Most full-time employees feel entitled to certain amount of paid vacation.
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You have no legal mandate to offer paid vacation time, but you'll have a difficult time attracting and retaining a skilled workforce unless you are willing to offer a vacation policy that is in line with the labor marketplace.
From an employer standpoint, vacation benefits can be problematic. Several weeks of vacation each year have obvious advantages for employee morale. But vacations can significantly interrupt critical workflows and project deadlines. The best way to manage vacation time is with a carefully crafted set of employee handbook vacation policies.
- Who and how much. One of the first things your vacation policy should address is who qualifies for paid vacation and how much vacation they will receive. Paid vacation is normally only offered to full-time employees and is tied to the length of time the individual has worked at the company. Employee handbooks often identify a base amount of vacation after the first year with additional days being earned for each year of service.
- Accrual issues. Most employees don't actually use all the vacation time that is allotted to them. How you handle the left over days is entirely your call. But if you let employees accrue an unlimited number of vacation days from year to year, you could end up paying for months of vacation when the worker separates from service.
- Blocks vs. piecemeal. Employee handbooks describe how employees are expected to take their vacation days. Many businesses require employees to take vacation in a block of at least one week because day-at-a-time vacations are difficult to plan around, creating untenable situations in small businesses with a limited number of employees.
- Mandatory. Some companies require employees to take all or part of their vacation at a specific time of year. Seasonal workflows and facility shutdowns can necessitate mandatory vacation periods, but they should be clearly identified in the handbook.
- Supervisor approval. Employees sometimes operate under the mistaken idea that they are entitled to schedule their vacation whenever they feel like it. Your employee handbook should make it abundantly clear that vacations are subject to supervisory approval so you can avoid the eventuality that more than one key employee will be out of the office during the same time period.