Vacation Policies Printer friendly format


a period of suspension of work, study, or other activity, usually used for rest, recreation, or travel; recess or holiday.
A brief online search for articles and news items covering “vacation policy” is evidence enough that, although we all might enjoy a good vacation, a lot is up for debate on the way companies handle the specifics involved in the policy, quantity, and compensation surrounding this much-loved career perk.
What is “vacation?” Though we often think of something like the definition given above (taken from, business entities are usually obliged to consider any time that they compensate an employee during which the employee is not performing the duties of their job as a form of “paid leave” or “vacation.” For that reason, vacation policy is surrounded by a myriad of related benefit issues like maternity leave, sick leave, federal & religious holidays, and any other days that a company may need to make labor and compensation decisions about.

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For employers and those who regulate and administer human resources policy, the issue of "vacation time" can be a daunting one. Traditionally, policies regarding paid absence are put in place to protect the rights and well-being of workers while keeping the situation within equitable bounds for the employer. For those operating a business in the United States, the minimum guidelines are seemingly simple and straightforward, andThe United States Department of Labor Website provides helpful information about common requirements. Not surprisingly, these minimums are often about allowing workers to deal with necessary occurrences in their lives without fear of retaliation from their employers rather than a total assurance that the employer must pay for them to attend to each situation.
Fear of retaliation from employers is based on an unstable market place with employment rates in constant flux. Americans in the US have used less than half of their paid vacation over the past year. According toMarketWatch, this time amounted to over 658 million unused vacation days with 222 million days that could not be rolled over or exchanged for money. In more recent years employees have developed a work martyr complex. Employees feel that if they take time off, it will show a lack of dedication on their part, their work will go unfinished with no one to fill their shoes, and, if someone does finish their work, they will appear insignificant to the company. These new issues pose broader questions for the employer on how to manage their paid time-off policies without promoting a disgruntled, overworked, less efficient work environment.
Vacation Models
Vacation time or paid time-off are commonly practiced in three forms:
  • Traditional leave allocates a set number of paid time-off to the employee for holidays, vacation, sick, and personal days
  • Paid time-off (PTO) bank groups all the days together
  • Unlimited time-off (UTO) self-explanatory.
Companies like Netflix, Evernote, and Pocket have adopted unlimited time-off. The theory behindUTO places value on the individual and their needs and makes them feel trusted. The traditional model is more commonly practiced, while PTO banks are quickly becoming more adapted for recruiting purposes.Society for Human Resource Management (SHRM) recommends monitoring time-off through spreadsheets, weekly time reports, and attendance policies.
Accrued Vacation Time
Accrued vacation time is time that has not been used or paid. Company policies differ on how they manage time that has not been used by an employee. Two common practices are:
  • Use it or Lose It: a policy that allows companies to forfeit an employee's right to paid time-off if they did not use it within a certain time frame (annually, quarterly, or whichever way the policy is written)
  • Roll Over: a policy that allows for the time to roll into the next period, which would allow for a larger amount of paid time-off.
27 states in the U.S. have laws protecting the right of the employee to be able to challenge any vacation time lost. Some of those states hold employers accountable if they break the contract to pay them. In the states, such as California, where the regulations are more specific, the employee cannot lose these accrued hours under any circumstances since they are considered the same as earned wages. If the employee has collected vacation time at the time of their departure from the company, depending on the policy, the employer may or may not pay the difference in PTO.
What happens if an employee has a deficit of days owed to the company? At this point, the company is loaning the days off to the employee if they request more time needed than there allowed PTO. Make sure to add “an accrual loan” to the company policy to clarify how a negative vacation time balance should work.Consider how you might address this in your company policy.
Keeping Employees Happy

Employees just want to be happy, whether they have a work martyr complex or seem to take too much time off, which research shows is less likely. Encourage employees to take time off. Make them feel secure that their jobs are safe. Take time off yourself to set a precedent and encourage other influencers in your organization to do the same. A productive working environment is one that is well-rested, inspired, and confident.