Best Practices: Building a Vacation Policy

By Katherine Muniz
June 28, 2016

These days, there is no such thing as a standard vacation policy. The concept of a vacation policy has evolved from a set number of days a year to unlimited days year-round.

Top companies offering unlimited paid time off – Twitter, CarMax, VMWare – theorize that without restraints on time off, employees are assumed to be more engaged, less stressed, and more likely to stay with the company long-term.

However, not every business has made the move to offer unlimited leave programs. Findings from WorldatWork illustrate that a traditional paid time off system continues to be used by the majority of organizations. Employers with more than 20,000 employees show greater use of traditional systems over PTO banks than smaller organizations, and the health care industry strongly prefers PTO Bank Type Systems.

While federal law doesn’t require employers to provide their employees with any vacation days (only 12 weeks of unpaid job-protected leave for medically-related absences thanks to the Family Medical Leave Act), many organizations feel they need to offer paid time off to be competitive. Here are some suggestions on how to develop your own vacation policy:

Make it rewarding

Benefit surveys indicate that the flexibility a generous vacation time policy provides is one of the most appreciated and desired benefits today. “In an environment with limited compensation growth in most sectors of the U.S. economy, a competitive benefits package can make the difference in attracting top talent to an organization,” a survey from the Society of Human Resource Management comments.

Designing your policy to reward your employees and increase retention could pay off in the long-run. Consider these two dismal facts: 23 percent of Americans have no paid vacation and no paid holidays; the average American worker receives 10 days of paid vacation annually, compared to European countries that mandate at least twenty days. Do you want to stick with the status quo, or reward your employees and challenge it? Promoting respect and appreciation goes a long way in cultivating a rewarding culture.

Consider the details

It’s important to consider how you want to frame your vacation policy. While some employers continue to separate time-off categories between vacation, sick, and personal time, increasingly employers are implementing general PTO banks that employees can draw from for sick days, vacation, and/or other personal needs. Additionally, will you allow paid time off to roll over to the next year, or will you institute a use-it-or-lose-it policy?

One study reports that 88 percent of employers pay out the remaining PTO balance in cash. According to a Fortune article over-viewing six brands with great vacation policies, medical practice and research group Mayo Clinic allow employees to sell back their PTO hours for cash. Finally, consider your company’s rate of accrual. Typically PTO time is usually accrued instead of credit all at once. Will you allow a higher rate of accrual for key employees driving your business or have all your employees accrue at the same rate?

How FingerCheck can help

FingerCheck allows for multiple levels of accrual so that if you do choose to appoint certain employees to accrue time off at a faster rate (such as an executive vs. a newly hired employee), you can program the system to do so. Additionally, employees can request vacation using the software, which supervisors can approve using the mobile app or the web-based application. You can even set all paid holidays on auto-pilot so that the system knows when and how to allocate holiday time to your staff.

However you decide to tailor your policy, FingerCheck truly makes tracking PTO and managing employee vacation a breeze.

Table of Contents

Work smarter, not harder

Automate your payroll and HR systems with Fingercheck today!

Stay in the loop

Subscribe to our blog to stay updated on the latest Fingercheck updates, industry news, payroll, employee management tools, and HR tips.

This field is for validation purposes and should be left unchanged.
Shopping Cart
Scroll to Top