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EMPLOYEE BENEFITS

Paid time off can be anything under the sun, even unlimited vacation

Time off isn’t required by law, “but it’s so commonplace that employees expect it,” says Vanessa G. Nelson, SPHR, CLRL, president of the human resources consulting firm Expert Human Resources in Flint, MI. And for employee morale and retention it’s a necessity.

How the office sets up its time off policy is its own business, says Nelson. However, there are a lot of elements it needs to evaluate.

The vacation questions

For vacation, Nelson cites these questions that have to be answered.

• How long people have to be employed at the office to be eligible for it.

• How much vacation to allow. “That’s all over the place,” she says. But as a general rule she suggests:

  • after 90 days – six days
  • after a year – seven days
  • after two years – two weeks
  • after three years – three weeks
  • after four years – four weeks

• The times when nobody can take vacation. Some employers have a restriction on the especially busy times so they don’t run the risk being shorthanded.

• Vacation restrictions around holidays. A common one, Nelson says, is that employees have to work either the day before or the day after a holiday. That prevents long absences during holiday periods.

• How to request vacation time. And that varies widely, Nelson says. An office “that’s really laid back,” might allow people to ask for vacation the next day, she says. In a busy office, however, it’s not uncommon to see a 30-day request rule.

• Overlapping requests or how to respond when two people ask for vacation at the same time and only one person can be out.

An easy way to solve that, Nelson says, is to say that the person with the most seniority gets the time. But what if the person with less seniority made the request first?

Set a first-come, first-served rule with a one-day limit. If both requests are made the same day, seniority rules. That eliminates any argument that one person’s request came in 15 minutes before another request.

The unused-time questions

There also needs to be a policy on unused time off. Many small employers have a use-it-or-lose-it policy while most large employers allow accrual, sometimes for as long as five years.

Nelson’s recommendation is to let people carry the unused time into the next year.

People are people, she says. If they can’t carry over their days, they use every one. And if the extra days happen to be sick days, “they use them even when they aren’t sick,” she says.

If the office does opt for carryovers, it has to decide how long they can continue. Some employers allow only one year while others let employees save up several years’ worth of days.

Whatever the save-up time, after the maximum is reached, it’s usually a matter of using the time or getting paid for it.

She adds, however, that state law can enter here. California, for example, doesn’t allow a use-it-or-lose-it policy whereas most other states do.

To pay or not to pay

Another question is whether the office will pay for unused time.

The advantage of it is that attendance improves because people want the extra money. “They’ll jump on it if it’s cash,” Nelson says.

Some even see it as a salary hike. It’s money they wouldn’t otherwise get.

Her advice is to pay for the unused time but to do so at the end of each year. Don’t require people to carry it over, say, two or three years, before they can cash out. That’s too hard for the office to track. And worse, after the third year, the office could be facing a large payout.

And then there’s paid time off

What about a paid-time-off plan where employees get a certain number of days to use however they want?

All the days just go into a bank, and there’s no tracking vacation, sick, and personal days separately.

For the office, the benefit is that the tracking is easy.

And for the employees, the advantage is that they can use the days however they want. They don’t have to lie about being sick when they just want time off.

The office does need to protect against last-minute call-ins, however. And that’s done by setting a notice requirement for non-emergencies.

Counting by the day, hour, minute

What about counting time off by the hour instead of the day?

Some companies allow half days, but most offices that count hours allow two-hour increments, Nelson says.

Employees don’t have to take an entire day for a one-hour appointment. And employers can usually cover for only a few hours. But the disadvantage, of course, is that the system requires a lot of tracking.

Don’t get boxed in

It doesn’t matter what rules the office sets for time off, Nelson says. What matters is consistency in the enforcement. “It’s inconsistency that gets employers sued,” she says.

Every rule needs to be laid out in the handbook, and the handbook has to be followed. Then, when a staffer asks, “why do I have to give 30 days’ notice?” the manager can say, “because it’s in the handbook.”

Discussion closed.

But keep in mind, Nelson says, that “once something is in writing, the office has to do it that way.” And it can get boxed in by its own rules as a result.

Allow for some breathing room. Don’t say the office “will” do anything. Say it “may” do things, perhaps “we may pay this after your second year.”

Business changes. And if the handbook says the office “will pay” something at a certain time, there’s no getting out of it.

Along with that, the handbook needs to say the office can change any policy any time with or without notice.

Vacationing at leisure

And for the really progressive manager, Nelson points out that some employers are moving to a flexible time-off policy where there is no set number of days allowed. People have unlimited time off and simply take it when they need it or want it.

Employers who use it say people act prudently and rarely is the policy abused. It creates a pleasant work environment that in turn increases creativity.

Caveat emptor.

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