December is just around the corner, which means that all those pesky end-of-year considerations that seemed so far away just yesterday are now fast approaching! You know, like leave-tracking.
Even in the best of times, choosing the right leave tracking method can feel like a bonafide balancing act.
FMLA leave regulations state that an employee is entitled to 12 weeks of leave in a 12-month period. Meanwhile, Canada's employment standards specify that an employee is entitled to up to 17 weeks of leave within a 52-week period. No matter where you're situated, there are two common methods for managing leave: the calendar year system and the rolling year system.
While many companies assume the calendar year is simply the easier way to go, there's a lot more to consider when making the right choice for your business.
In this article, we'll break down the differences between the calendar year and the rolling year. After all, knowledge is power. The best way to decide which approach aligns best with your company's unique needs and goals is to better acquaint yourself with both systems.
What is a calendar year?
In an HR context, a calendar year runs from January 1st and end on December 31st, aligning with the traditional yearly cycle most people are used to. It's a straightforward system that simplifies the process of tracking leave and benefits—since everyone's entitlements reset simultaneously in the new year.
This is an approach that offers predictability, makes record-keeping easier, and works well for organizations with fixed annual schedules.
A calendar year system is great for:
- Businesses with predictable schedules: A calendar year aligns with year-end planning, reporting, and seasonal workflows, making it easier to manage employee time off.
- Organizations wanting simplicity: Resetting all employee entitlements on January 1st streamlines leave tracking and reduces the administrative burden. True story.
- Companies that need to match benefits cycles with tax reporting deadlines: The calendar year system helps align benefits and reporting periods with the fiscal year or tax year, making it easier to maintain consistency and meet compliance requirements.
What is a rolling year?
In the world of HR, a rolling year is a flexible 12 month period that starts with a specific event. This event might be an employee's first day of work, or the date they use their first day of leave. Unlike a calendar year, it doesn't reset on a fixed date but instead moves forward based on individual circumstances.
This approach is tailored to employees, allows for more personalized leave management, and ensures time-off entitlements are distributed evenly across your workforce.
A rolling periods system is great for:
- Employee-specific leave cycles: A rolling year system is ideal for companies that want to tailor their leave policies to individual start dates, ensuring fairness and flexibility.
- Year-end flexibility: By spreading leave across different 12-month cycles, businesses can reduce the rush of employees all trying to use up entitlements before December 31st.
- Dynamic team growth: This system works well for organizations with staggered hiring throughout the year. This means that new employees won't have to wait until the following calendar year to access their full benefits.
Calendar year vs. rolling year
The calendar year is fixed, and leave entitlements for all employees will be reset on January 1st, providing consistency and simplicity in tracking. In contrast, the rolling year offers flexibility by resetting leave on the anniversary of each employee's start date, which accommodates diverse work schedules.
While the calendar year is ideal for businesses with a uniform annual cycle, the rolling year suits companies with staggered hiring or dynamic teams, allowing for more personalized leave management.
Let's break down the pros and cons of both approaches, shall we?
Calendar year:
Pros:
- Simplicity and consistency: all employees' leave entitlements reset on the same date, making it extra intuitive to track and manage.
- Alignment with yearly planning: it ties neatly into fiscal or tax years, helping businesses align their leave tracking with their financial reporting.
- Predictability: since the cycle is fixed, employees and HR teams alike know exactly when the year begins and ends, reducing confusion.
Cons:
- Inflexibility for new hires: employees who join later in the year must wait until January 1st for their leave year entitlements to reset, which can feel prolonged and unfair.
- Year-end rush: many employees may try to use up their leave before the calendar year ends, creating bottlenecks and shortages in staffing.
- No customization: this system doesn't account for individual circumstances, such as staggered hiring or different start dates, making it less flexible for dynamic teams.
Rolling year:
Pros:
- Fairness for new hires: employees' leave entitlements reset based on their individual start dates, ensuring everyone receives a full twelve month leave cycle.
- Flexible and tailored: this system adjusts to varying work schedules, making it ideal for companies with staggered hiring or dynamic team. Dynamic teams are teams with frequent new hires, varying schedules, and/or frequent changes in team roles.
- Avoids year-end rush: by spreading and staggering leave throughout the year, it reduces the pressure on employees to use up their leave before December 31st.
Cons:
- More complex tracking: managing different leave cycles for each employee can be challenging and require more administrative effort.
- Potential confusion: unless clearly spelled out, employees may not understand when their leave resets without a consistent annual reset date.
- Difficulty with annual planning: it can be harder for businesses to align their leave tracking with their fiscal or tax deadlines, making rolling year systems less predictable overall.
Bottom line:
Use a calendar year system when you need a simple, predictable approach that resets leave entitlements for all employees on the same date.
Opt for a rolling year when you want flexibility, especially if your team has staggered hiring or requires personalized leave cycles based on individual start dates.
How to choose the right approach for your business
Here are a few pro tips to help you choose the best leave-tracking approach based on your business's needs and circumstances:
- Consider your team structure. If your business has employees with varying start dates and/or an ever-changing team structure, a rolling 12-month period may offer the flexibility needed for fair leave distribution.
- Evaluate your administrative capacity. A calendar year is easier to manage and track, while a rolling year requires more effort. Consider which system better suits your team's administrative resources.
- Align with financial or fiscal year timelines. If your company operates on a fixed fiscal or tax year, a calendar year may be more compatible with syncing leave with financial planning.
- Assess employee preferences. Take into account how employees view leave entitlements. If fairness and equal treatment are top priorities, a rolling year might be more appealing, whereas a calendar year offers straightforward consistency.
Ultimately, choosing between calendar year or rolling year leave tracking systems depends on your business structure, team needs, and administrative capacity. PurelyHR offers a powerful, flexible, and efficient leave tracking system designed to streamline staff leave management while adapting to your unique policies and needs.
Sign up for PurelyHR's 21-day free trial today and see it to believe it!