About that vacation…

One of the most important employee benefits involves vacation and sick time. Many companies offer a set number of days based on tenure. Others bundle sick leave and vacation days in one program – called Paid Time Off or PTO – providing employees a set number of hours for both vacation and sick leave.

While you are not required by law to offer vacation and sick time, doing so can be a smart way to gain a competitive hiring advantage.While you are not required by law to offer vacation and sick time, doing so can be a smart way to gain a competitive hiring advantage. Before you make these policies available, you’ll need to take a number of important steps:

  • Set restrictions. You can limit the times your employees are eligible to take vacations. For example, if your business is cyclical, you can restrict employees from taking vacations during busy times. This is very important for smaller, seasonal businesses which have fewer employees and during peak business times.
  • Ask employees to schedule vacations in advance. This will allow you to plan ahead and ensure you don’t have too manyemployees out at the same time. A little preparation can help you avoid surprises and added stress.
  • Set a reasonable vacation accrual policy. To limit the possibility of employees taking too much time off, you may want to set a cap on the amount of days employees can accrue and use at one time.
  • Be consistent. Consider offering the same policies to all employees.
  • Police sick leave.It’s no secret that some employees view sick time as vacation time. To ensure that this doesn’t happen, require a doctor’s note for serious illnesses. If you think an employee might be taking advantage of sick time, take a look at the times they’ve taken off. Is there a set pattern, such as absences on Mondays and Fridays? If so, you should address your concerns with the employee immediately.
  • Determine your separation policy.If an employee quits or is terminated from employment, you’ll need to establish a policy for compensating them for unused sick or vacation time. Keep in mind that some states have laws that outline when payment is required.
  • Publish your policies.Your policy should outline vacation eligibility–the rate at which vacation accrues—along with your policy for carrying over vacation days. In addition, it should address what happens to unused vacation in the event of separation from the company. 

While formulating a vacation or PTO policy is no easy task, it should go a long way in helping you attract employees and retain and reward your top performers. After all, good employees make good businesses.


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