Vacation Policy – Be Careful What You Say

I often see a big and potentially costly mistake in the way that vacation time is described in an office policy manual.  Typical wording “after one year of employment, you get one week of paid vacation, and after two years, you are entitled to receive two weeks of paid vacation”. What happens if you fire someone–or they leave voluntarily–after the second month of the third year of employment? With the above language, the employer would be required and obligated to pay that employee for the full two weeks, even if common sense might say that was not your intention. Bummer!!  So the solution is to state that vacation time is accrued–then that employee would only be paid for a percentage of the vacation time. Here is my suggestion for the proper language to use.

Vacation with pay  is accrued by full-time employees only ( those working at least 32 hours per week). Vacation is accrued 0.33 days per month based on working four days a week during the first year of employment. Then, after the second year of employment, vacation is accrued at a rate of 0.66 days per month for working four days a week. Vacation time may be taken in minimum increments of one half day. Vacation benefits are calculated on a calendar basis. Vacation must be used in each calendar year or that time will be lost. Unused vacation time may not be rolled over into a subsequent year. If you terminate your employment, you will be paid for any unused, accrued vacation days. However, any vacation day given in advance which was not subsequently accrued, will be deducted from your final paycheck.

It is critical to remember that promised paid vacation time is considered wages, and failure to pay wages is a serious offense–often with double or triple damages. So check out your language–it is an easy no-brainer to fix.