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Giving Employees Vacation Time Off

By Catherine Gordon, JD | June 19, 2013

Even the most dedicated employees look forward to escaping on a vacation from work. As an employer, you aren't required to provide time off for vacations, and you may be tempted to avoid the topic because of the particular hassles involved for small businesses. However, the benefits your business will reap from offering employees vacation time off can far outweigh the negatives, particularly if the proper plans are put in place.

Studies consistently show that employees value fringe benefits, such as time off, as much, if not more, than the amount of pay they receive. To attract and keep the most talented and loyal employees, employers cannot offer only the bare minimum of required benefits. As a matter of fact, small businesses often cannot pay as much as larger companies and benefits, such as paid vacations, can make up the difference. Not to mention that refreshed and recharged employees are likely to be more productive and focused.

You may be convinced that your employees should receive time off, but may not be sure that you need a formal vacation plan in place. Resist the urge to make your vacation policy one that consists of your employees asking for time off and you saying yes or no. Even if you have very few employees now, as your business grows and the amount of people you employ increases, it's easy to see that a plan is best for all concerned.

The best way small businesses can continue to run smoothly and allow employees to take vacations is by planning and coordinating the time off. There are numerous ways to structure a vacation policy:

  • The amount of time and when it is taken can be based on the traditional seniority method.
  • A specified amount of time off can be allowed that must be taken in minimum increments of, for example, a week.
  • On the other hand, your business operations may permit you to allow employees to take vacation time on a day-by-day basis.
  • Some businesses may close down for a week or two at a certain time of the year, and that period is everyone's vacation time off.

Regardless of what best suits your business, you should definitely.have a policy in place. A policy can also help you avoid running afoul of any anti-discrimination employment laws.

As an employer, you generally have much flexibility in determining your vacation policy. You can use a sample vacation policy and tailor it to fit the needs of your business and employees.

Tools to Use

The Business Tools include a sample vacation policy that you can adapt to meet your needs.

Be aware that if you allow employees to take vacation time off one day at time or for part of a regular workweek, payroll issues may arise.

Work Smart

Our vacation pay case study illustrates the role vacation pay plays for the purpose of determining minimum wage and overtime pay requirements. While these computations can be somewhat cumbersome, the offset is that employees taking a day or two of vacation at a time will almost certainly create less disruption to your business operations than having employees away for extended periods.

Must you pay employees for vacation periods? In short, no, but for morale purposes, you may wish to offer a shorter paid vacation period rather than longer, unpaid periods. This isn't to say that you can't permit an employee who is taking the trip of a lifetime and needs a few extra days to take some unpaid time off. Remember, time off is not a benefit required by law, so employers have some flexibility.

Time off for a vacation is something that you should grant yourself as well. Small business owners are notorious for giving all of themselves to their businesses and often feel that the business simply can't function without them. Every small business owner should find a way to take some time off, even if it's only a couple of days at a time. If you need convincing, consider the time away from the daily grind a benefit for your business in the form of a being a re-energized boss when you return!

Office & HR

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