Vacation policy
In the world of employment benefits, vacation time is high on the list of employee favorites. Whether you are looking to set yourself apart from the competition by offering a robust package or trying to match the minimum requirement for your state, days off (both paid and unpaid) will be a daily human resources matter. Aside from communicating to your team how many days off they receive, there needs to be a clear expectation of how these days are requested, confirmed, recorded and what each employee will need to do to make sure their work is covered in their absence. Here we will look at what your vacation policy needs to cover.
Eligibility for vacation
Employers are not required to offer vacation time. However, for those that do, a good start to any vacation policy is to define which employees are eligible for vacation. For example: do full-time and part-time employees receive vacation days? Do employees need to be employed for a certain amount of months before they receive days?
Accrual of vacation
After defining who is eligible for vacation time, the next step is to outline how a vacation is earned. A policy could provide that vacation accrues on the anniversary date of the employee’s hire or that three vacation hours accrued per pay period.
If accrual varies for different types of employees, the policy should clearly explain the different rates. For example, full-time employees might receive three vacation hours per pay period, whereas part-time employees might receive only two vacation hours per pay period.
When writing a policy, the employer should keep in mind that accruing vacation days is not the same as earning vacation pay. For instance, a particular policy might allow for accrual of 40 hours of vacation pay, but also provide that unused vacation hours will not be paid upon termination.
Taking vacation
After the “who” and the “how” of earning vacations has been explained, a policy should cover by what method vacation time is to be cashed in. A vacation policy may place limitations on when employees can take a vacation and may require advance notice and employer approval. For instance, a vacation policy might require employees to take vacation during the annual plant shutdown or only with four weeks’ advance notice.
Sample policies
The first policy below is a general use policy that can be easily adapted to address most offices. Also included is a policy based on a maximum accrual, and a policy based on annual accrual.
SAMPLE POLICY
It is the policy of ABC Company to provide each full-time employee with vacation time on a periodic basis. The amount of vacation to which an employee becomes entitled is determined by the employee’s length of service as of his or her employment anniversary date. For full-time employees, vacation accrues as follows:
1. At the end of the first year of service, one week, or 40 hours, of vacation.
2. Two years or more but less than five years of service, two weeks, or 80 hours, of vacation per year.
3. Five years or more but less than 10 years of service, three weeks, or 120 hours, of vacation per year.
4. Ten years or more of service, four weeks, or 160 hours, of vacation per year.
Regular part-time employees earn vacation on their employment anniversary date in the proportion that their normally scheduled number of hours bears to 40 per week. For example, a regular, part-time employee who usually works 20 hours per week would earn 20 hours of vacation upon completing his or her first year of service.
Vacation does not accrue between employment anniversary dates and may not be taken until it is earned. Vacation time must be used in the anniversary year after which it is earned and may not be carried over past the employee’s next anniversary date. For example, an employee with two weeks’ vacation as of his or her third-anniversary date must use the two weeks prior to his or her fourth-anniversary date. If an employee fails to take his or her earned vacation time before the employee’s anniversary date in violation of this policy, the employee will not earn any further vacation until that unused vacation has been taken.
Earned vacation must be taken. Employees are not entitled to pay in lieu of taking time off for vacation.
VACATION POLICY (maximum accrual)
Our “vacation year” is based upon [anniversary/calendar] year. This means that your vacation year begins on [the date you started work with our Company and runs until the day before that date in the next calendar year] OR [January 1 and ends on December 31 of each year].
Full-time employees accrue vacation at the rate set forth in the following schedule:
Years of Service
Vacation Hours Accrued Per Pay Period
Rate of Accrual
0 through _______ days per year
__ through _______ days per year
[etc.]
_____ days per year
The maximum amount of vacation hours you accrue is determined by your rate of accrual. Once that maximum is reached, further accruals will cease until the vacation hours are taken and fall below the maximum allowed. You will not accrue vacation during unpaid leaves of absence.
[In an effort to accommodate the desires of our employees who would like to take their vacations early in the year, employees will be permitted to “borrow” against the vacation they expect to accrue over the course of a vacation year. You should understand, however, that if your employment with our Company is terminated for any reason prior to the time that you have accumulated the number of vacation days taken during the vacation year, you will be responsible for reimbursing our Company for the amount of used but unaccrued vacation. At the time you “borrow” against the unaccrued vacation, you will be expected to execute a written authorization that would allow the Company to deduct the amount of used but unaccrued vacation from your final paycheck, should that be necessary.] OR [Employees may only use accrued vacation. You may not “borrow” against unaccrued vacation.]
[Accrued but unused vacation time may be carried over from vacation year to vacation year up to a maximum of ___ days.] OR [Accrued but unused vacation time may not be carried over from year to year.]
Please notify your supervisor as far in advance as possible of the time you wish to take your vacation. Requests for scheduled vacation must be submitted in writing. Requests for unscheduled vacation must comply with the Company’s call-in procedures, as set forth in the Attendance Policy. To ensure that our Company’s staffing and operational needs are met at all times, the Company reserves the right to grant vacation requests at its discretion. Even if approved, requests for unscheduled vacation may not necessarily be excused for purposes of the Attendance Policy.
You will/will not be paid for all unused, accrued vacation upon termination of employment.
VACATION POLICY (annual accrual)
Our “vacation year” is based upon [anniversary/calendar] year. This means that your vacation year begins on [the date you started work with our Company and runs until the day before that date in the next calendar year[ OR [January 1 and ends on December 31 of each year].
All regular full-time employees are eligible to accrue up to __ paid vacation days during the first year of employment. These paid vacation days are accrued on a pro rata basis – that is, you will accumulate one paid vacation day for each ___ months of uninterrupted service. After that, you will accumulate vacation according to the following schedule:
a. __ days per year [___ days per month] of service for the __ through ___ years of continuous employment.
b. __ days per year [___ days per month] of service for the __ through ___ years of continuous employment.
c. [Etc.]
You will not accrue vacation during unpaid leaves of absence.
[In an effort to accommodate the desires of our employees who would like to take their vacations early in the year, employees will be permitted to “borrow” against the vacation they expect to accrue over the course of a vacation year. You should understand, however, that if your employment with our Company is terminated for any reason prior to the time that you have accumulated the number of vacation days taken during the vacation year, you will be responsible for reimbursing our Company for the amount of used but unaccrued vacation. At the time you “borrow” against the unaccrued vacation, you will be expected to execute a written authorization that would allow the Company to deduct the amount of used but unaccrued vacation from your final paycheck, should that be necessary.] OR [Employees may only use accrued PTO. You may not “borrow” against unaccrued PTO.]
[Accrued but unused vacation time may be carried over from vacation year to vacation year up to a maximum of ___ days.] OR [Accrued but unused vacation time may not be carried over from year to year.]
Please notify your supervisor as far in advance as possible of the time you wish to take your vacation. Requests for scheduled vacation must be submitted in writing. Requests for unscheduled vacation must comply with the Company’s call-in procedures, as set forth in the Attendance Policy. To ensure that our Company’s staffing and operational needs are met at all times, the Company reserves the right to grant vacation requests at its discretion. Even if approved, requests for unscheduled vacation may not necessarily be excused for purposes of the Attendance Policy.
You will/will not be paid for all unused, accrued vacation upon termination of employment.