How to Set a Workplace Vacation Policy

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How to Set a Workplace Vacation Policy
A guide to structuring a vacation policy that sets the tone for your benefits package and keeps employees happy and motivated - not to mention gives your company a competitive edge. Deciding what sort of vacation policy you want your company to have is an important step for any business owner in creating a comprehensive employee benefits package. Whether you want to create a system of rewards, or you are just trying to create a set of guidelines for time off, there are several ways that establishing a vacation policy can help contribute to your business functioning smoothly. The following guide will highlight the various options available for creating or improving a vacation policy.

How to Set a Workplace Vacation Policy: Consider Legal Requirements 

Although vacation time seems like a standard occurrence in the American workforce, employers actually have no legal obligation to offer their employees any vacation time at all. However, the majority of business owners understand the health benefits of offering their employees vacation time, and they aim to set policies that fit their business's operations.

While time off for vacation is not federally enforced, employers are legally obligated to provide certain employees with up to 12 weeks of unpaid, job-protected leave each year under the Family Medical Leave Act (FMLA), a labor law which was passed in 1993. Employees that would qualify for this type of leave include persons that are caring for a sick family member, persons who must leave due to a serious health condition that prevents them from working, or persons that have to care for a new child, by birth, adoption or foster care. 

Dig Deeper: Regulation: Your Own FMLA Policy

How to Set a Workplace Vacation Policy: What Are Your Priorities?

According to Steve Kane, a human resources expert based out of Hillsborough, California, with more than 25 years of experience working with enterprise companies and start-up businesses, vacation time is simply one form of paid time off (PTO), and before you choose your vacation guidelines, you must begin with deciding what you want to accomplish. "You have to put your [benefits] strategy into perspective," he says. "Are you setting a vacation policy to create a rewards structure, to minimize costs, [or] to be competitive? Those are all worthy things, but they may lead to different conclusions." 

Traditional vacation policies, Kane says, have stemmed from policies established by labor union contracts, which will grant employees a certain amount of time off depending upon the length of time they have worked for the company. And, in addition to the yearly allotment of vacation time a company decides to grant employees, many businesses offer additional time off for personal days, sick days, and national or religious holidays, like New Year's Day, Independence Day, and Christmas Day.

"An employer has the option of giving employees two weeks off for the first year, three weeks off after five years, and four weeks off for 10 or 15 years," Kane says. "But, those are just some common schedules; some employees say two weeks for everyone." 

Accrued time off – additional sick days, PTO or vacation time that employees accumulate based on the length of time they have worked at a company – is also more prevalent now than it used to be. Rollover vacation days – unused vacation time from one calendar year that gets added onto next year's allotment – may count as part of accrued time off, but it depends on the employer, Kane says: "Some employers say you have to use your rollover days by March 30, or some date in the next year. Or, they will say you can accrue unused vacation time only up to so many hours, or for so many hours."

One more factor to take into consideration when creating a vacation policy is to determine whether you feel that your business has key employees. If that is the case, you may want to construct separate policies...
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