Annual Leave: What Happens When Employees Resign?

When employees decide to move on from a company, one question that often arises is, “What happens to their accumulated annual leave?”. In Malaysia, understanding the complexities of leave entitlements and how they are managed is essential for both employees and employers.

This article explores what happens to an employee’s annual leave after their resignation, diving into employee entitlements and breaking down how Lightman’s HRMS software, Worksy, simplifies leave management for resigned employees.

First, Let’s Take a Closer Look at Employee Entitlements:

In Malaysia, employees are entitled to leave as mandated by the Employment Act 1955 and other relevant laws. The exact entitlement differs based on the length of service and the employment contract. Typically, employees earn annual leave progressively, accumulating a certain number of days for each completed year of service.

Utilizing Annual Leave Before Resignation

Ideally, employees are encouraged to utilize their accumulated annual leave before submitting their resignation. This approach ensures that employees enjoy the benefits of their entitled time off while still employed. Additionally, it helps employers maintain a balanced workforce and minimize any disruption caused by sudden absences during the notice period.

Prorated Leave Calculation

In cases where employees have unused annual leave at the time of their resignation, the leave is prorated based on the employee’s tenure for that calendar year. Prorated leave also applies to employees who have completed less than a full year of service. The calculation is usually based on the number of completed months of service, and the entitlement is determined by the company’s policies and practices.

Payment for Unused Annual Leave

Upon resignation, employees are entitled to receive payment for any unused annual leave. The payment is calculated based on the employee’s daily wage or salary rate at the time of their resignation. It is essential for employers to accurately calculate and settle the outstanding amount to comply with labor laws and ensure a fair exit process.

Streamline Your Leave Management with Worksy

Managing leave entitlements and calculations can be a time-consuming and error-prone task for HR managers. However, Worksy simplifies this process, even for resigned employees. With its user-friendly interface and comprehensive features, Worksy streamlines leave management, automates prorated leave calculations, and facilitates accurate payment calculations for unused annual leave.

By integrating a HRMS software into the offboarding process, employers in Malaysia can ensure a smooth and efficient transition for resigned employees. HRMS softwares enable HR managers to generate detailed leave reports, process leave encashment calculations, and maintain accurate records. Not only does this save time, it also reduces potential errors, enhances transparency and builds trust between employers and employees during the offboarding journey.

On an Important Note:

Understanding what happens to annual leave after an employee resigns is essential for both employees and employers in Malaysia. By familiarizing themselves with employee entitlements and complying with local labor laws, employers can facilitate a fair and transparent offboarding process.

On top of that, by leveraging on advanced HRMS softwares such as Worksy, organizations can simplify leave management, automate calculations, and ensure accurate payment for unused annual leave. With the help of modern HR technology, organizations can effectively manage employee entitlements, foster positive employer-employee relationships, and optimize their HR processes for a smooth offboarding experience.

Are you ready to enhance your HR management? Schedule a free demo with us now!