WORKPLACE: It’s Vacation Time For Your Company!

Summer is fast approaching and employees across the country are beginning to anticipate planned vacations, trips and a break from the daily grind. Since September 11, for many, it seems that the inherent value of a free weekend and time with family has increased ten-fold.

As a result, this year your company may find that employees are more reluctant to forego vacations or to cash them in for extra pay — that is, if your policy allows for these options. By the way...when was the last time you reviewed or updated your company’s vacation policy? Perhaps this is a good time to ensure that your company’s program has kept pace with the changing labor force and today’s challenging business environment.

Bloody from the battles of the mid-1990s labor war, among other changes, many employers found it necessary to relax the waiting period in their vacation policies. Some also added time off for long-tenured employees and upped the ante for employees who stuck it out for even one year. If you were one of the many employers who made these changes, rest assured it’s not time to revert back to the old ways. In fact, don’t expect the desire for more time off to end any time soon.

As the Baby Boomers retire and the Gen-Xers and Ys take over the American workplace, more time off will remain at the top of the list as a key recruiting and retention tactic.

While the veterans and Boomers invented the 60-hour workweek, you can count on the Xers and Ys to reclaim their freedom and make up for the lost time with their parents.

Aside from these unique labor market issues, there are also practical policy considerations related to vacation time. As you review your vacation benefits, here’s a checklist of items your policy should address, along with some ideas to think about:

ELIGIBILITY. Who is eligible? Are full- and part-time employees qualified? What about temporary employees? Be sure that your policy defines the eligibility criteria.

LENGTH OF TIME. How much paid time will your pest control company offer? Many companies provide one week after one year (or after six months), two weeks after two years, three weeks after five years, and four weeks after 10, 12 or 15 years. Also, some companies provide more time off to upper-level managers.

ACCRUAL. Is there a schedule for accruing vacation or does vacation come due on the anniversary year? (Note that this is usually much easier and less cumbersome for companies and managers to track.) If you use the accrual method your company must decide when time starts accruing.

PAID-TIME OFF CALCULATION. How much pay do your employees receive for their vacation time off? The method of calculating vacation pay should be spelled out in your company policy or manual, especially for commissioned employees. (Note that some companies pay the base rate only as vacation pay for commissioned employees. Others calculate an average daily rate from the previous years’ earnings and multiply it by the number of days used.)

CARRY-OVER. Will you allow employees to carry over unused vacation time from year to year? If so, is there a cap? Or, will you require employees to take vacation within the anniversary year that it comes due? (This is currently more common.)

PAY FOR TIME EXCHANGE. Can employees exchange vacation time for additional compensation? (Most companies require employees to take their vacation because they believe time away from work is in their best interest.)

SCHEDULING. How much advance notice is required for scheduling vacations? What happens if two employees request the same time off? (Usually, the most tenured employee is given preference.) Are there periods of time that employees cannot take vacation, perhaps due to the seasonal nature of your work? If so, these should be defined. Can employees take vacation in less than full-day or weekly increments? Do they need special permission to take more than one week off at a time? Once again, all of this should be addressed in your policy.

HOLIDAYS. What happens when a holiday falls during a vacation? (Most employers will provide an additional day of vacation to be taken at a mutually agreed upon date within a certain time frame.)

LEAVE OF ABSENCE. If an employee requests and is granted a leave of absence, could he or she use any earned vacation time during the leave? Is this time provided in addition to the leave or is a portion of the unpaid leave substituted for the paid vacation time? (Note that some states have leave regulations that mandate how this is handled.)

PAYMENT UPON SEPARATION. When an employee resigns or is terminated, is he or she eligible for accrued, unused vacation time? (Most policies provide for unused vacation if the employee resigns with proper notice or is laid off. If the employee is terminated, vacation is usually forfeited. However, beware! Some states have regulations that require pay for accrued vacation upon separation, regardless of the reason!)

REGULATORY PROVISIONS. Does your company policy comply with state and federal employment regulations? Is it applied in a nondiscriminatory fashion? (It’s wise to have your policy reviewed by a professional who can help ensure your company’s compliance with all employment provisions.)

CONCLUSION. If your policy does not explain your company’s position on these important points, or if you’re not certain that it complies with state and federal employment regulations, it may be time for a review or update. A well-written vacation policy that provides competitive benefits and fair provisions is just one more tool you can use to recruit and retain talent. And, these days, it’s one that’s especially important to our nation’s workers.

The author is president of Seawright & Associate Inc., a management consulting firm located in Winter Park, Fla. For the past 15 years, she has provided human resource management and compliance advice to employers across the country. She is the author of The Employment Genie and can be contacted at 407/645-2433 or jseawright@pctonline.com.