Make a Creative Vacation Policy for Your Small Business

I recently tried to get in touch with a colleague in France, only to discover that he is out of the office until August 29. In France, employees are guaranteed a minimum of 5 weeks of paid vacation a year.

Here at home in the States, summer is vacation time too, only, of course, less so. People are coming and going, raising the question—what is the best way to handle sick leave and vacation time? When developing vacation and sick leave policies for your small business, there are some things that you have to do because the law requires them and some things that you will want to do because they will help you keep your best employees.

First the law: The Fair Labor Standards Act requires that you pay employees at least the minimum wage for 40 hours of work a week. The only legally required “extra” benefit employers are obligated to have is workers’ compensation insurance. You do not need to pay people sick days, vacations, holidays, etc.

Second: The Family and Medical Leave Act allows eligible employees to take up to 12 weeks of unpaid, protected leave in a 12-month period for specific family and medical reasons.

So the basics are indeed basic. The real question then is: Are there any sorts of leave policies that you can adopt that will not only make your employees happy, but make yours an exceptional workplace?

You bet.

Most small businesses have basic time-off policies whereby employees get X number of sick days and Y number vacation and holiday days off per year. On average, as opposed to Europe, full-time employees here usually get about 17 or 18 days off per year, allocated evenly between sick and vacation days. Professional, long-term employees could have 30 days or more.

But here is a trend I see more and more that makes a lot of sense: Consider pooling all of these days into a day-off “bank.” Employees may get, for instance, 150 hours off a year (about 19 work days). The bank would include days off for holidays, time for vacation, and some sick days. But instead of divvying them up that way, it is up to the employee to take off the days he or she wants, when he or she wants, within the needs of the business.

This plan has many benefits:

  • First, it allows employees to schedule days off without telling those little white lies.

  • Second, employees are treated like adults. They make their own choices for what days they want off. Maybe Ramadan or Yom Kippur is more important to them than the 4th of July.

  • Best of all, employees use their time as they see fit. If they have a child at home sick for a few days, they can use time for that. In fact, they can use the day-off bank for vacation, personal time, sick days, or whatever. Some employers even allow employees who bank more than, say 80 hours, to redeem the excess hours by exchanging the hours for cash.

This sort of creative time off program is the sort of intangible benefit that separates great small businesses from the pack.

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