Does Your Time Off Policy Raise More Questions Than It Answers?

Now is the time of year that employees begin to look at their vacation and PTO balances and realize that they have 3 weeks of vacation to take before the end of  the year – or they’ll lose it.

Do you  allow them to take it all in one block? Do  you require them to break it up into shorter amounts (i.e. a week at a time) or  do you make an exception to company policy and allow them to carry over? On the flip side, maybe you have an employee  that already has a planned vacation but has already taken too much time this year and has no additional time to take.

What’s an HR pro to do?

Time off is one of those HR policies and employee benefits that is very close to an employee’s heart and therefore, issues around time off can often be contentious between the employer and employee. One thing that employees hate most is an ill-defined policy that leaves them thinking one thing, while the employer is thinking another.

This is a common problem. This recently happened at a company that thought their time off policy could do no wrong as it was a “policy of no policy,” meaning they allowed employees to take an unlimited amount of time off given the work gets done on time and with a high level of quality. This can be an amazing employee benefit, if clearly defined.

An employee at this company requested to take 8 weeks off during the summer off. At the time the request was made, there were no guidelines around length of consecutive time off. The employee thought nothing of the request because the summer was  slow and they could still get all their work completed on time. The company, on the other hand, felt this was an unreasonable request and denied it.  The employee was frustrated and unhappy because he understod the policy as having no limits. After this incident the company defined an extended time off benefit that addresses time off for periods of 6 weeks or more. Unfortunately, the damage was already done with this employee.

Whether you have a vacation or PTO policy, whether its an overly generous policy or one held more closely to the belt, having a  well-defined time off policy can help promote employee retention and employee  motivation. Your  employee handbook should outline the policy and all the specifics around taking  time, balances and the logistics.

When writing your policy consider the following qiestions:

  • When are new hires eligible to begin taking time off?
  • How does time off accrue? Does it increase based on length of service, position or some other measure? How is it pro-rated for part-time employees?
  • What is the process for requesting time off? Are there  requirements around how much time an employee can take in a row?
  • What happens to unused time at the end of the year? Do you have a policy to payout employees for unused time? How much time can an employee carryover at the end of the year, if any?
  • What will you do if an employee wants to take time they have not yet accrued?
  • Keep in mind that  any unused accrued time must be paid out to the employee upon termination. You may want to write  your policy in a way that will not result in excessively high balances that require payout upon termination.

Once you’ve  written and published your policy, the most important thing you can do it is stick to it. An employee policy that is constantly having exceptions made is not an effective policy and only breeds dissatisfaction among the employee and employer.

Photo credit iStockphoto

About the author: Nancy Saperstone has 20 years experience as an HR Generalist in varying industries and size organizations.  Nancy joined InsightPerformance in 2004 where she is a Senior HR Consultant. Nancy holds a Bachelor of Science degree in Human Development and a Masters of Education from Vanderbilt University. She is a member of the Society of Human Resource Management and Northeast Human Resource Association.

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Jason Harriman

I’m surprised the example company did not have those limitations spelled out already in their handbook. A well-structured time off policy in a modern and up-to-date employee handbook will contain clear language about these limits, which inform the employee and protect the company.

Nancy Saperstone

Encouraging hard working employees to actually take time off can be a challenge. I think it’s important for HR to stress to employees that not only is paid time off an employee benefit we want them to take advantage of, but it’s important for their own well being. Employees need time to off to recharge their batteries. Taking time off will make them more productive and keep their employee morale in good standing. We can often get fooled into thinking their morale is good because they’re so dedicated, but these are often the employees that keep it bottled up inside and begin to resent their job. HR should work with the manager and create an environment that makes it conducive for employees to take time off. If the environment is right, the employee will feel more comfortable taking it.

Andrea Ballard

Do you think we should try and force employees to take time off? My biggest challenge when administering a time off policy was those employees who wouldn’t take time off. We had a ‘use it or lose it’ policy, and despite advance notice and several warnings, we had some people who would let several weeks of vacation expire every year. What do you see as HR’s role in this scenario?


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