How to Structure Employee Vacation Policy


Give an inch, and you will be amazed by the speed at which people will take a mile. Especially when it comes to vacation days. You may also find that employees respond well to freedom with time off and act responsibly. Rather than having a gray area and leaving this to chance, a structured employee vacation policy is the answer. When employees know what to do, and how their vacation days are calculated, they don’t take them for granted.

Begin With the Legalities

The premise of any employee vacation policy is the legal requirements that the employer is responsible for. Some may be surprised that in some countries, employers have no legal obligation to offer vacation time. This means that it is up to the employer to decide what is fair. In other places, full-time employees have the right to 21 full working days as vacation time each year. Employees earn their full salary and benefits even when they take vacation days.

It is recommended that when the vacation policy is being created, the days should not be carried forward. This means that all the days need to be taken within the working year. Should an employee choose to leave their jobs and have vacation days stacked up, it will cost a pretty penny to pay them off.

Owner of a coffee shop? Check out “Leadership Tips For Cafe Owners” for a guide on how to structure your coffee shop in a way it can perform at its highest level.

How to Structure Employee Vacation Policy
Begin with the Legalities

Consider Length of Service

The typical rule of thumb is that the longer a person works in a company, the more leave days they are able to get each year. The number of days that are allotted is a decision that is made by the company and is not set in stone. A simple rule that one can use is giving two or three additional days for every five years worked.

Paid Holidays and Floating Holidays

Full-time employees do not face deductions when there are holidays declared by the state. Typically, they are no more than eight of these in the year. Part-Time employees or temporary staff may not be paid on these days if they do not work.

Floating holidays are another option that employers need to consider in their policy. One must decide if they are to honor religious holidays that occur on different days during the year. These include holidays like Ramadan, Kwanzaa and Good Friday.

Sick Days

Sick days allow employees to take the day off if they can show evidence that they are too ill to work. Confirmation would be in the form of a note from their doctor or a clinic. Sick days enable employees to take a number of days off if they are sick each year, without their pay being reduced.

Take a look at “Standard Vacation Policies for Small Business” for options on seeing what vacation policies work and don’t work inside a small business.

How to Structure Employee Vacation Policy
Vacation can bring new energy to your employees

Consider Black Out Periods

These may not be a popular option for employees, but they may be necessary to protect the company. What typically happens in companies is that there are periods when everyone wants to take time off. This could be around holidays like Christmas or Thanksgiving, or during the summer. If everyone takes time off, then the company will not run effectively.

A blackout period means that for certain months during the year, employees will not be able to take extended time off. Extended time would be more than two consecutive days off. This is recommended if you have periods where your business is exceptionally busy.

Get Creative

Motivated employees are high performing employees. An employee vacation policy could include allowing for paid vacations on certain days. These would consist of birthdays or anniversaries. Introducing a number of days for compassionate leave could also be a good idea. Compassionate leave could be when a close family member dies, and an employee needs to mourn. It may also be applied when caring for a sick loved one, such as a child in the hospital. When employees feel cared for, understood and their feelings considered, they are more productive.

Need some more tips on motivating an employee at work? Check out “How to Motivate an Employee Who’s Underperforming in Your Café” for more.

Involve Your Employees

Your employees’ input to creating the vacation policy should not be taken for granted. When creating the policy, rather than asking them what their preference is, they should be asked what their preferred outcome would be. They may be looking to spend more time with their families or to travel the world. By understanding their outcome, it will be easier to determine when their vacation days should be taken and how to go about taking them.

Need to find more ways to keep your staff united and in sync with each other? Check out “Tools For Tracking Employee Performance at Your Cafe” for business owner tips on tracking the activity of your employees at work.

How to Structure Employee Vacation Policy
Motivated employees are high performing employees.

Look to the Future

The future of vacation policies is changing. When setting a vacation policy, consider the projected growth of your company, and how it will evolve. This will make it appealing to more people as the company continues to grow. Large companies are starting to offer paid leave. This means that they are paying people to take holidays. The objective is to give employees the opportunity to plan something that they can enjoy and actually take the time off.

There are other companies that are introducing unlimited paid time off periods, allowing employees to take a break as and when they need to. There need to be guidelines to guide this if it is a direction that seems viable for the company when setting the policy. If it is linked to professional development, it would be a good idea to introduce this.

How to Structure Employee Vacation Policy
Coffee on Vacation @dianakuts

An excellent structure will work for a business in the long term. It will be easier to retain excellent staff and to avoid them getting burned out. When deciding how to create the best employee vacation policy, the key is to determine what factors are to be considered. With all the options that are mentioned here, it is easy to tailor-make a policy that is aligned with your business.

Thank you for reading with us today! Be sure to also check our piece on “Best Small Business Apps for General Productivity” for a helpful guide to finding apps to maximize productivity at work.

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