The Vacation Issue

Vacation is a valuable benefit for employees — and an important management tool for you. And with summertime here, vacations are also very much on everyone’s minds. Here are some points to consider when managing the vacation issue.

First, there is no Massachusetts statute requiring that business provide vacation as a benefit to their employees. Massachusetts law gene rally requires jury duty leave, voting leave, meal breaks, and one day of rest in seven. But when it comes to vacations, employers may decide whether or not to grant this benefit.

Second, vacations benefit employers, not just employees. They can be, for example, an alternative form of compensation — and especially helpful when funds for other types of compensation are scarce.

How much do new employees get?
New employees, under the stress of training and adapting to a new environment probably need a vacation day as much as the seasoned professional. However, there’s a matter of equity to consider. If you present vacation as an earned right rather than an entitlement, you may wish to allow new employees to earn vacation in the first three months of employment but not allow them to use the days until completing an “adjustment period.” Most first-year employees receive an average of 5 to 10 days. Longer-term employees typically receive 15 to 20 days. One factor to consider is that most long-term employees do not use all of their vacation days.

About half of all large employers allow employees to carry over vacation days from one year to the next. If you choose to have such a policy, there should be a limit to the maximum number of days. Other employers have “use it or lose it” policy. A carryover policy can be quite costly if an employee separates from his or her employment, because the vacation pay is owed as wage.

Legal Issues
If you do offer vacation, it is a wage that must be paid at the end of employment. That means that if your employee is terminated for any reason and has 10 days vacation on the books, you must include pay for those ten days in the final paycheck.

Your Vacation Policy
You should have a detailed vacation policy that is included in your policy handbook and communicated to your employees. A blanket “two weeks per year” policy is too vague and will lead to misinterpretation. If you decide to grant benefits to your employees, you must follow your own policies and procedures. You may choose to have vacation accrual on a monthly basis according to the calendar year or have a given amount accrue monthly based upon the employee’s anniversary date. An employer retains the right to place restrictions on when vacation may be taken. You can also require that vacation be taken in a particular month or season, if that works best for your business.

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