What Is a Vacation Policy?

A vacation policy is a unique guideline defined by each employer that outlines and sets forth the requirements for requesting vacation, as well as the allotted days that are given to employees. Employers should clearly define vacation policies in a consistent manner and apply the same set of guidelines to each employee. An easy-to-comprehend, well-enforced vacation policy avoids confusion and helps employees comprehend what steps they must follow in order to effectively schedule their time off.

Written Vacation Policy Advantages

Written vacation policies are the best and most concise way to communicate the requirements for taking vacation time. The policies should clearly outline what the employee's responsibilities are for their time spent away from work, such as if they need to find another employee to perform their duties while they are gone, or if they need to schedule their vacation time in a certain way or during specific times of the year.

Best Ways to Manage Vacation Requests

Many companies use a rotating system for making vacation requests because it eventually gives all employees the opportunity to choose their preferred vacation times. In a rotating system, certain employees get to choose their vacation days first and that list of people with the first choice changes every year.

Another popular option is to just close the business for a week or two so there is no chance of favoritism affecting who gets to choose the most coveted times of the year to take vacations.

Vacation Policy Options

The three most common options in establishing vacation policies are:

  • Each employee receives a fixed number of vacation days at the beginning of each work year that they must use in that year.
  • Each employee receives a certain number of vacation days each year and unused days roll over to the next year.
  • All employees have unlimited vacation days.

Policies for Accrual of Vacation Time

Accrual policies for vacation time are at the discretion of the employer and have wide variations. A policy may be that vacation time accrues all at once on the anniversary date of the employee's hire. An alternate policy would be that a prescribed number of vacation hours are added per pay period.

Accrual of vacation time may vary for different types of employees, and this should be clearly stated in the employee handbook or other work-related documents. For instance, full-time employees might accrue three vacation hours per pay period, and part-time employees might accumulate only two vacation hours for each pay period.

Employers should also put in writing if unused vacation pay will or will not be paid when an employee's job ends either by choice or termination.

How to Establish a Workplace Vacation Policy

While time off for vacation is not federally imposed, under the Family Medical Leave Act (FMLA), a labor law passed in 1993, employers are lawfully obligated to provide specific employees with up to 12 weeks of unpaid, job-protected leave each year.

Vacation time is just one form of paid time off (PTO), and a company should choose its vacation policies based on company goals as well as what employees as a whole prefer.

Before finalizing the rules for vacations, it's best to ask for employee opinions on what they hope to gain from the policy. Next, provide them with the proper information about vacation policy options, including benefits and drawbacks to potential plans so they can make a knowledgeable decision.

Another factor to consider when establishing a vacation policy is that if the company has key employees, separate policies may be beneficial to keep those employees contented for the sustenance and growth of the enterprise.

Unlimited Vacation Time

Unlimited vacation has its supporters as reports flourish that Americans work too much and ignore the benefits of downtime. Others counter that the policy would be widely abused, and company productivity would suffer.

Advocates of unlimited vacation time cite three benefits of the plan:

  • Offering unlimited vacation time indicates that a company acknowledges that its employees have obligations and interests outside of work that can't always be scheduled during non-working hours.
  • Unlimited vacation policies express trust, putting the responsibility of completing jobs and projects in a timely manner on employees instead of managers or HR directors.
  • Unlimited vacation treats employees as responsible adult individuals and builds morale.

If you need help with a vacation policy, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.