As already noted, you can't really blame employees for making full use of the perks you give them.
While some would be abusing the perks because they're lazy or just don't have the best work ethic, others could be doing so because they're not happy at work, so it might be worth having one-on-one's to try to find out how they're feeling and whether there's anything that can be improved, before going too far in terms of changing policies or punishing them.
Coming in late / leaving early
I'd recommend against saying you allow this X times a month.
Instead, say the working hours is X to Y, but you don't mind them coming in a bit later or leaving a bit earlier "once in a while" as long as:
They have a good reason (going to the doctor is a good reason, oversleeping or just being tired is not). It's up to you whether you require them to tell you said reason, or whether you just say they should have one. OR
It is for exceptional circumstances (if it happens once every week, it's not exceptional).
- They tell you beforehand via IM or email (e.g. the day before or before 11 AM on the day).
- They wouldn't miss any meetings or deadlines and they're not blocking someone else (i.e. that employee can't continue their work without this employee's help).
- Their overall performance is acceptable.
- They don't abuse this perk (if they do, it should be revoked).
Working from home
You can do this exactly as above.
But it can also work to just allow them to work from home twice a month (or however often). Some people can be as productive, or more productive, when working from home, so working from home is not necessarily a bad thing.
This is assuming the job doesn't require them to constantly work closely with others, which would be best achieved when they're in the office. If this is the case, you might want to scrap working from home altogether.
They should probably be reachable by phone, email, IM and/or however else to the same extent than if they had been in the office (if not to a greater extent, since people can't just walk over and talk to them).
One problem with people working from home is that it can be hard to check up on them (contacting them or checking if they're online can work to some extent) - if they're lazy and only doing the minimum amount of work to keep their job, allowing them to work from home might not be the best idea. The better idea is probably just to get rid of them though.
As already noted, leave should accumulate (at least up to a year). Many people would prefer to take longer holidays, and that would probably help prevent burnout better than taking 2 days every month.
Other than than, them taking all their (regular) leave shouldn't be a problem.
Violating the policy
Those repeatedly violating the leave policy (or making use of perks despite them having been revoked) should:
- Be issued with warnings
- Have their leave be consumed by them coming in late or working from home (without permission)
- Possibly be eventually terminated
If this is one of your top performers, you can also make an argument for just looking the other way (because what they get done should be much more important than how long they take to get it done). Although there is a risk there that others will feel you're showing favouritism (if they complain, you can say something along the lines of "their working hours is between them and me", but this may not be too effective).
Changing the policy
If you want to update the leave policy from what it was, I'd probably recommend sending an email saying something along these lines:
Please see this page for our updated leave policy.
The current leave policy was created on the assumption that the perks will be used conservatively. Some of you have used them as intended, but others have, unfortunately, tried to make maximum use of them.
We accept that this was our mistake, not yours, and we apologise for not making clear what we expect of you. We will be updating the leave policy going forward to better reflect our original intent.
For those of you only rarely or occasionally making use of these perks, this will likely not change anything. If you have been trying to "use up" the perks every month, this will need to change going forward, but there will not be any consequences beyond that.
So, starting next month, you will no longer be allowed to come in late 4 times every month. Instead, we expect you to only come in late when you have a good reason for doing so (e.g. a doctor's appointment - oversleeping or just being tired is not a good reason). As such, there is no longer an exact threshold for how often you're allowed to come in late. As a rough guideline, we expect an average of about 0-2 times a month, with 4 times a month being the maximum. We will tell you if we think you're overusing this perk, and may revoke it if it's abused.
Some may not be happy with this, but there isn't too much that can be done about that.