Vacation Policies: 4 Mistakes To Watch Out For

No matter the size of your business, it's important to have a vacation policy, and there's a lot of things new employers overlook that can lead to trouble down the road. These are the four biggest mistakes people make when setting vacation policies and how to avoid them. The information provided here is for general information only and should not be used as legal advice.

4 Big Mistakes People Make With Vacation Policies

  1. Not having a firm policy. You need to put your policy in writing and give your employees a copy so there's no confusion.
  2. Failing to understand the roll-over concept. In some states, it's illegal to have a "Use it or lose it" policy, which means employees have the right to save up vacation time. Prepare for it so you don't get taken by surprise.
  3. Not realizing that you have to pay them for unused PTO. Depending on your state, you may have to pay employees for unused paid time off.
  4. Thinking you can let some people slide. If you violate your own policy, others may try to do the same. If there are disagreements with employees, find an attorney to help you make the right moves.

Vacation Leave Laws By State

Population Rank State Use It or Lose It Unused PTO Paid Upon Termination
1 California Prohibited, but employers can cap the amount of vacation time that can be accrued Earned PTO cannot be forfeited unless a collective bargaining agreement states otherwise
2 Texas No rule Required if promised in written policy
3 Florida No rule No rule
4 New York Not prohibited, but employers must give notice of policy Must be paid out if policy is silent on the matter
5 Pennsylvania No rule Employer's policy determines if unused PTO is paid
6 Illinois Not prohibited, but employees must be given reasonable notice and an opportunity to take vacation time Separated employees are entitled to unused earned vacation time unless collective bargaining agreement specifies otherwise
7 Ohio No rule Unused PTO must be paid out if policy is silent on the matter
8 Georgia No rule No rule
9 North Carolina Not prohibited, but employees must be given notice of policy in writing Must be paid out if policy is silent on the issue
10 Michigan No rule Cannot withhold benefits upon termination unless employee agrees in writing

Can I Fire An Employee For Taking Too Much Vacation Time?

It depends on where you live. In most states, unless specified otherwise in an employment contract, all employment is presumed to be "at-will," which means you can terminate an employee at any time, for any reason. However, there are many exceptions to this rule. For instance, if an employee is asked to do something illegal and refuses, they cannot be fired for that. With respect to vacation time, it depends on what your policy is and what the laws are in your state, so do your research, and make sure your termination letter includes a legitimate reason for the termination and all the information the employee needs regarding benefits.

How Vacation Differs Around The Globe

Country Legally-Mandated Paid Vacation Days Legally-Mandated Paid Holidays
France 30 1
United Kingdom 28 0
Austria 25 13
Norway 25 2
Denmark 25 0
Finland 25 0
Sweden 25 0
Portugal 22 13
Spain 22 12
Italy 20 11
Belgium 20 10
Germany 20 10
New Zealand 20 10
Ireland 20 9
Australia 20 8
Greece 20 6
Netherlands 20 0
Switzerland 20 0
Canada 10 9
Japan 10 0
United States 0 0

Companies That Offer Unlimited Vacation

The following companies currently offer unlimited time off for employees, or have recently experimented with similar policies:

Vacation Across American Industries

Industry Percentage of Workers With Paid Time Off
Agriculture, forestry, fishing and hunting 61.1%
Accommodation and food services 66.2%
Arts, entertainment and recreation 74.5%
Construction 79.1%
Educational services 75.8%
Real estate, rental and leasing 81.6%
Retail 84.1%
Administrative and support and waste management and remediation services 85.3%
Health care and social assistance 87.1%
Transportation and warehousing 87.4%
Professional, scientific and technical services 87.1%
Wholesale trade 90.6%
Mining, quarrying and oil and gas extraction 89.3%
Manufacturing 93.0%
Finance and insurance 92.0%
Information 92.1%
Management of companies and enterprises 93%
Utilities 94.2%

How Different Countries Provide Parental Leave

Based on the amount of total paid and unpaid leave provided to both parents in a two-family household in 2008:

Country Weeks of Paid Leave Weeks of Unpaid Leave Total
France 22 296 318
Spain 18 294 312
Germany 47 123 170
Sweden 47 116 163
Norway 44 106 150
Austria 16 100 116
United Kingdom 13 67 80
Ireland 21 49 70
Italy 25 44 69
Greece 34 26 60
Japan 26 32 58
New Zealand 14 40 54
Australia 0 52 52
Canada 28 25 52
Denmark 20 32 52
Finland 32 16 48
Belgium 18 25 43
Netherlands 16 26 42
Portugal 18 13 31
United States 0 24 24
Switzerland 11 3 14

In Depth

You want to be a nice boss and give your employees paid time off, but you also don't want to be a pushover who gets taken advantage of. Don't worry, we're here to help. These are the four biggest mistakes people make with vacation policies that you need to watch out for.

Mistake #1: not having a firm policy. There are crazy bosses out there who deduct paid time off when an employee goes to the doctor or takes a lunch break. That's probably too far, but the fact is that you don't have to offer your employees paid time off if you don't want.

While there are some countries that take vacation very seriously, in America there is no requirement. Although you don't have to offer paid vacation time to your employees, people might not work hard for you if they're depressed and angry because they haven't had a break in a year.

Although you don't have to offer paid vacation time to your employees, people might not work hard for you if they're depressed and angry because they haven't had a break in a year.

There are even companies who are taking the extra step and offering unlimited time off, letting employees decide for themselves when they come to work and not even keeping track of vacation days taken. General Electric has tried it, as has Netflix, Grubhub, Virgin Group, and others.

There are some who are skeptical of this practice, as companies like Kickstarter have found that it didn't help their bottom line. The truth is, no matter how nice you are, if the policy isn't written down, everyone may be scared to take time off and will resent working for you, so it's best to have a vacation policy you can point to so no one is confused.

There's a lot of information that has to go into a vacation policy, so make sure you cover everything. Check out our full guide to vacation policies. Get started now beneath this video.

There's a lot of information that has to go into a vacation policy, so make sure you cover everything.

Mistake #2: failing to understand the roll-over concept. Depending on where you live and the policy your company has, employees may be able to roll over unused vacation days to the following year, collecting them for later use.

There's actually been recent research which suggests that taking multiple short vacations throughout the year is better for your overall health than one long trip. But good luck explaining that to an employee who has saved up their vacation time and now wants to take off five months to hike the Pacific Crest Trail.

Would you like to go to Florence to try the delicious pasta? What about a secluded island getaway in Petit Saint Vincent? Well, you can't, because you have to mind the shop while your most valued employee has the time of his or her life. You may not want to let them roll over their time, but in some states, "Use it or lose it" policies are prohibited.

Would you like to go to Florence to try the delicious pasta?

Which leads us to Mistake #3: not realizing that you have to pay them for unused PTO. What happens if an employee doesn't take their earned vacation time, and then leaves the company? In some states, those unused days of paid time off are considered earned compensation, and you have to pay them for the vacation days they didn't use.

Because the laws regarding paid time off vary so much from state to state, it's vital that you know the rules for your state before creating your policy. To see our full guide to vacation policies, scroll beneath this video.

Mistake #4: thinking you can let some people slide. It always starts the same way: an employee asks for an extra day off, and you decide to be cool about it. Then someone else asks, and someone else. The moment you stop adhering to the policy, people will try to take advantage of you.

The moment you stop adhering to the policy, people will try to take advantage of you.

If you don't believe us, you may be astounded to learn the amount of people who have managed to skip out on work for years at a time, including an Australian man who used a potato chip bag to disable a GPS device and an Indian man who didn't show up for work for almost 25 years.

For some reason, a lot of these cases took place in Spain, including a man who didn't show up to the office for at least 6 years and possibly as many as 14. His employers didn't notice until they showed up to give him an award for two decades of loyal service. We aren't lawyers, and this isn't legal advice, but maybe check to see if someone has shown up to work in the last decade before giving them an award.

If there's a disagreement with your employees, try to keep your cool and don't make the problem worse. Find an attorney who can help you navigate any potential lawsuits, and make sure you have all the necessary information before enacting any policy to avoid violating local laws. On this page, you can find our full guide to vacation policies. Get started now beneath this video.

If there's a disagreement with your employees, try to keep your cool and don't make the problem worse.

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