Summer vacation season will soon be upon us, and that means it’s time to dust off your company’s time-off policy.
The United States is the only industrialized nation that has no minimum paid-leave law. About 77% of U.S. workers receive some combination of paid holidays or vacation time, according to the Bureau of Labor Statistics. That means almost a quarter of U.S. workers have no paid leave and no paid public holidays.
Several weeks of vacation is standard in much of the rest of the world. In Australia, employers are required to provide 20 days off per year. France requires a minimum of 25 days, Germany mandates 24 and the United Kingdom requires 20. Even China requires a minimum vacation time of 15 days.
Take off … please!
Recent studies have shown that many employees aren’t even taking the time off they do have. Many Americans routinely skip vacations, handing back to employers more than $21 billion in unused vacation time each year.
In fact, vacation is good for business—it lowers employee stress and prevents burnout. Consider your vacation policy an important element of your organization’s health.
5-part vacation plan
A sound vacation policy addresses the following five elements:
1. How much time. Most companies base the number of annual vacation days on tenure and seniority—more days off for more years of service. Vacation days can increase gradually or come in one lump sum as an incentive to recruit and retain-level employees.
2. Eligibility. At what point does the employee become eligible to take vacation or begin accumulating vacation leave? Typical benchmarks are after six months or a year. Can part-time workers earn vacation leave?
3. Requesting leave. How far in advance should employees schedule vacation, and how should they request it? How much time off can employees take in one stretch?
4. Blackout dates. Make sure your policy states that the company’s needs take priority, so vacations may need to be rescheduled. If yours is a seasonal business, your policy can require employees to schedule time off during the nonpeak months.
5. Unused vacation time. If vacation time goes unused by the end of the year, you have four options:
- Force employees to forfeit accrued leave.
- Pay employees the equivalent in cash.
- Force employees to use their time.
- Allow them to carry it over to the next year.
Have a formal, written policy
You wouldn’t dream of having informal payroll policies, right? Yet too many employers treat vacation time—a form of compensation—as a casual entitlement. Getting too informal can cost you.
Case in point: A company fired a worker after 20 years on the job, claiming he failed to show up for three straight days and didn’t call. The employee said he was scheduled to be on vacation. But his supervisor’s calendar said the vacation was slated for the following week. After the firing, the company hired a much younger employee as a replacement. The former employee sued for age bias and won a $150,000 jury award. In upholding the award, the state appeals court criticized the way the company recorded vacation requests as “rather informal.”
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