October 9, 2014
When employers should consider,
A vacation buying option:
- Your company needs to offer more time off (because of downsizing), but can't increase costs.
- You want another option for employees' flex dollars.
- You have a weak vacation program, especially for newer employees.
- Electing more time off doesn't disrupt staffing needs.
- Replacing absent employees isn't necessary or the costs are low.
- Section 125 of the Internal Revenue Code (use-it-or-lose-it rule) won't create a problem with employees, administration or state law.
A vacation selling option:
- It can help employees draw down (or prevent further deposits into) a large accrued vacation bank.
- Higher paid, longer service employees with better vacation benefits won't get a big windfall from selling vacation time at their higher rates of pay.
- The current vacation schedule is generous or most employees have relatively long service and could use the option to sell time.
- Replacing absent employees costs too much, and the company would save by reducing absences.
- Employees have other benefit option uses for the dollars they receive from selling vacations, such as flexible spending accounts, substantial health plan contributions or long-term care insurance.
- Section 125 of the Internal Revenue Code won't create a problem with employees who could sell vacation days but don't, and therefore risk forfeiting any unused time they could've sold.
SOURCE: George R. Faulkner Jr., managing consultant at A. Foster Higgins & Co. Inc. in Philadelphia.
Personnel Journal, August 1996, Vol. 75, No. 8, p. 76.