I understand that by submitting this form, I agree to receive periodic emails from TPD. My consent can be withdrawn at any time using the links provided in every email.  Please refer to our Privacy Policy or Contact Us for more details.

Back to Blog

Vacation Policy: What You Need to Know

Top employers know that focusing on retention not only saves their company money in the long term, but also leads to the development and engagement of employees.  One key tool top employers use to retain their employees is offering a comprehensive benefits plan – one that gives them a competitive edge against other companies. A structured and transparent vacation and benefits package will help keep your employees happy and motivated.  And, when your employees are happy, the business is too.

Whether you’re starting from square one, or making amendments to your pre-existing vacation policy, there are a few things you will want to consider:

What’s The Law?

In the United States, the Fair Labor Standards Act does not require payment for time not worked, such as vacations, sick leave, or federal holidays.  These benefits are matters of agreement between employers and their employees, and are a key defining opportunity for companies.  Information about your legal requirements as an employer in the United States can be found through the United States Department of Labor website.

In Canada, regulations for vacation pay are not as clear and consistent as one would hope. Each province has its own rules and regulations when it comes to how much time a person can take off, and how much vacation pay a person is entitled to. Service Canada provides a breakdown of vacation entitlement requirements that serves as a great starting point for making sure your policy is compliant.

What Are You Trying To Accomplish?

Companies put time and effort into tailoring a vacation policy that will fit their employees’ needs for a variety of reasons. It is important to ask yourself as an employer: are you attempting to minimize costs, create a rewards structure, or be competitive in your market? Each of these conclusions has its own merits, and by first outlining your ideal end result, you will be in a far better position down the line to deal with unforeseen circumstances when they inevitably appear.

In addition to the traditional two week allotment per year, many employers opt to allow their employees the added benefit of personal days, sick days, national or religious holidays (look into your Federal laws for this one, as many are mandatory), as well as time-accrued or days ‘in lieu.’

Can unused vacation days accumulate for future use?

This also depends on the employer’s vacation policy.  An employer may elect to allow an employee’s unused vacation time to ‘roll-over,’ with the the employee’s remaining vacation days moving forward into the next year’s vacation allotment.  Many employers who allow roll-over time will set a cap-off date for the days to be used by, usually a date in the first few months of the following year.

How Will You Enforce Your Policy?

It is imperative that employers ensure their employees utilize allotted vacation time. Having an online version of your company’s vacation policy available for viewing, or, providing employees a hardcopy version along with their onboarding paperwork will help you prevent feelings of disconcertion when it comes to what your employees are entitled to. Moreover, employers must communicate clearly that it is in their best interest and the employee’s best interest to make use of vacation time.  Employees who take their full vacation time are often more rested and return to work with greater clarity and focus.

Or, No Policy At All!?

One of the most significant movements in the business world has some forward-thinking companies adopting a new way of looking at the traditional vacation policy–one in which they forgo it altogether. For example, Netflix does not have a vacation policy at all, and instead asks that all employees follow the Golden Rule of Netflix and use their best judgement in taking the course of action that is best for the company.

The driving force behind this idea is that rather than making employees feel like they will be compensated for productivity, they will maintain increased productivity by not stressing about proving their self-worth within the organization. ‘Unlimited Vacation,’ like anything else, is sure to have its pros and cons. Establishing what your company aims to achieve with their benefits plan will help you decide if no policy is the best policy for your employees.

Keeping Track

On a final note, even if you’ve designed an extremely comprehensive vacation policy, the unfortunate truth is that it can still be difficult to keep track of it all. Vacation requests, scheduling conflicts, black-out days, time-accrued, bereavement and maternity leave, sick days – there are numerous employee records to keep organized.

Fortunately, TPD has you covered on the scheduling front. We’re excited to provide you our specialized organizational tool, the Online Staff Planner, free of charge. Track employees, calculate time-accrued, eliminate paper files, manage staff entitlements in perpetuity, and much, much more.  It’s easy to forget when your employees have requested time off, but with the Online Staff Planner, there are no surprises.


Happy Vacation Scheduling!

Please choose to subscribe as:

After a great run of 33 years, we're picking up the pace.

The Personnel Department is now TPD.


Continue to the new TPD website