Taking a vacation gives employees a chance to recharge, spend time with family and friends, and take care of personal responsibilities so they can be more productive when they return to work. While encouraging employees to use their vacation time is important, you also need to ensure you have adequate staffing. Here are some guidelines for how to balance these important factors.
Discourage last-minute requests.
Some employers require at least one week’s notice for vacations of a few days or less, and more notice for longer periods. Set a reasonable deadline for vacation requests and clearly communicate it in your written policy.
Set reasonable limits.
Employers generally have the right to control how much vacation employees take and how many employees are out on vacation at any one time. The following are examples of practices employers may use to help manage vacation requests:
- Early deadline. Consider requiring all summer vacation requests be submitted by a certain date. Choose a reasonable deadline based on your business needs.
- Restricted-use periods. Employers may set a limit on the amount of vacation that can be taken at any one time.
- Block-out times. Some employers implement block-out times during which vacations are off limits. This can help employers meet demands during peak business times.
- Incentives. Employers may provide incentives for employees to take time off during less desirable times of the year. For example, some employers provide an extra day of vacation or offer premium pay for working during peak vacation periods.
Whatever strategy you choose, make sure it is clearly communicated in your written policy.
Reserve the right to deny requests based on business needs.
Even if you don’t adopt a formal strategy, your policy should still make clear that vacations may be restricted, if necessary, based on scheduling and business needs. Your policy should provide guidance on how requests will be granted when demand is high (such as, being based on seniority, first-come first-served, or through a lottery method.)
Review carryover provisions.
When permitted by state law (see below), some employers limit the amount of unused vacation time that can be carried over to the next year. One of the goals of such provisions is to encourage employees to use their vacation time. For example, some employers require employees to forfeit any unused vacation at the end of the year. However, many employers allow employees to carry over at least some of their unused vacation to give employees flexibility in scheduling their vacation. Review your policy’s provisions on carryover and ensure they are meeting your business needs.
Keep in mind that some states explicitly prohibit policies that force employees to forfeit accrued, unused vacation time (also known as use-it-or-lose-it policies). In these cases, employers must generally allow employees to carry over all accrued but unused vacation time from year to year, or pay employees for the unused time at the end of the year. In some cases, a reasonable cap on accruals may be permitted. Similarly, in these states, employers are required to pay out any accrued, unused vacation at the time of separation. In some other states, employers are allowed to have use-it-or-lose-it policies only if the company has a written policy communicating the rule to employees. So, make sure your policy on carryover complies with state law.
Be consistent.
Make sure your policy is being followed consistently and that vacation requests aren’t being handled in an arbitrary or discriminatory manner.
Hold supervisors accountable.
Give supervisors guidance on handling time-off requests and hold them accountable for ensuring adequate staffing levels and applying your policy consistently.
Remind employees of your policy.
Prior to peak vacation times, remind employees of your vacation policy and highlight any changes made in the prior year. For example, many employers send out a companywide email to remind employees of their vacation policy and any deadlines for submitting requests.
Conclusion
Providing paid vacation time and developing a culture that encourages employees to use their time off can help attract and retain employees, as well as improve productivity. However, you should consider measures that ensure adequate staffing, and make sure your policy is applied fairly, consistently, and in compliance with applicable laws.
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