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Changing Maximum Leave Balance
Benefits & Compensation
Changing Maximum Leave Balance
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
We are looking at changing our maximum leave balance from 200 hours to 40 hours to minimize our liability when people leave the company. Has anyone done this? What are issues we should be aware of?
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Forums » Topic Forums » Benefits & Compensation » Changing Maximum Leave Balance
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Changing Maximum Leave Balance
posted at 3/31/2011 5:57 AM EDT
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Posts: 58
First: 12/1/2006 Last: 9/2/2011 |
We are looking at changing our maximum leave balance from 200 hours to 40 hours to minimize our liability when people leave the company. Has anyone done this? What are issues we should be aware of? |
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Changing Maximum Leave Balance
posted at 3/31/2011 6:30 AM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
Don't change your maximum leave policy.
Change the policy of paying it all out when staff leave. Otherwise you penalize those folks with legitmate leave requirements by cutting back from 4 weeks to 1 week which is pretty harsh IMO. If you change your leave into different buckets and only pay out certain buckets at termination you would have the outcome you desire...... |
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Changing Maximum Leave Balance
posted at 3/31/2011 8:51 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
I agree with Howard that works in states that don't require you to pay out leave upon termination. However there are some states that still do. What state are you in?
I do think 40 is low....I would suggest closer to 80. Otherwise you are going to have employees taking a day here or a day there with no real downtime benefit to them. And you will get into situations where they have used it all prior to being able to accrue more, but yet still need to use it. Also, you will need to consider how to deal with the current balances. In some states, it will be seen as already earned and therefore can NOT be taken away. As an employee if I had accrued 200 hours and all the sudden they were not only going to be paid at termination but also immediately going away before I could possibly use them, I would be extremely frustrated. So you need to come up with a way to lower those balances...you could stop accruing until such point as their balance got to a specific level, such as 40 hours, and then accrue up to a top level of say 80 hours. Another thing you could choose to do is a one-time buyout period where you pay x% to cash out the time. In this economy, I am betting you would get quite a few takers. |
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Changing Maximum Leave Balance
posted at 4/1/2011 6:14 AM EDT
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Posts: 24
First: 1/25/2005 Last: 4/1/2011 |
I'm assuming this has already been thought through, and the decision has already been made (we made the same one in Nov., 2008 - staff can carry over only 40 hours).
I'd say it's important to give folks plenty of time to use the vacation they have, and to explain why - that you are NOT trying to take away what they've earned, just trying to limit the liability to the company, and, that it's for their benefit -- you want employee's who have a healthy life/work balance and are well rested, not someone who works and works and works and gets burnt out. Our FY is 9/1 - 8/31, and we gave plenty of notice - Nov. 2008 that only 40 hours would be carried over, and they had to use or lose the rest by 8/31/09. Supervisors were reminded that they were responsible to make sure their staff were using their vacation. We've were about 50 on staff then, and I continued to remind supervisors, and every 2 months or so I would check in with staff who it seemed to me hadn't been using their vacation. In the end, a couple of C-Suite Staff were the only ones to lose vacation, and one in particular just likes to be the martyr. That same employee still doesn't use her vacation every year, and always loses more than a week. |
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Changing Maximum Leave Balance
posted at 4/29/2011 5:14 AM EDT
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Posts: 58
First: 12/1/2006 Last: 9/2/2011 |
Our current policy is folks can accrue up to 200 hours, all of this rolls over year to year, and all of it is paid out when they leave. We are thinking of grandfathering current employees so they can keep their 200 hours rollover, and changing the policy so that new employees can only rollover 40 hours. Does this make sense? Or should we just try to give everyone time to use their balances down to 40 hours? We have employees in VA and NY. |
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Changing Maximum Leave Balance
posted at 4/29/2011 5:27 AM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
If you have a sufficient size organization so that there will not be any critical staffing shortages, you can easily go to use it or lose it for most of your earned vacation.
The problem ususally is at the end of the year when everyone realizes they have not taken their days and no one is in the department for the last 2-3 weeks in December. And......... if your company is on a calendar year for accounting purposes this is a further burden to have so many people out as you are closing the books. 40 -80 hours carryover is fine. |
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Changing Maximum Leave Balance
posted at 4/29/2011 5:56 AM EDT
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Posts: 562
First: 11/12/2009 Last: 9/14/2011 |
I'd suggest just simply imposing a maximum leave accrual cap. Generally, this is 2X annual leave entitlement. Once the cap is reached, no more leave is credited until such time as leave is taken that brings the balance down below the 2X cap.
This will automatically reduce your payouts and will also limit the liability balance on your books. |
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Changing Maximum Leave Balance
posted at 4/29/2011 10:55 AM EDT
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Posts: 562
First: 11/12/2009 Last: 9/14/2011 |
I haven't seen that much vacation time in my experience - I think the top has been 4 or 5 weeks.
However, I still think a max cap is a good idea. The California Labor Commission has suggested that a cap of 1.5X is allowable (note: this was several years ago. Not sure it's still current). |
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Changing Maximum Leave Balance
posted at 5/10/2011 7:13 AM EDT
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Posts: 11
First: 4/27/2010 Last: 8/16/2011 |
We're allowed to carry over 440 hours of Annual Leave from year-to-year, and it's good to have if you need it. We can also cash in up to 128 hours of Annual Leave per year, donate leave to employees needing it and get paid for all accrued Annual Leave at retirement, all of which are good. However, if you are going to radically decrease the amount of Annual Leave that can be carried-over, I agree with those who recommend giving people plenty of time to use up their accrued leave. My main concern would be whether having alot of people off work in a "use-if-or-lose-it" situation would negatively impact operations. |
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