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When Flex Vacations Workand Don't

August 1, 1996
Related Topics: Benefit Design and Communication, Featured Article
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.

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