention but the truth is, even satisfied employees snoop the job ads for their position from time to time. This helps them learn if they’re fairly compensated for their efforts, and whether to ask for a raise, extra perks, or seek another employer.

You should stay in touch with the current job market situation at all times. It enables you to improve leave policies for loyal employees, whenever there’s a chance. Continuously improving working conditions tells employees they’re appreciated and heard; otherwise, you may face high employee turnover.


Customizable leave policies take into account what matters the most to your staff and their specific needs.

For example, let’s have a look at a company whose workforce is 90% remote. Hiring people from different corners of the world means you have to honor different state and religious holidays and have various backgrounds in mind. A customizable leave policy means everyone can take time off at their convenience, without it disrupting the business at any moment. Having the same rules for everyone won’t work; Easter, Passover, and Ramadan — wonderfully diverse, but complicated indeed.

Pro tip: Use the PTO tracking tool to automate leave tracking, and make your leave policies known company-wide. Vacation Tracker is free to try and available for Slack, Google, Microsoft, and email — give it a spin!


Compliance is another thing to consider when creating leave policies, especially if you provide remote jobs. You need to account for different leave types, including vacation, sick leave, bonus days off, and leave donation policy. Leave policies depend not only on company size and type but on local legislation for each residential country of your employees.


Finally, compassionate leave policies probably make the largest impact on employee retention. Leave policies that keep the employees on board include specific times and situations in employees’ personal lives. On top of paid vacation time and sick leave, people need time to rest, grieve, celebrate, or work on other personal tasks and issues, such as:

  • Parental leave for both parents;
  • Days off for family members’ sickness;
  • Bereavement leave;
  • Educational leave;
  • Employment sabbaticals (paid and unpaid);
  • Days off for relocation;
  • Birthdays;
  • Mental health days.

Having a well-rounded leave policy includes many of these individual examples and general rules that apply to specific cases you may forget to work out in detail.

Good Leave Policies Prevent Burnout

The Impact of Leave Policies on Employee Retention

Source: Pixabay

Burnout was one of the main culprits for the Great Resignation, ranking in second place behind the need for a higher salary.

Each person can display a different set of burnout symptoms, varying from mild cases of Sunday dread to acute anxiety, sleep issues, and depression. 

In all cases, burnout will sooner or later result in poor output at work: your top performers may become slow and unwilling to accept new challenges, do shabby work, or start looking for other employment options — or as they say on TikTok, quiet quitting.

Burnout may happen for several reasons, such as poor management or a toxic workplace atmosphere. However, sometimes your struggling employee only needs a break.

That’s where the leave policy comes in handy!

Burnout prevention should be a built-in feature for every leave policy. Let your employees know they can safely take time off when they feel the burnout is getting closer, without the fear of retaliation or pay cuts.

Some employers go as far as to offer unlimited paid time off to keep and attract the workforce, but you should tread carefully with it: some call unlimited PTO a scam.

Workplace Culture Benefits From High-Quality Leave Policies

High-skilled employees and seniors know to always ask the HRs and the rest of the staff about the current employee retention situation. 

The answer to “How long do the people stay at this company, on average?” tells them everything they need to know about the workplace culture and working conditions. If people love being there, they simply won’t quit that easily. 

A good leave policy is one of the substantial workplace benefits, and in the recent switch to mass layoffs, employees won’t leave easily when nothing significantly better is guaranteed.

Improve Productivity, Reduce Mistakes and Injuries With Leave Policies

Working with potentially dangerous tools and machines at work, as well as handling high-value and complex business transactions demands the staff be well-rested.

Leave policies make the job more attractive, prevent burnout, and improve workplace culture — but making the actual line of work safer matters a lot, too.

Workplace injuries and serious errors are easy to prevent when rest periods are strictly mandated and guaranteed with leave policies. National legislation may be more or less lenient with workers’ rights and protection, but it is highly beneficial for your company to take care of the people making it successful. 

Bottom Line

A well-made leave policy can help keep employee retention levels high even in times of crisis. 

Whether you’re making one from scratch or updating your current one, consider the 4Cs of a stellar leave policy and make it competitive, customizable, compliant, and compassionate. No workplace looks the same, so be sure to have the individual needs of your staff in mind. 

If you put some work into making your leave policy one of your strongest employee retention assets, you can improve the workplace culture, prevent burnout, and improve employee productivity at the same time!

As it’s hard to juggle all the intricacies simultaneously, having a PTO tracker will drastically improve your PTO management by automating dull tasks!

Anja Milovanovic
Anja Milovanovic

A journalist turned content writer – Anja uses her investigative skills to produce high-quality SaaS, Marketing, and HR content.

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