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Vacation Policy Change
Benefits & Compensation
Vacation Policy Change
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
In an effort to reduce costs, we are considering changing the policy from paying out employees who do not use all their vacation time to "use it/lose it" policy. The vacation yr is based on date of hi
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Forums » Topic Forums » Benefits & Compensation » Vacation Policy Change
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Vacation Policy Change
posted at 1/6/2009 6:26 AM EST
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Posts: 127
First: 5/10/2000 Last: 5/13/2010 |
In an effort to reduce costs, we are considering changing the policy from paying out employees who do not use all their vacation time to "use it/lose it" policy. The vacation yr is based on date of hire. If this is done, obviously, there needs to be a phaze in time. I'm thinking Q2. What are some drawbacks/pitfalls that I should be aware of? Any suggestions in communicating this, most likely, unpopular decision? |
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Vacation Policy Change
posted at 1/6/2009 7:16 AM EST
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Posts: 1783
First: 11/11/2003 Last: 5/13/2010 |
When you refer to paying out employees who fail to use all their vacation time, do you mean at separation, or active employees at a certain point in the year?
You need to check with your state's wage & hour division to see whether unused vacation is considered "earned wages." If it is, you still would have to pay out unused PTO to departing staff, and changing to use it/lose it may not necessarily be an option. Instead of zapping unused vacation, it may be more palatable to create an "extended leave bank" and put the unused vacation in that account. ELB time could be accessed for something like Family-medical leave absences. (Try searching this site and SHRM's site on this topic.) You may also want to review how your vacation accrual schedule compares with how much people actually take and with those of similar firms in your labor market. If there's a disparity between accrual/usage it may be that your employer is over-generous with this benefit...or perhaps that staffing/workload prevents people from taking time off. You need to dig into the disparity to see what's up. In terms of communication, lay out the business reasons, state who will be affected and what the impact would be. Employees will not like the change, but they'll be more likely to accept it if they understand why the change was made. |
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Vacation Policy Change
posted at 1/6/2009 7:58 AM EST
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Posts: 127
First: 5/10/2000 Last: 5/13/2010 |
It is for "active" employees when they reach the end of their benefit year, which is their service anniversary date.
I like the idea of the ELB and define what qualifies for using this time and how long this bank of time is avail.... |
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Vacation Policy Change
posted at 1/6/2009 8:21 AM EST
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
You might also prepare for lots of requests in the next few months if the employees have a lot of banked time. Will there be enough time to let everyone use it? You might consider a longer phase in.
One idea also might be to do a last payout so the employees don't feel cheated. Even if it is not 100% of what you have done in the past, it is better than taking it totally away. We have a "use it or lose it" with no payment for not using. Once you get there, it is easier to deal with it than carryover. |
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