Vacation Policy

In the US there is no Federal law requiring you to offer your employees paid vacation but if you have full time employees they will likely expect an annual vacation. You may also need to offer vacations to be competitive in attracting employees.

Some things to consider for your policy:

·         How much vacation time do you offer, for example 5 week after one year, 10 weeks after two years, 15 weeks after ten years

·         When is the vacation earned at the end of each calendar year or at the employee's anniversary date? If earned at end of year will you prorate the service into days for example if the employee works nine months do they earn 9/12ths of 5 days or 4 days? If the vacation is earned on December 31 and the employee leave before the end of the year do they lose accumulated vacation?

·         Do you want to allow employees to accumulate vacation time over several years or will unused vacation expire at the end of the calendar year or can the employee elect pay in lieu of vacation? Some states such as California do not allow "use it or lose it policies" however California allows you to pay the employee for unused vacation instead of giving time off.

·         Is there a minimum or maximum days in a row that employees can take at one time? Most companies require a minimum of 1 day increments.  I know a bank that required each employee to take two weeks consecutively because they believed that any fraud could be discovered if an employee was out of the office for two weeks. Many small businesses do not allow employees to take more than one week consecutively because there are fewer employees and less duplication of duties and skills.

·         You should require employees to schedule vacation in advance giving preference to the most senior employees.

·         If you shut down for maintenance at a designated time each year you may wish to require that employees take vacation at that time. You can also limit time off during busy seasons such as a retail store limiting vacations during Christmas selling season.

·         Do you give vacation to part time hourly employees? If so will the vacation pay be based on normal hours or average hours worked per week?

·         You can offer different packages to different classes of employees. You can decide to give part time employees no vacation time and more vacation time to executive employees. If you have employees with particularly stressful jobs they may need more time off to be more productive. I knew a computer programmer/analyst that worked for a software company that designed customer programs for large banks. He would work long hours and often go for weeks without a day off when there were issues with new software. He also received 8 weeks vacation a year in compensation.

Add the vacation policy to your Employee manual.   

Original Content copyright 2010 Thomas Robinson