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Paid Time Off: What’s Your Policy?

Paid Time Off: What's Your Policy?

It’s that time of year. Everyone I know is chatting excitedly about a vacation to the beach, a road trip with the family, or a summer camping and hiking adventure. They’re looking forward to some well-deserved time off from the daily grind.

Paid vacation is a popular benefit that allows employees to recharge and keeps them motivated. And that’s a good thing, because when morale is high, employees work harder to make your small business a stronger competitor in the marketplace.

So what’s your small business’s vacation policy? Have you established one yet? If not, there’s no time like the present. Here’s what to consider before drafting your official policy.

Know Your Legal Requirements

In the United States, employers don’t have a legal obligation to award paid vacation time to staff. Despite that, most business owners still offer paid time off to their workers. Whether they’re practicing the Golden Rule, trying to maximize profitability, or a little bit of both, bosses understand that time off is essential for the health of employees and the business.

Set Your Goals

You should have one or two goals in mind when determining when and how to award vacation time to your staff. Do you want to use vacation as a reward for time spent with your company or as a way to attract top talent or compensate for below-average salaries?

Choose an Accrual Policy

How you award vacation is up to you. The most popular accrual policies are:

  • Service-Based Time Off: This reward system is common, and it involves awarding vacation based on length of service to the company. For example, you might award two weeks to start, and then add an additional week off after five and ten years with the company.
  • Accrued Time Off: This system also awards vacation time based on the length of time someone has worked for you. The difference is that days are usually banked on a monthly bases rather than being allotted at once at the start of the year. Some businesses allow a certain amount of accrued time to rollover to the following year—a benefit many employees find attractive.

Get Feedback from Employees

If you have the opportunity to get employee feedback before setting your policy, jump at the chance! You may find that your employees have special circumstances you hadn’t considered that make one policy more desirable than another. Let them know the options you’re considering and ask for their opinions.

Put Your Policy In Writing

What happens when an employee doesn’t use all of her days? Can vacation time to be banked or rolled over? Do part-time employees earn any time off? Can employees be forced to take their vacation days? How far in advance should vacation days be scheduled? Who must employees go to for approval of scheduled time off? What happens when all employees want the same day off?

All of these questions should be addressed in your employee manual. If any questions or problems arise, you can consult the policy rather than try to remember how you handled things the last time a similar issue came up.

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About Emily Suess

Emily Suess is a full-time technical marketing writer in the software industry and a part-time freelance copywriter. To learn more about marketing your small business online, check out her copywriting blog, Say It With Me. Read more about Emily.
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1 Comment on Paid Time Off: What’s Your Policy?

  1. The idea of vacation time has always seemed a bit odd to me. You pay someone for not doing something. I understand it is a perk and helps attract/retain talent and preserve your employee’s well being, but the concept just seems funny. Imagine if your gardener didn’t come and do your lawn, but still expected to be paid.

    That being said, I prefer the service-based method because it rewards individuals who are loyal. Additionally, it makes them less likely to leave once they are getting a sizable amount of time off per year.

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